TV's new generation emerges: It's clever, and it may be inevitable. But, asks Larry Black, do people want it, and will it make money?

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FOR almost a generation, it was touted as 'the next generation of television'. For a while, it was virtually synonymous with the race for international high-technology supremacy.

But 20 years and hundreds of millions of yen, dollars and ecu later, high-definition television (HDTV) was beginning to look dangerously like a technocratic time-waster - a marginal improvement in picture quality that few consumers thought was worth the extra cost.

In Japan, the only country where HDTV is on air, sets cost pounds 5,500 each. Yet so feared was Japan's new technology five years ago that the European Community - worried about a collapse of its electronics industry - committed 850m ecu ( pounds 640m) to developing a European alternative.

In America, where subsidies were rejected in favour of a technical competition among manufacturers, broadcasters were so alarmed at having to invest billions simply to hang on to their audience that they tried to sabotage the race.

Yet suddenly a global transition to HDTV now seems more or less inevitable. After the world's manufacturers unexpectedly reached a compromise on a US standard in May, the EC managed to skirt the issue entirely, quickly agreeing instead to a more modest 228m ecu subsidy for television programmers.

Europe is now widely expected to accept the standard set by the US 'grand alliance', which includes communications firms as well as Philips and France's Thomson. The first commercial HDTV broadcast in the US could now be the 1996 Atlanta Olympics.

Not all the hurdles have been vaulted. The receivers to be made by the US consortium will be far cheaper than in Japan. But dollars 2,500 (pounds 1,660) a time is still five times as much as a conventional set. Nor have America's broadcasters necessarily been won over to HDTV, although they will now be given free channels to 'simulcast' programmes during a 15-year transition period. Some experts put the cost of replacing cameras, editing equipment, transmitters and antennae at dollars 15bn to dollars 20bn.

But backers of the US system believe cost comparisons with existing television will ultimately not be the issue. Crucially, the US technology is digital, giving household television not only cinema-quality video and compact-disc sound, but also for the first time making it fully compatible with computers and interactive telecommunications.

Analogue systems, such as the NHK system in Japan and the MAC system originally under consideration in Europe, represent only an incremental advance over conventional television, simply reproducing video information as an 'analagous' picture of the original.

Digital HDTV, on the other hand, transforms video into digital codes, allowing it to be manipulated, giving consumers access to the full promise of multi-media communications. Far from being just boxes to amuse couch potatoes, the new sets could eventually replace telephones, computers, bookshelves, the mailbox, shopping trips, video stores, bank branches and perhaps even newspapers.

Philips and Thomson, which both stood to profit from the original European initiative, are now anxious to establish the US system as the international standard. 'Digital high-definition gives us a chance to harmonise video transmission worldwide,' says Ralph Cerbone, director of advanced television at AT&T, another participant in the grand alliance. 'The compatibility problems that plague all the competing analogue standards tend to disappear in a digital world.'

But reaching a compromise in the US alone was no mean feat - and the final US standard is something of a compromise, accommodating five different types of the 'progressive' scanning required for sharp computer graphics as well as a traditional interlaced display, which portrays motion more smoothly and is favoured by broadcasters.

Under the new standard, every set will have the ability to decode any of six transmission formats, although only televisions with screens larger than 34 inches (86mm) across will be obliged to have computer-quality displays. But rather than wait for the American regulators to pick a clear winner in their competition - with the inevitable appeals and lawsuits from the losers - the three groups decided to bury their differences and speed their product to market.

The system that emerged is still far superior to its rivals, which were designed when most broadcasting experts ridiculed the notion that HDTV could be digitised. Only in 1990, shortly before the US competition deadline, did a US cable equipment manufacturer, General Instrument Corp, come up with a feasible technology. Others followed within months, eventually forcing the only analogue entry, NHK, from the running.

Some involved in the US competition argue that there is some sort of laissez-faire lesson to be drawn from the whole HDTV experience - that by leap-frogging over systems developed with Japanese and European government backing, the Americans have demonstrated the folly of spending public money on high technology.

Britain, in the shape of the former telecommunications minister Edward Leigh, took a similar view, opposing Community spending on HDTV. 'We started with a fairly expensive and ill-directed programme,' his successor, Patrick McLoughlin, said recently, 'but after three years of hard and successful negotiations we now have a programme that is forward-looking and market-led.'

But the consortium that will dominate the new technology - which also includes Zenith, General Instrument, NBC TV, and the Massachusetts Institute of Technology - agrees it is not quite that simple. Their work was built on the shoulders of public-funded research elsewhere, they note. It was, after all, the Federal Communications Corporation that forced them 'to invent to a deadline', having decreed that current television standards would be replaced 'by the best available'.

And before the free-market back-slapping gets too loud, it should not be forgotten that in the early panic over Japan's supposed onslaught, the American Electronics Association tried unsuccessfully to get dollars 1.35bn in development money from Washington.

Perhaps more importantly, say HDTV sceptics on Wall Street, this new technology is still not being driven by consumer demand. Politicians and regulators may not have imposed a technology, but it is telecom equipment makers who view HDTV as a component of the digital revolution, rather than the viewing public, crying out for better resolution from their television screens and volunteering to pay more for the privilege.

HDTV may now be inevitable but whether anyone will make any money from it is another question. 'It's all very nice to talk about high def,' says Patrick Montgomery of Archive Films, a Manhattan film library that stands to be one of the beneficiairies of the multi-media revolution.

His company has been approached by all sorts of communication and computing companies about digitising its archival footage and recordings, but none has yet come up with a system that is affordable. 'It's still very much the pot of gold at the end of the rainbow.'

Additional reporting by Andrew Marshall in Brussels.