The billion-dollar assumption by cable, satellite and now telco providers is that customers want hundreds of digital channels. But what if consumers just want a few more channels than what is currently offered through their antennas? Those customers are the ones that U.S. Digital Television has drawn a bull’s eye on with its "over the air" terrestrial digital subscription TV service. Last month, USDTV announced it was deploying its service, which costs $19.95 a month, in the Dallas/Fort Worth area as well as re-launching in Salt Lake City, Albuquerque and Las Vegas, the last three of which were pilot launches last year. "The two primary targets for this service are the 21 million antenna-only homes that aren’t using cable or satellite," said Steve Lindsley, the CEO of USDTV. "Many of those homes can utilize their existing antennas for our service, although it does require a set-top box similar to the satellite experience. They’ll be able to get all of the HDTV channels from the broadcast networks plus 12 of cable’s most popular networks. "The other target is the 45 million expanded basic, or basic analog, cable subscribers who aren’t really inclined to take digital cable, or they’ve tried it and churned out of it for one simple reason; they didn’t see the value. Our research says there are millions of homes that feel like they’re over-served by cable. They don’t like paying for channels that they don’t watch." 4,500 customers so far The USDTV set-top box has a high-definition receiver that allows viewers to receive all of the digital and high-definition programs that are sent by local stations and national broadcasters in each market. Customers with home-theater systems can also use digital surround sound in their homes. Lindsley said there are currently 4,500 subscribers using the service. "On average, we have four to six local stations per market, and those range from being network-affiliated stations to independent channels like ethnic or Christian channels," he said. "Anyone who has a full digital television signal is a potential partner with USDTV." Since USDTV is by definition a pay TV service, the content needs to be encrypted so it’s not free to air. "Our technology is standards-based as it relates to the DTV tuning process, but the CA card is our technology," Lindsley said. "It’s a key management system that we encode at our NOC in Salt Lake City and then send the content via PanAmSat down to the broadcasters in our four markets. They pass it through fully encrypted to the set-top boxes in our marketplaces." "We statistically multiplex our content in Salt Lake City and then send it out in blocks of programming to the broadcasters, and then, depending on the deal we’ve cut for the amount of capacity that we need from the broadcasters, they pass it through accordingly." Lindsley said local ad insertion isn’t a primary focus right now and would require additional equipment, but USDTV has negotiated space for the spots from national broadcasters. More service offerings USDTV plans to roll out VOD and DVR services in the second quarter of next year, as well as its own MPEG-4 solution in the same time frame. Lindsley said due to competitive reasons he couldn’t say what other markets USDTV plans to enter next. "We think there’s a big hole in the market," he said. "We think we’ll get a good share of the homes who want more channels but don’t want to pay $50 a month for channels that they don’t want to watch. If you need 200 channels in your home, then USDTV is not your provider."