1. HD Distribution in the Digital Headend Nov 13, 2002 Marek Skupien Scientific-Atlanta Sr. Market Manager, Headend Systems marek.skupien@sciatl.com 770-236-6493

2. HD what’s taking so long? Consumers hesitant to buy HD sets due to: High equipment cost Lack of programming Few programs available due to : small consumer base with HDTV sets …the market has been waiting to reach critical mass

3. Has the time arrived for HD? Over 2M house holds in US have an HD ready TV set Prices for HD sets are coming down, 2M more sets are expected to be sold this year “USA’s 10 biggest operators - including AT&T Broadband, AOL Time Warner, Comcast, Charter and Cox – said that by 2003 they will provide a package of high-definition television” USA Today, May 2, 2002 Numerous Headends are in process of creating “room” in their plants for HD programs S-A has shipped over 100,000 HD set top boxes!!! …yes the time is now, get ready!

4. DTV adoption by consumers Once the price point falls below $1,000 per unit (est. Christmas ’02 or early ‘03), a strong shift towards HDTV units is expected. Source: DTV Guide, Jan. 02 and CEA Market Analysis, Jan. 02 Average Price Based on DTV Sales through October 2001 Years on Market DTVColor TV Normalized Prices in Dollars

5. Why bother with HDTV? Regulation Broadcasters need to fully convert to DTV by 2006 Competition DBS is offering HD programming now HBO HD, Showtime HD, HD Net (NHL, Major League Baseball, etc) Fight for premium customer Cable can offer a better premium package (HD, VOD, Cable Modem…) Consumers are starting to create demand Vendors are responding (DTV ready sets, more programming, HD equipment)

6. DNCS  HeadendPlantHome Explorer ® 3100HD HDTV Set HDTV in the Headend LOCAL CONTENT PICTOR HD RTE BITMIZER MULTIPLEXER OR: MQAM UP TO 5 CA-QAM DTV BROADCAST ATSC Demodulator IRT-2000 HBO, etc PBS PowerVu IRD C100 Continuum Encoder LOCAL SD CONTENT ReceptionManagementSubscriberTransmission

7. DVT Program Reception Digital Terrestrial Broadcast is not just HD May be SD or HD transmission May alternate between SD and HD based on time or program event Requires an ATSC demodulator with ASI output HD reception is not just via terrestrial digital broadcast Content may be locally encoded Content may be delivered via Satellite Requires a satellite decoder with ASI output

8. DTV Program Reception… …Alternating HD and SD transmission Some programs alternate between one HD and several SD services Allocate HD and SD programs at all time How to handle the switch at the HE? Adjust program lineup based on time schedule Let system auto switch based on incoming bit- rates Black screen when program not there, may waste b/w Some program are event based and time of switch can not be predetermined Appears to be the best solution, but harder to implement HD SD1SD2SD3SD4

9. Program Management… …Multiplexing of HD programs HD typically uses 13 to 19.4 Mbps vs 3 to 5 Mbps for SD programs (HD transmission in VBR may go as high as 20 or 21Mbps for short periods of time) For Efficient use of cable plant b/w Multiplex 2 HD programs into 256 QAM or Top of an HD program with some SD programs 256 QAM = 38.8Mb/s HD Multiple SD or one HD 19.4 Overhead 19.4

10. Program Management… …Transrating of HD transcoding, transrating, rate reducing, rate shaping All refer to bit rate reduction of the program May allow 3 or even 4 HD programs to fit through a 256QAM But, lower bit rate = lower quality Program providers generally do not want HD programs further rate reduced at the Headend Need to consider subscriber reaction to lower video quality

11. Program Management… …PSIP information What is PSIP ? Program System Information Protocol (ATSC defined) PSIP contains the program information (ex. Program Name, Number, EPG, etc.) PSIP Management: 3 rd party PSIP management systems are available PSIP Management System coordinates and consolidates PSIP information from different program streams

12. Transmission … …Bandwidth Management HD takes a lot of bandwidth (equivalent to 3 - 5 typical SD programs) Many HE plants are bandwidth restrained Solutions 1.Is there spare capacity…Optimize first!!! 2.Is it possible to move from 64 to 256 QAMs 3.Move Analog Programs to Digital or 4.Upgrade Plant

13. Bandwidth Management… …Creating Room for HD or VOD Programs Some Cable Plants have b/w available to add HD or VOD – Some need to make room!!! AnalogDigital 550750 Upgrade plant to higher b/w - expensive ($15 to $20 K per mile) Aggressively convert more program from analog to digital tier – may need to subsidize the set top boxes Option 1 Option 2 The option that is more cost effective is a function of plant size, and number of subscribers Ie. Subscriber Density

14. Conceptual models evolution of 550MHz HFC systems to HDTV carriage Analog “Must Carry”Extended Analog Number of 6 MHz channels per Node (or Optical Rx) Digital TierVODHSD Analog “Must Carry”Extended AnalogDigital TierVODHSDHDTV Analog “Must Carry”Extended AnalogDigital TierVODHSDHDTV 50 ch 200 ch 46 ch 216 ch 35 ch 246 ch 250 channels 262 channels 281 channels 50 VOD streams 500 VOD users (10:1) 27 Mbps (1.5 b/Hz) 675 data users (25:1) Nodes can be fragmented if more needed 6 Ch. 26 Ch. HDTV doesn’t necessarily mean an upgrade to 750MHz An orderly analog to digital transition will enable the bandwidth at the same time that increases digital penetration: the digital tier will become the new extended basic tier (or likely will be segmented) PPV = 15% of basic subs – replace with VOD Premium = 30%-40% penetration (almost perfect overlap with digital footprint)

15. Bandwidth Management… …Moving more programs to Digital Tier Headend Encode additional programs for Digital Tier Need: Broadcast picture quality at low bit rates Cost effective encoders Subscriber Implications With movement of more channels to digital tier, may need to subsidize set-top boxes to provide churn of analog subscribers

16. In Conclusion… HD is finally here due to regulation, but consumers are latching on and it’s becoming market driven HD ready solutions are available Plant upgrades are not always necessary to add additional content