Apple computer rental

Byline: MAVIS SCANLON

Showtime CEO Matt Blank did high-definition television a big favor at the National Cable & Telecommunications Association show earlier this month when he plugged his own cable operator's hi-def service.

A Manhattanite, Blank is one of the Time Warner Cable of New York City customers who have anted up for an HD-capable or HD-ready TV set, and requested an HDTV set-top box from the operator. Unlike TWC competitor RCN, which offers a bundle of video, voice and data services in New York, including hi-def, the rental fee for TWC's Scientific-Atlanta 3100 HD set-top, at $5.75, is the same as the monthly fee for its digital boxes. RCN charges $9.95 to lease an HD box.

Since it rolled out the HD service shortly before Sept. 11, 2001, TWC's New York City system has amassed about 20,000 HD customers, or 4% of its digital subscribers, with little marketing. But it's really only in the last six months that the service has been "getting some publicity," noted Barry Rosenblum, president of the New York division. Recent HD broadcasts of NBA games on TNT, and the Masters Tournament on USA, along with a print advertising campaign for those events, helped. TWC NYC offers HD content from seven networks, including HBO, CBS, ABC, NBC, PBS, Fox and Showtime. Although the operator just struck a deal to offer HD content from Discovery, Fox Sports and HDNet, Rosenblum said that the timing for those offerings has yet to be determined.

The New York City system accounts for about a fifth of the HD set-tops TWC has deployed throughout its 31 divisions. As a whole, the company has been one of the more aggressive operators in rolling out new services, said Richard Greenfield, an analyst at research firm Fulcrum Global Partners. "HD is one of the most important aspects of cable right now," Greenfield noted, adding that the availability of local channel broadcast content is a "great competitive tool" against satellite competitors.

In the Big Apple, the service is advertised on the system's website, and is also mentioned in sales literature, Rosenblum said. TWC has also forged relationships with consumer electronics retailers including P.C. Richards, Stereo Exchange and DataVision.

On a recent rainy Tuesday afternoon at DataVision's Fifth Avenue store, more shoppers were browsing in the store's computer department than its video department. But store manager Morey Becker said HD invariably comes up in conversations with TV-buying customers, who ask about distinctions among the array of picture-tube, or CRT, LCD and plasma-screen sets available these days.

DataVision technology consultant Norman Cohen said the questions customers ask most often is, "What is HD?" and, "How is HD different from regular cable?" underscoring the wide gap that lies between the general public and early adopters of the services, which currently make up about 5% of TV households.

While most better sets manufactured these days are either HD-capable or HD-ready, HD-ready sets do not have an HD converter built-in, while HD-capable sets do.

As far as HD sets go, customers ask a lot of questions about contrast, brightness, picture quality and installation. Although consumers now have a choice of purchasing slick LCD screens and the Holy Grail of couch potatoes, big plasma-screen TVs, good old-fashioned picture tube sets "are still some of the hottest-selling TVs," Becker said, pointing out a 36-inch Sony Trinitron priced at $1,999. Screen sizes for most picture tube HD sets start at 30 inches, and at DataVision were priced between $1,299 and $2,000.

Walking over to a wall of 15-inch LCD flat-screen monitors, Becker said this area was "expanding" nicely. And why not? It's these HD sets that are in the under $1,000 range; Sharp and Samsung both offered models between $600 and $700, although these smaller sets seemed more suited to the kitchen or office than the entertainment room. Prices for LCD models with a 30-inch screen went up to about $2,000.

The big plasma-screen models, with screen sizes of 42 to 50 inches, started at $6,000 and went up to $9,000.

Despite the allure of watching TV in HD, for now the high price of sets, and the still-limited availability of content, will hinder mass consumption. But that's changing.

John Hendricks, CEO of Discovery Communications, noted at the NCTA show that the costs to produce programming in HD had dropped to $25,000 to $30,000 an hour, from about $100,000 four years ago.

Lower programming costs will surely prompt more programmers to add to or begin amassing HD libraries, said TWC's Rosenblum.

HD TV set prices are said to be dropping by as much as 2% a month. While that won't lower prices drastically by this holiday selling season, prices should be more amenable to a mass market, at least for the picture-tube and LCD sets, by Christmas 2004.

When demand picks up, Time Warner Cable will be ready. While Rosenblum declined to give specific projections for next year, he noted that the system can move within 90 days on set-top box inventories. "We can make sure we have enough inventory of boxes so if it looks like things are starting to pick up we can increase orders," Rosenblum said.

No doubt he'll be watching TV set monthly sales reports closely.