Out with the old, in with the new.
That’s what cable companies will need to do over the next few years to increase the bandwidth necessary for more high-definition channels and video-on-demand choices in their effort to keep up with satellite and telecommunications companies’ HDTV services.
Comcast and Time Warner Cable will try to clear airspace for HD programming by converting analog cable subscribers to digital. Converting enough subs to eliminate analog use in some markets would allow cable companies to “reclaim” some analog channels.
For each analog channel reclaimed, a cable company could add as many as 12 standard-definition digital channels or up to three HD channels, says Ian Olgeirson, senior analyst at research firm SNL Kagan.
So far, cable companies are making progress. In the third quarter, Comcast cut the number of analog subscribers as a percentage of total cable customers to 31% from 40% a year earlier, while TWC reduced its analog subscriber percentage to 35% from 41%, the companies said last week.
Comcast is doing this by converting “millions and millions” of customers in its second-lowest-priced analog tier to digital by giving them a set-top box and access to more linear channels and video-on-demand without changing their monthly subscription fees, said Derek Harrar, senior VP and general manager of video services.
“We’re taking price off the table,” he said. “It’s not about, ‘Hey, upgrade and pay us more.’ It’s a great deal for you because it’ll cost you nothing.”
Cable companies also may ease the process of HD channel expansion by distributing more MPEG-4 set-top boxes to subs, possibly by introducing new HD subscription tiers. Compared with MPEG-2 boxes, which were distributed as far back as a decade ago, MPEG-4 boxes can process twice the information in the same-size digital stream, Mr. Olgeirson said. Adding switched-digital video to their operations also may give cablers more room for HD content.
“The cable companies have tools at their disposal for increasing the amount of space they can devote toward HD,” he said. “It just depends on what tools they utilize to create that space.”