Millions of TV viewers could be in for an unpleasant surprise come Feb. 17.
Blank screens.
That's the day the nation's broadcast television stations switch to beaming all-digital signals via the airwaves. Judging by an early experiment in the transition, it's going to be a big mess.
My prediction? At least 2 million people who use the old rabbit-ear or outdoor antennas will have problems tuning in their favorite shows after the switch, including some with converter boxes or new TVs. The number could reach 9.3 million or more, if you believe some estimates.
Because digital TV reception by old rabbit-ear or rusty rooftop antennas is hard to gauge, no one really knows what's going to happen.
In fact, even when it will happen is now uncertain. Last week, the incoming Obama administration asked to push back the conversion date, as a way to deal with snafus surrounding the change.
Chief among them: Millions of rabbit-ear holdouts who waited until the last minute to buy the boxes that turn the new digital signals into old analog signals have found that a government program to subsidize the purchases with $40 coupons has run out of money. People who want the coupons are now being put on a waiting list.
The bonus is bandwidth
Ultimately, there's good news in all this. The termination of analog TV broadcasts will free valuable bandwidth for emergency services and cell phones.- Play the video to the right for more on the conversion.
Plus the switch to digital means more high-definition TV, which provides crisper, more-lifelike images. (No, HDTV and digital TV aren't the same thing.) It will be up to the players in each local market to decide whether to offer HDTV or just a plain, lower-resolution digital signal.
But to receive digital TV over the airwaves, you'll need a newer TV with a digital receiver or one of those converter boxes. And you may need a better antenna regardless.
The best news right now is for anyone who watches television via cable or satellite. Sit back and relax. You shouldn't see any difference. "The cable and satellite companies are managing the transition for their subscribers," says Frank Graybill, the lead engineer for WNET and WLIW, New York's public television stations.
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The real winner: Media companies
Investors will want to know that the switch to digital is a boon for media companies such as Cablevision Systems (CVC, news, msgs), Comcast (CMCSA, news, msgs), Time Warner Cable (TWC, news, msgs) and DirecTV Group (DTV, news, msgs). They'll pick up frustrated antenna users as subscribers. And all the hoopla over conversion will heighten interest in the digital television services they offer -- like HDTV and video on demand, which delivers TV shows and movies when you want them, often for extra fees.But these benefits will play out only in the long run. In the short term, the recession will continue to hold these stocks back.
And here's a word of warning for investors: Don't get seduced into buying retailers such as RadioShack (RSH, news, msgs) or component makers like Broadcom (BRCM, news, msgs) as plays on digital converter box sales. True, they should get a temporary boost from converter sales. But any benefit will just be a short-term blip and not one that can keep the stock price up.
3-ring conversion circus
There are three reasons the switch to digital is going to be a circus.Problem No. 1: poor reception. To get a read on how many antenna users will have problems, I took a look at an early transition-to-digital experiment in a five-county area around Wilmington, N.C. It happened in early September.
At least 5% of antenna users reported they'd lost some reception despite having a conversion box or digital TV. This suggests at least 2 million households nationally will have problems. That's 5% of the 36.5 million households that still use antennas on 81 million TV sets. (That's 17.3 million antenna-only households and 19.2 million that use antennas on some of their TVs. About 76.5 million households use cable or satellite TV only, according to Barclays (BCS, news, msgs).)
But the number of antenna users who will lose at least some TV channels will almost certainly be much higher than 5%. The reason: Wilmington isn't much like much of the rest of the country. It's a beach community with relatively flat terrain and no tall buildings to block signals, says David Klein of Centris, a market research firm.
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Centris estimates 54% of households using antennas to pull down analog signals will have problems. If they are right, that means 9.3 million antenna-only households will lose some channels in the conversion. Almost 20 million households will have problems if you include families that have pay TV but use rabbit-ears in the garage or the kitchen.
These people will have to try upgrading their antennas, switch to cable or satellite, or go without some or all broadcast TV channels.
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Klein says even his estimate may be low because his study assumed the use of 30-foot-high rooftop antennas. But about 80% of antenna users have mere rabbit-ear antennas, and older ones at that, he says.
"If you are inside a major suburban location and close to the transmitter, it won't matter," predicts Dennis Silage, an electrical engineering professor at Temple University. "But if you are 20 miles out and there are hills and valleys, it will matter."
Centris expects the biggest problems in and around New York City, Boston, Philadelphia, Los Angeles, Seattle, San Francisco, Minneapolis-St. Paul, Atlanta, Cleveland and Washington, D.C.