Michael McEwen is president of Canadian Digital Television. Following is an edited version of the speech McEwen delivered at the Canadian Satellite Users Association’s annual conference, held Feb. 1-2 in Toronto.

I want to share some of my observations about the state of the Canadian transition to high definition.

Virtually all U.S. primetime drama and sitcoms are shot electronically, mostly in 1080 24p formats. Sports and special events are increasingly being broadcast in HD. Pay and specialty services have moved to HD.

Up to 2,000 hours a week of HD programming is available to the viewer by one count, and if you think that is a bloated figure, then back it off by 25% and you still have 1,500 hours. Staggering numbers!

While both the U.S. and Canada have had a deficit in tuners and set-top boxes available, this equation is rapidly changing with new FCC rules.

By 2007, there is projected to be more than 67 million HDTV sets in U.S. homes. A minimum of 75% of these sets will have over-the-air tuners and open cable technology built into them. Combine this with DTH efforts and commercial and cable set-top boxes and you are beginning to close on the 85% of U.S. households with DTV sets which the FCC set as the threshold for analog shutdown. There is active consideration of analog shutdown in the U.S. sometime in 2009.

In any viewer survey, those who have been exposed to HDTV never – and I mean never – want to return to standard television programming.

My point is simply put: we haven’t done a very timely job with our digital HD transition in Canada. We don’t have our core businesses in any kind of shape to take advantage of the new digital devices and the myriad of platforms that will characterize digitally repurposed and distributed content.

While I acknowledge and appreciate the Canadian efforts to date, I firmly believe far more needs to be done.

We have a paucity of Canadian HD content and we have no coherent national strategy to increase HD content.

We need a national strategy to get this on the right track. Canadian services in HD without prominent Canadian product are not acceptable. I recognize that efforts are being made to create Canadian HD content, but according to Canadian Television Fund figures, these efforts to date are very modest indeed.

We have some DTV transmitters on air in Toronto and a few coming on stream. We have a couple planned for Montreal and one or two planned for Vancouver. Pay and specialty services are providing four HD services in the English market.

While efforts are being made to broadcast more HD programming, the number of HD hours available from most of the current HD specialty services remains disappointingly low. In some cases, these HD services have a cost premium attached to them and that creates a viewer expectation of HDTV all the time, and when they don’t get it they let the distributor and broadcaster know.

You’ll recall that I was, and in fact remain, a strong proponent of a strategy that the Canadian broadcast industry adopted over six years ago, following the U.S. DTV transition by two years. We declared the U.S. operational more than two years ago and yet we find ourselves at least five years behind them by any objective measure.

We are commissioning and producing very little Canadian HD product. We have yet to commit to building our transmitter system out to at least Canada’s 15 to 20 largest cities and then develop a strategy for smaller communities. We are still struggling with digital migration issues, and the whole question of moving pay and specialty services to HD formats which could provide abundant content for viewers while efficiently utilizing bandwidth is yet to be settled.

We have challenges still to resolve in the distribution community, particularly capacity issues and meeting subscriber expectations.

Apparently as an industry we aren’t worried about this present state of affairs and the down-the-road health of our industry. Yet what I see is a U.S. threat to the economic and cultural foundation of Canada’s broadcast industry.

I understand that the broadcast industry will not be motivated unless they see eyeballs disappearing to U.S. services and advertising. But I would argue when that happens, and it will happen if nothing changes, it will be too late. We almost lost the marbles with color TV and we seem to be complacent once again in a far more competitive domestic and North American market.

I believe we are standing at the precipice and looking into the abyss. I am reminded by what a well-respected colleague once said to me. He said we should never get ahead of what the consumer needs or wants. I agree with him, but we have got to be able to deliver what they want and need when they want and need it.

The U.S. HDTV machine is about up to full speed, Canadian distributors are promoting HDTV and carrying as many U.S. HD services as possible (as well as those Canadian services that are available), the consumer electronics industry is pushing all the new HDTV and related devices, and we are educating the Canadian consumer about HD benefits.

All this HD buzz will translate into consumer demand, which will have a tremendous impact when it hits.

So, doctor, what is the prescription? It’s never easy to get the right dosage, but here are a few thoughts:

1. The Canadian production community needs to recognize that they are in HD deficit. It is in their interest to produce HD programming both for shelf life and foreign markets. Education, information, best practices and workshops must be embraced.

2. Broadcasters need to recognize there are some serious challenges to their basic business model and must move quickly to develop strategies for HD infrastructure deployment.

3. Funding agencies along with Canadian Heritage must consider an HD incentive for funding independent production.

4. The federal government needs to bring in enhanced tax breaks for private broadcasters which address the extra investment needed for facilities and transmission for HD services.

At the same time, the CBC will need a special one-time capital allocation to build out digital HD services.

5. The CRTC needs a coherent digital migration strategy, where current analog players can make the migration in a secure environment.

6. Finally, Canada should not be giving up any of our orbital slots to foreign [satellites]. We will need that capacity for distribution and backhauls.

Finally, we need to remember that Canada’s marketplace approach to the transition is in fact Canadian not American. We have a different market and a different economic and cultural imperative than our U.S. cousins. This requires made-in-Canada solutions that suit our practice and experience. We don’t need artificial deadlines or strict regulation, but we do need some creative solutions that help prime the pump.

-www.cdtv.ca

-csua.ca