HD: High in Demand or Huge Disappointment?

By Karl Sin, Vice President Sales of BNS Ltd

With a number of recent high profile service announcements, it may appear that HD has finally begun its foray into the region in earnest. But the reality is that far from being a wave, HD seems more like a trickle in Asia so far and there are several reasons for that.

To start with, there is still a regional divide when it comes to HD services in Asia and, unsurprisingly, the fault line goes right along the bandwidth divide: Whereas broadcasters or service providers in Japan, Korea, Hong Kong, Singapore and Australia are showing increasingly interest, other markets in Asia have not much appetite for HD yet.

The slow spread of HD is due to multiple reasons – and, surprisingly, content isn’t one of them. It’s a myth that there isn’t enough HD content available in the market since most major studios around the world have already recorded their content in HD format. 

The real issue is how to distribute HD content to subscribers at low bandwidth but high quality, something that the two dominant encoding standards, MPEG-2 and H.264 don’t deliver, or at least not yet. MPEG-2 technology may provide good quality but requires high bandwidth, while H.264 is low on bandwidth use but is not yet mature and still expensive. This gives bandwidth-rich markets a natural head start and explains the current HD divide in Asia.

A good example for this is Japan which has no bandwidth issues and consequently has had broadcast HD services for some time and well ahead of the rest of the world. Japan’s excellent network infrastructure means that operators are able to use the MPEG-2 encoding format for HD broadcast which provides better quality than H.264 HD with the pay off that it needs around twice as much bandwidth.

But using MPEG-2 gives operators also ready access to an abundance of mature broadcast headend equipment, along with relatively mature MPEG-2 HD STBs which lowers the overall cost for an MPEG-2 HD broadcast platform. This contrasts with a lack of reliable, good quality HD STBs for H.264. And besides the decoding glitches, there are also interoperability issues between H.264 HD STBs and H.264 HD encoders from different vendors, which adds another dimension of complexity to an operator’s decision making process.

Another factor is cost of HD equipment. The cost of an H.264 HD encoder is currently roughly double that of an MPEG-2 HD encoder and there is a high chance for some of the current H.264 HD encoders to become obsolete and give way to more mature models within one or two year. Of course there are some unorthodox alternatives where some operators are simply getting a HD CAM tape from the content provider, encode it locally and play the content out from a video server. But while this may save cost it unfortunately doesn’t work for live content.

HD H.264 STBs are also still relatively expensive by the standards of a majority of countries in Asia. Their current market price is between US$150 - 300, depending on volume and features. To really become more widely attractive, STB costs in Asia should be between US$50 - 100 USD.

In China, the country’s determination to promote their home grown encoding technology, AVS, and digital broadcast technology, DMB-T, is creating its own issues.

While AVS is similar to, but not necessarily better than H.264, China’s push for developing their own standard is motivated by wanting to avoid paying licence fees to MPEG LA and the ITU for using the H.264 standard, which was jointly developed by the two bodies. It will be interesting to see how the AVS standard will evolve and a fair few people will probably bet that a country like China, with its huge population and runaway economic growth, will eventually lead, rather than follow. But in the meantime this standards issue will certainly delay the overall deployment of HD services in China.

And finally, regardless of which technology is used, since satellite transponder cost can easily exceed US$1M a year, an operator needs to first and foremost be sure he is getting value for money, i.e. high value content.

So here is the dilemma: H.264 HD still has some way to go to match MPEG-2’s features and quality, but markets where bandwidth is an issue have as yet little choice but go for less mature and more expensive bit rate encoding technologies for their broadcast or VOD services. It’s a catch 22 situation that lies at the heart of the slow spread of HD in Asia and will continue to be an issue at least for another two years or so.

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