MPEG-2 is a standard for compression and decompression of video and audio signals for TV. MPEG stands for Motion Picture Experts Group, an organization comprising some 200 to 250 delegates from around the world. The group has been working for several years to develop international standards for digital compression.
Digital compression will make it possible for TV sets to receive several signals on the same channel, vastly increasing the quantity and video/audio quality of programming. MPEG-2 is an extension of MPEG-1, a standard finalized last fall.
Last month, Tele-Communications Inc. said it would delay its planned purchase of 1 million next-generation set-top boxes from General Instrument and others. TCI had planned on deploying the boxes in the first quarter of this year, but now won't until the fourth quarter at the earliest.
The delay was attributed to the fact that MPEG-2 standards weren't finalized yet. But not everyone says MPEG is to blame.
"MPEG's right on the same schedule that it announced publicly a little over a year and a half ago," said Greg Wallace, compression technology manager at 3DO Co. and the lead U.S. delegate to MPEG. "It could be that people didn't think out all of the manufacturing and development infrastructure [necessary] ... so they were pushing to be as optimistic as possible in the schedules they were announcing for their set-top products."
Another MPEG delegate, Baryn Futa, chief operating officer of CableLabs, the cable industry's research & development arm, said set-top box manufacturers have known since August what the MPEG-2 standard will be, but that developing hardware based on it takes time.
General Instrument, for its part, insists it has been operating under a revised schedule for many months and that "market deployment of digital compression is not being slowed by the resolution of any remaining MPEG-2 technical issues."
MPEG delegates say all technical standards for MPEG-2 are set, but what remains to be done may be the toughest task: getting MPEG delegates to sign off on them. Indeed, Mr. Wallace said a strong faction of the U.S. delegation is pushing for an audio standard different from the one MPEG has already agreed on.
In the meantime, others are taking the opportunity to tout their own products.
"You don't have to wait for digital to get interactive," said Michael Ares, VP-marketing at Scientific-Atlanta, another set-top box company. Many transaction-oriented features are possible without full-digital boxes, he said, including ordering movies, requesting more information or responding to choices within ads.
But Mr. Ares predicts a "digital backlash" coming from consumers anxious for interactivity.
"The backlash is, 'Hey, where's my damn interactive? You're telling me this stuff's coming; where is it?"' Mr. Ares said.
For marketers who think a delay in deploying digital boxes means a delay in the interactive superhighway, Brown Bros. Harriman analyst Jay Nelson has this advice:
"You've got to be involved, and it's probably going to be a frustrating process because it's going to take years," he said. "But it is the future."