DIRECTV Puts HDTV Owners On Pause

[Gregg Lengling]

More than 500,000 high-def satellite receivers could be
obsolete in the near future. But DIRECTV says help is
on the way. By Phillip Swann

Washington, D.C. (January 31) -- Linda recently upgraded her DIRECTV system
with a $999 High-Definition DVR, which combines a DIRECTV satellite receiver with
TiVo's recording service. With her expensive new toy, Linda can not only watch her
favorite HDTV channels, but she can record them.

However, Linda (who asked that her last name not be used) is upset because she
discovered last week that DIRECTV this summer will require all HDTV subscribers
to get a new dish and receiver to get their local stations in high-def. If Linda wants
local HDTV on DIRECTV, it appears that she will have to dump her $999
DIRECTV-TiVo and get a new one.

"That doesn't seem right," she said in an e-mail to TVPredictions.com. "Why would
anyone buy equipment that will be obsolete by summer time?"

Linda is not alone, although most DIRECTV receivers are far less expensive than her
$999 HDTV recorder. The equipment switch will affect any current HDTV owner who
subscribes to DIRECTV, which the company says numbers roughly 500,000. In
addition, any HDTV owner who buys a current DIRECTV receiver model (and dish) in
the next few months will also have to get a new one this summer to get local HD
signals (and, eventually, all HDTV channels.)

The reason for the switch? DIRECTV is launching four new satellites over the next
two years that will enable it to provide local channels in high-def for the first time,
beginning this summer with 12 markets. (The 12 markets are: New York, Los
Angeles, Chicago, Philadelphia, Boston, San Francisco, Dallas, Washington DC,
Atlanta, Detroit, Houston, and Tampa Bay.) By 2007, the satcaster expects to have
capacity for local HDTV in all major markets -- and up to 150 national HDTV
channels. The new HD services are expected to give DIRECTV a major competitive
advantage in its battle against the cable TV industry and chief satellite rival,
EchoStar's Dish Network.

However, DIRECTV has announced that it will use the new MPEG-4 compression
technology for the local channels (and future national high-def channels). A new receiver and a slightly larger dish will be required to receive the MPEG-4 signals.

DIRECTV spokesman Robert Mercer says the company has not decided when the
new MPEG-4 satellite system will be available for sale, which means any DIRECTV
system sold today would have to be replaced this summer to get local HD signals.

Mercer adds that current receivers and dishes will still be able to display DIRECTV's
existing high-def channels, such as HDNet, HBO and Discovery HD Theater, when
the company starts using MPEG-4 for the local channels this summer. However,
Mercer acknowledges that DIRECTV "will make the transition (to MPEG-4) at some
time for all (HDTV) channels," which means that, eventually, everyone will need a
new dish and receiver to get any channel in high-def.

Mercer did not know when all HDTV channels would be switched to MPEG-4, but he
said that the company would try to ensure that current subscribers are happy with
the transition. He said he could not provide further details on possible offers.

In the past, DIRECTV has provided equipment upgrades for little or no money if the
subscriber will agree to commit to a year-long programming package. (EchoStar,
which plans to switch to MPEG-4 at some point as well, has also previously
provided incentives for customers to upgrade equipment.)

But that may not be enough for Linda. Contacted today by TVPredictions.com, she
said: "We decided to pack everything up and take it back.  We'll go back to cable
until things shake out with local HD."

Phillip Swann, president of TVPredictions.com, has been quoted on TV technology
in dozens of publications and by broadcast outlets, such as The Chicago Tribune,
The Hollywood Reporter, Fox News and CNN. If you would like to contact Mr.
Swann, he can be reached at 703-505-3064 or at Swann@TVPredictions.com.