So remarked a high-society photographer in London circa 1925, when radio was king and television merely a flickering experiment in an electronics lab. Nearly three-quarters of a century later, the guy would be positively speechless about the advent of high-definition digital television, U.S. broadcasting's biggest and perhaps most uncertain makeover in 50 years, made possible by some ingenious minds in San Diego like the irascible James Tiernan.     A stocky, quick-witted man of 57 with the dress code of a mathematician and the inquisitive mind of one, too, Tiernan may be one of San Diego’s more candid company presidents. Booming laughs frequently punctuate his fast-paced speech. He makes no qualms about his liberal leanings, despite his background as one of the main architects of the Navy's Pershing missile command-and-control system.     "I’m a political liberal, but my view was I'd rather have us in control of (the missiles), where we take all of those lives seriously, rather than the conservatives who didn’t give a damn," says Tiernan, his head snapping back in devilish laughter during an interview just weeks before his company’s state-of-the-art digital compression and transmission equipment would be put to the test during last month's national debut of HDTV in the top 10 TV markets.     Humor seems natural for the head of Tiernan Communications these days, as yet another disciple of the Linkabit crowd watches the digital fruits of his company’s decade of labor finally begin to pay off.

James Tiernan of Tiernan Communications is on the digital television cutting edge.

His company and others in San Diego sit poised to profit as over-the-air broadcasters nationwide begin the government-mandated switch from traditional analog signals to the promising yet daunting frontier of all-digital television by the year 2006.
    The promises are many, particularly for digital television's most touted format, known as high-definition television, or HDTV: wide-screen, crystal-clear pictures likened to a window view, CD-quality sound and the potential for interactivity that threatens the very being of the traditional couch potato with more programs, Internet tie-ins and — gulp! — on-the-spot online shopping. Better still, the signals zoom through the air and are captured by the modern counterpart of an old-fashioned antenna: no need for a special dish or cable. The technology also is hailed as the next best thing to a theatrical experience, which probably explains why the emerging HDTV airwaves will be dominated by Hollywood movies and major sporting events for the foreseeable future. The broadcast networks are counting on HDTV to grab market share back from cable stations.
    And while some surveys suggest that consumers are warming up to the expansive potential of digital TV, it’s still hard for many to grasp the idea that within a decade the televisions sitting in 98 percent of all U.S. households will become obsolete. But for a bustling thicket of San Diego companies that are betting on a digital future, the next few years of transition mean money in the bank.

    Down Digital's Road
    When the big four television networks started down the digital road, it didn’t lead to Silicon Valley. Digital television has its roots firmly planted in San Diego soil, and that’s where the big shots headed. Engineers at one of Tiernan's chief rivals and former employer, General Instrument, probably saved the ba-con of those rather boastful U.S. broadcasters, who started the hubbub about digital television in the late 1980s, claiming it would be the savior of free broadcasting.
    At the time, the Federal Communications Commission appeared ready to turn over a stretch of unused UHF bandwidth to mobile-radio manufacturers for use with two-way radios. Desperate, the National Association of Broadcasters suddenly proclaimed it would bring high-definition television to the nation's viewers but would need two traditional analog channels for each HDTV signal. Japan, already dominant in TV-set manufacturing and decades ahead in the race to rule HDTV, loomed warily in the collective eyes of Congress, which took up the cause as well. Two-way radios lost out, but the FCC required TV broadcasters to give up their analog channels in exchange by 2006.

Tom Lynch, General Instrument transplant, now runs San Diego’s GI division.

