DTT bows in cities, analogue shut off by 2011

TOKYO — It’s been a rough and costly road, but digital terrestrial television (DTT) arrived in Japan on Dec. 1.

Pubcaster NHK and the five national commercial networks, as well as 11 regional broadcasters have been licensed to start DTT in the metropolitan areas of Tokyo, Nagoya and Osaka.

The estimated combined investment of all broadcasters for the changeover will reach a cool one trillion yen ($9.2 billion). Japan’s largest commercial net, Fuji TV, alone spent a whopping $55 million for its DTT plans during the last financial year (ended March 31).

The government has set a schedule for the demise of analogue TV and target sales of digital sets.

The milestones are: 12 million sets, or 10 million households, by the time of the soccer World Cup in Germany in 2006; 36 million sets, or 24 million households, by the Olympics in Beijing in 2008; and 100 million digital TV sets replacing all analogue boxes in 48 million homes by 2011 — the target for complete digitalization.

That’s the official picture. A reality check shows a very different situation.

For one, the bandwidth density in Japan limits signal choices. This in turn will make reception in many areas of this densely populated and mountainous country spotty.

Even the start will be more a whimper than a bang, as technical preparations and the analogue-to-analogue conversions have not been completed on time. This means that only selected areas of Tokyo will be able to receive the digital signals, with wider coverage expected in Nagoya and Osaka.

Another problem not yet resolved is the expected interference between analogue and digital signals.

According to official calculations, 4.25 million households will have to change antennas and switch frequencies on their TVs to be able to watch analogue broadcasts once digital signals intrude into their regions.

If people care, and are able to tune in, that is.

The biggest hurdle for the foreseeable future is the reluctance of Japanese consumers to jump on the digital TV bandwagon.

Witness the disappointing results of the introduction of digital satellite TV three years ago. Because of cool consumer reception and low ad revenues, the five digital satellite channels affiliated with commercial networks have run up combined losses of over half a billion dollars so far and don’t see any breakeven point on the horizon.

Worse money hemorrhaging could be in store for all DTT broadcasters. Digital TV sets retail for between $2,300 and $3,500.

According to government estimates, this cost will not significantly decline until 2006. Hence sales of the new TV sets, many of them flat-panel models, are much slower than the DTT enthusiasts in the government would like to see.

Digital tuners for analogue TV sets are an alternative but cost between $460 and $920. Cable TV subscribers will be able to receive DTT programs on their analogue sets, as long as they pay for the extra service.

Neither tuner users nor cable subscribers, however, will be able to use the interactive facilities DTT offers, neither will the picture quality be up to DTT standards.

“To be honest, it is absolute chaos,” admits one exec at a commercial network. “We really are not sure whether all of this makes any business sense.”

Keen to exploit any possible revenue source, broadcasters pin their hope on the transmission of DTT programming to mobile phones. The Japanese system makes this possible.

But as of now the copyright issue has not been resolved, and it is questionable whether ad revenues from such services will cover significant outlays.

As even the government foresees that its rosy plans might not materialize, it is working on deregulation that would allow broadcasters to merge — something which, might well be triggered by the DTT drama starting to unfold.

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