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HBO Bets Big on MPEG-4

ORLANDO, Fla. -- If you're a cable operator and you're thinking about carrying HBO's expanded lineup of linear, high-definition television (HDTV) networks, you had better get a plan in place right quick to deal with a flood of MPEG-4-based content that will be coming through your door.

That's because the premium programmer plans to distribute its bevy of HD channels in the bandwidth-saving codec via satellite, according to Robert Zitter, HBO's CTO and executive VP of technology, who spoke here Wednesday morning at a special panel that preceded the official opening of the Society of Cable Telecommunications Engineers (SCTE) Cable-Tec Expo.

Earlier this month, the programmer announced that all 26 of its HBO and Cinemax channels would be offered in hi-def. The transition will begin in the fourth quarter of this year, with an expected completion by the end of the second quarter of 2008. (See HBO to Beef Up HD Menu .)

Zitter said HBO had no choice but to go with the advanced codec because of the bandwidth savings it offers over MPEG-2. Besides, MPEG-4, he maintained, "is ready for prime time."

Zitter estimates that each HDTV feed will be delivered in that format at 8 Mbit/s, which provides the necessary amount of bits to produce a high-quality picture but leaves enough headroom (about 1 Mbit/s) to ensure the quality of the signal is not damaged when transcoded to MPEG-2. "We think we've reached the tipping point for high-def," Zitter said.

HBO's decision will present special challenges for cable operators (and some telco TV providers) that are offering digital video today only in the MPEG-2 format. As of March 2007, the U.S. cable industry had about 34 million digital cable subs, and pretty much all of them are being served by set-tops that can decode only MPEG-2 signals.

MSOs and telcos alike will have to adjust to HBO's plans with MPEG-4 to keep up with competitors like DirecTV Group Inc. (NYSE: DTV), which has already declared it will offer as many as 150 HDTV channels… once that many are actually available from the programming community.

Operators on the morning session understood HBO's decision to go with MPEG-4, given the high costs of transporting those HD signals.

But, if MSOs had their druthers, they'd rather see HBO simulcast those HD feeds in both MPEG-2 and MPEG-4. Since that won't be the case, cable operators will have to figure out how to transcode those signals for the industry's massive legacy base of MPEG-2 set-tops, according to Marwan Fawaz, the chief technology officer and executive vice president of Charter Communications Inc. .

For its part, Comcast Corp. (Nasdaq: CMCSA, CMCSK) has been cooking up a new series of Residential Network Gateway (RNG) set-tops that can decode both MPEG-4 and MPEG-2 signals. Comcast expects to test some of those products in the second half of this year, with commercial rollouts beginning in early 2008, said John Schanz, Comcast Cable's executive vice president of national engineering and technical operations.

More generally, the session touched on strategies cable operators can leverage to build and sustain competitive networks using tools such as advanced coding, switched digital video (SDV), analog spectrum reclamation, and even bandwidth expansion.

MSOs must have those tools "sharpened and in use now" to handle coming bandwidth pressures, including HDTV, said Jim Ludington, the senior vice president of the Advanced Technology Group of Time Warner Cable Inc. (NYSE: TWC), which has already announced plans to deploy SDV in 50 percent of its markets by the end of this year. "If you're thinking [about those tools] now… it's too late," he said.

Fawaz said Charter expects to launch SDV in "most of our markets eventually." It will look at 1GHz technologies only in new builds or extensions of plant into new markets.

"Most of us have networks that have reached capacity, and we have to do something about it, and we are doing something about it," Fawaz said.

Operators must also keep a close eye on their nodes, streams, and sessions, to help them determine what capacity they actually have and what's being used, according to Robert Cruickshank, vice president of worldwide OSS strategy and product management for C-COR Corp. (Nasdaq: CCBL), sponsor of the morning session. Operators, he added, must "pay attention to where the hotspots are."

— Jeff Baumgartner, Site Editor, Cable Digital News

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