While broadcasters figured they'd be looking at a system similar to Japan's bandwidth-hogging analog version, a handful of techno-wizards at General Instrument's San Diego-based satellite technology arm in 1990 raised the stakes with the breakthrough development of a more efficient way to deliver a high-definition image over the air — digital.     It wasn’t long before broadcasters realized they were going to have to put their money where their mouths were. At an estimated $5 million a pop to convert a TV station into a digital workhorse, and with no assurances that they would recoup their investment anytime soon, broadcasters began to tone down the rhetoric.     "The big question was, what’s the compelling reason for HDTV?" says Tom Lynch, transplanted last year from GI's Pennsylvania headquarters to take over as general manager of its San Diego division. "If I’m a broadcaster, do I get more advertising? Not right away. So there was really nobody driving it."     So while GI focused its efforts on getting its compression technology ingrained in the cable and satellite-television markets, Tiernan saw an opportunity to get a jump on the competition in the broadcasting realm. Tiernan Communications first got the networks to stand up and take notice with its digital satellite news-gathering equipment, which industry analysts hailed for its compactness and ruggedness.     CBS brought a truckload of Tiernan's equipment when it covered the Republican National Convention here in 1996.

    "It was the first time any network used digital television for their collecting of news," Tiernan says. "It was absolutely a big deal." Tiernan also adds it was his equipment that made it possible to beam out the first reports from Chechnya when it broke away from Russia.
    For the unveiling of HDTV, Tiernan lobbied hard and fast with the networks, and in October landed multimillion-dollar deals with ABC and NBC, which would use Tiernan equipment to transmit its HDTV broadcasts to its affiliate stations. About the same time, GI announced a similar deal with CBS, Home Box Office, and NBC's San Francisco affiliate, KRON-TV.
    "We’re in a very strong position," Tiernan says in the wake of the landmark deals, which he hopes will translate into lucrative contracts with the hundreds of affiliate stations over the next few years. "When two of the three networks pick you, you've done something right."
    GI's Lynch counters that the battle for business has only begun.
    "CBS went with us for the networks. But the real home run is in the affiliates. That's where all the volume (in sales) is. We’ve met with NBC. Tiernan was selected by NBC because, to their credit, they were about a month ahead of us" in development, the general manager explains. "We would have liked to have won those other deals. But the real business is going to evolve in late '99 and 2000. We believe we’re going to get a big share of the other guys, too."

Sony's first HDTV for the North American market was designed and developed at the Sony Technology Center in Rancho Bernardo. The sets started rolling of the assembly line at Sony de Tijuana Este in Tijuana late last month. Debuting at Dow Stereo/Video and selling for $8,999, the 34-inch wide screen is the industry's first HDTV to use a picture tube instead of a rear projection system. Sony says the set quadruples the apparent picture density of conventional TV broadcasts.

    Lynch adds that GI's pending alliance with Sony Corp. — which dominates TV's so-called "origination" market of high-definition studio cameras and other systems, and last month rolled its first HDTV set off a Tijuana assembly line — will help open doors at network affiliates.
    "Broadcasters are really a new business segment for us," he concedes. "We’re working with Sony on a marketing arrangement where they'll market our encoder, because they have people out there all over the place selling this equipment."
    But the big unknown in all this is just how consumers will take to digital TV — and when. In San Diego — where digital network broadcasts won’t begin until November of next year despite its contribution to the new technology (even HDTV-set manufacturers Sony and Panasonic developed their products at their San Diego facilities) — HDTV's impact could be hampered by its challenging geographical makeup and the region's predominance of cable-TV subscribers. About 70 percent of TV viewers in San Diego get their signal via cable.

"HDTV's not in the foreseeable future," says Larry Fox, digital TV product manager for Cox Communications. Customers, cable industry studies have shown, are more interested in wider channel selection than clearer picture quality. This month, Cox begins to roll out its new digital converter boxes in San Diego County, which will add dozens of new digital video and CD-quality music channels. It will do so through compression technology that allows up to 12 digital channels to be carried in the space of a single analog channel — as well as viewed on today’s conventional television.     In addition, the FCC has yet to rule on the so-called "must carry" rule for digital TV, which cable operators contend would force them to sacrifice potentially popular channels to make way for the network's bandwidth-hogging HDTV signals.     "It’s assumed that less than 5 percent of the market will have HDTV for the next year or two," Fox explains. "That being the case, 95 percent of the people want more stuff for the type of TV they have now." Subscribers, he says, "are asking for more choice. So we can’t say, 'Uh, OK, you 95 percent sit over here, and we’re going to just eat up this bandwidth with nice pictures for these folks.' It’s just not practical at the beginning."     Meanwhile, San Diego television stations are gearing up for next year’s local HDTV unveiling. Margie Baldwin, chief engineer at ABC affiliate KGTV-10, says her station's conversion to digital has been in the planning stages for two years. "It’s a massive undertaking with no immediate recouping of the money," she explains, adding that the McGraw-Hill-owned station plans to spend $2.5 million next year in digital equipment and antenna reconfiguration just to be able to receive and transmit ABC's HDTV signal.

