Multichannel video providers have at least cautiously been expecting an uptick in new subscribers as the U.S. NTSC television system is switched off, and the new HDTV-based ATSC system is activated. Though the precise timing of the move is in question, as some in the new Obama administration are pushing for a delay, the shift will come.

 

So far there is but anecdotal evidence of "nevers" (people who "never" have subscribed to a multi-channel TV service before) signing up. What remains to be seen is now significant a bump the digital TV transition provides.

 

Research outfit Centris estimates that there are 33.8 million homes that will be affected by the DTV conversion. These consist of 14.6 million households that use over-the-air television as their primary source of TV reception, and an additional 19.2 million households that have multiple signal connections including pay-TV. 

 

In the latter case, customers have satellite or cable service on a primary outlet or two, but then over-the-air on other sets scattered around the house.

 

Centris estimates some 42 percent, or 6.1 million of the most-affected households will remain over-the-air customers. The issue is the estimated 8.5 million over-the-air households (58 percent) of households located in areas where the change in signal coverage from analog to digital (analog signals carry further) will create signal reception issues.

 

In other words, adding a digital converter box to an analog TV only works when the digital signal is strong enough. And signal contours with digital will be less robust than they were for analog.

 

Cable and other multi-channel TV providers think those customers will drive new subscriptions, as they now will fit the classic profile of a cable customer: someone who buys service because there is no over-the-air signal reception. In other cases, the impending shift might represent enough of a disturbance that some customers will rethink their need or desire for subscription TV. Life changes, such as moving to a new house, frequently are drivers of service provider churn. The digital transition might have many users willing to make a relatively big change in their habits.

 

An unlikely, but dark hypothesis might then be that subscription video net additions in the fourth quarter, which have been generally robust, across the entire range of providers in the North American markets, have been propped up by the digital TV conversion, which is hiding attrition of other customers deserting providers because of the recession.

 

That seems unlikely, but we won't know for another quarter or so.