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By Tom Butts, Managing Editor

The past 12 months have certainly been eventful for digital television, from an historic merger for new media (AOL/Time Warner) to an equally historic proposal to break up a new media company (Microsoft) to FCC threats over spectrum use to continuation in fighting over the DTV standard and speculation over the future of Internet broadcasting. As the new century opens up, various sectors of the industry find themselves much like they did at the end of the old century – fractured and more protective than ever of their turf.

The year begins with a bang
The year started out on a positive note for fans of the "new" economy – the massive AOL/Time Warner merger, which represented a turning point in the growing influence of a connected wired and wireless world of on-demand information and entertainment. For the optimists it meant a new medium which, by its sheer size, would "revolutionize" the information society, encouraging the growth of broadband into the home.

Opponents to the deal, however fear monopolistic control over access to entertainment with the combined conglomerate's range of interests from cable to broadcast and the Web. With certain concessions to pro-competitive advocates, it looks like the merger will be signed sealed and delivered in the new year. While the deal was historic in its financial status, the merger also finally created an opportunity to push the Internet issue in front of the policymakers and the decisions made by regulators over this merger will serve as models for handling similar cases in the future.

But while the government's continuing oversight of the merger will create a wealth of new policy issues towards broadband and an ever-growing choice of mediums, the market will be the final arbiter of the success of AOL/Time Warner. And at beginning of 2001, that's not the most comforting thought.

Satellite and cable remain strong
For cable and satellite, 2000 was marked by steady and encouraging growth in broadband deployments with digital cable leading the way. The industry invested more than $12 billion in upgrades to digital cable while the increasing market growth among middleware developers such as Wink, Liberate, ACTV and OpenTV provided a positive outlook for a growing array of interactive services to the home entertainment center. The outlook for a major competitor, Microsoft and its interactive platform Microsoft TV is mixed, amid delayed deployments but promising field trials in Europe.

Satellite companies welcomed the new year with a long-awaited present – local channels for their subscribers. Although there is scant evidence that the new "local into local" services had any effect on subscription levels, the option is sure to bolster the industry as more local channels make their way further down the pipeline. Whether broadcasters will be able to force the satellite industry to carry all local channels (the so-called "must carry" issue) was still in question as the year closed.

Nevertheless, both cable and satellite ended the year stronger than ever, with DBS companies adding three million new subscribers for a total of just over 15 million in an industry that's only six years old. As for digital cable, an estimated nine million US cable viewers were signed up by the end of 2000 with an estimated 81% of the homes now capable of receiving the service.

Holding pattern for DTV
As for US broadcasters, DTV remained stillborn in 2000. Continuing battles over lack of programming, standards, compatibility and must carry rules showed little change during 2000. While broadcasters did a respectable job of meeting on air digital deadlines, very few, if any of the public were watching. Sales of DTV sets showed some progress, with the Consumer Electronics Association estimating that about 600,000 would be sold by the end of the year, but even association officials admitted that most of the sets (with much fewer decoders sold) were being used for something other than HDTV.

Speaking of HDTV, networks continued to dole out meager helpings of high definition programming with little effect. The year 2000 will probably be best remembered as the year that the industry searched out alternative markets for HDTV, from continuing increased interest over 24p (including the debut of NBC's "Titus," the first primetime network program to be shot in the new format) to digital cinema to the debut of little-known Enterprise Broadcasting Corporation, which wants to introduce the concept of "broadcast cinema" to malls around the country.

Unfortunately, though for broadcasters, 2000 marked a holding pattern for DTV. The continuing debate over modulation standards polarized the industry even more during the year, with the high point coming during a summer Congressional hearing over the issue. The event provided a sounding board for both sides as well as an opportunity for Congress to clarify its position on DTV – although not officially mandated, Congressional leaders reiterated their stance that HDTV must be part of the equation.

This left many in the broadcast industry mulling over the fate of another nascent technology slowly taking shape – data broadcasting. The initial flurry of interest over start ups such as Geocast, Wavexpress, iBlast and the Broadcasters Digital Cooperative turned to concerns over whether policymakers would allow enough flexibility over the use of the spectrum. Geocast's October alliance with satellite broadcaster EchoStar only fanned the flames of doubt over whether terrestrial digital broadcasting was the preferred carrier.

As 2001 dawns, convergence among the various carriers of digital technology, from cable to satellite to broadcast to the Internet is precarious at best. Events of the past year illustrate that despite proclamations of a new era of multimedia offerings spurred by new technology and broadband, DTV providers remain islands in a "digital sea."

Quote of the year – "If you can't count the units in millions, don't even count – otherwise it's just wasted breath." – Matt Peterson, president of post production research firm Scenic Wonders, commenting on the sales of DTV sets in the US.