Larry Fox, digital TV product manager for Cox Communications, says HDTV is not immediate.

    Development of local HDTV content is still years away. In fact, one of the hottest topics of discussion these days is the trouble synchronizing digital audio and video. "Why do you think CBS and ABC are going to start with their movies as their digital programming? Well, because it’s already pre-produced, and they just convert it" to digital, Baldwin says. "That's it. If you’re going to go towards live events like our local news, oh my goodness. The biggest thing that we’re starting to find out in our studio design is timing, you know, lip-syncing. In digital, that’s awful."
    Gerry Kaufhold, principal analyst of digital TV and multimedia for Cahners In-Stat Group, predicts that when the price of an HDTV set drops from its current range of $5,000 to $10,000 to a more affordable $1,200, then digital TV will take off in this country — probably by the year 2004. Meanwhile, he suggests a well-positioned company like Cox, with its fiber-optic network "could probably deliver 600 TV channels without batting an eye if it wanted to."
    And with satellite-broadcasting services like DirectTV and Dish Network expanding their digital menus, the battle will be on for the viewer's favor. "It used to be you went to buy a cup of coffee, and your choices were black or with cream. Now it’s latte, cappuccino, hazelnut, on and on," Kaufhold says. "The same thing's going to happen with electronic media. What do you want and how do you want it?"
    If James Tiernan's bet right, and broadcast HDTV is what consumers want, you can bet he’ll still be laughing . . . all the way to the bank.

    When the first high-definition TV sets in the country went on sale in San Diego in August at Dow Stereo/Video, Allan Farwell was one of the first in line to plunk down the $5,500 for the 56-inch Panasonic set, which was developed at Panasonic's research and development center in San Diego and assembled in Tijuana.
    Even without an HDTV signal to view, the general manager of the Hyatt Regency La Jolla says the TV is already a hit with sports viewers. The TV is situated in Michael's Lounge, the posh hotel's sports bar, and broadcasts a digital signal from a DirectTV satellite dish. The hotel may soon subscribe to St. Louis-based Unity Motion, a new satellite-broadcasting operator that is delivering HDTV programming 24 hours a day.
    "It looks great. I’m really happy with it, no kidding," Farwell reports. "It’s obviously not receiving in high definition yet, but that makes little difference to everybody, I tell you. The quality of the picture, with the added lines of resolution, is outstanding now."
    And the bar's clientele has changed because of the new novelty. "We used to get more nightclub drinking types because it’s pretty upscale," Farwell explains. "But now we get people coming in on weekends just to watch the games."
    The positive reaction from Hyatt customers doesn’t surprise Tom Campbell, an executive and long-time voice of Dow. He points out that an HDTV set can dramatically improve even the analog signal that brings sports and sitcoms into our living rooms.
    "With HDTV, instead of 60 lines interlaced, where only 30 lines at a time appear on the screen, you are seeing the full 60 lines at one given moment," says Campbell.
    Dow has sold "dozens" of the pricey sets — the new Sonys that started rolling off a Tijuana assembly line late last month sell for $8,999 — in the last few months. But the customer profile is different from the typical "early adopter" who always wants the newest technology.
    For example, Campbell reports that when Dow nationally debuted DVD (digital video disc) players, the stores couldn’t keep them on the shelf the first month, then couldn’t sell them for the next two. With HDTV, he says, "this is the first time that mainstream consumers have embraced a new technology. It is because people are seeing the value of these sets today. If I had to sell the set based on HDTV, I couldn’t give it away. But if they buy now they will see better pictures and be ready when HDTV is launched in San Diego next year."