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Digital TV Deadline Will Spur Pay TV Boom

The new deadline requiring conversion from analog to digital TV broadcasting will be a windfall for U.S. pay TV providers, according to Strategy Analytics. Their report predicts that the February, 2009 switch-off date will spur millions of households served only by free analog broadcasts to finally sign up for multichannel service from cable, satellite and telecom companies.

Additionally, the report forecasts that the number of U.S. households using some form of digital TV will grow from 57 million today to 77 million by the end of 2008, just two months before the new deadline. Cable operators are especially likely to benefit from this transition, which will drive adoption of digital cable services.

"Having a firm DTV deadline in place will sharply accelerate the industry's migration to an all-digital platform," notes James Penhune, author of the report. "Penetration of digital service will grow from less than half of all cable customers today to nearly three-quarters by 2010."

The deadline will also boost adoption of satellite and telco-delivered TV, but not on the same scale as cable, which will draw upon its huge base of analog customers. To maximize this opportunity, cable's strategy and pricing structure for digital cable should target customers who have not previously used pay TV. This means digital service pricing at much lower rates than those available today, as well as bundled service package offerings of TV, broadband Internet access and Internet telephony.

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