Last month, I detailed the efforts of Qualcomm to get its terrestrial pay-TV service (FLO) ‘off the schneid.’ The $9/month subscription service, which broadcasts nationally on UHF channels 55 and 56, delivers a package of ten cable channels to a $250 hand-held receiver and is now being offered in Best Buy.

Now, another layer is entering the fray. Sezmi has announced its lower-cost alternative to cable TV channel packages is up and running in the Los Angeles market, and that the Sezmi receiver/DVR package can be purchased for $299, or rented on a monthly basis.

Sezmi’s subscription plan, which is awfully similar to the one the now-defunct USDTV offered several years ago, provides viewers with local terrestrial broadcast TV channels (something anyone can get for free with an antenna and converter box or a new TV), plus select cable networks (Bravo, TBS, USA, MTV, CNN, and Comedy Central to name a few, although ESPN isn’t in the mix) and a few Internet video channels (YouTube, Crackle, and others).

The Sezmi package includes a 1 TB capacity DVR with uniquely-tailored program guides for every member of the house who wants one. It can record two channels at once, like TiVo’s HD-series DVRs. And Sezmi also offers an online video-on-demand service, downloading content to the DVR for $1.99 per title.

How much do you pay for all this? Well, the Select service costs you $4.99 per month, and gives you local Over The Air channels, SD and HD. (And as I just pointed out, you can get those for free anyway with an antenna.) You can also access Sezmi’s broadband download service for video on demand.

Want those cable networks? The package price climbs to $19.99 per month for Sezmi Select Plus. But there’s no telling how many of those cable channels you’ll actually be able to watch in HD.

Why? Because of the devil in the details. Sezmi’s business model depends on local broadcaster’s willingness to lease part of their bitstream to carry the cable TV channels. Terrestrial DTV broadcasters use MPEG2 encoding exclusively, and the maximum bit stream any broadcaster can transmit is 19.39 Mb/s.

With MPEG2 encoding, you need at least 3 Mb/s of bits to show an SDTV program with acceptable quality. And it’s been shown pretty conclusively that 720p HD needs at least 12-14 Mbps to look acceptable, while 1080i HD programs suffer if they start dropping below 15 Mbps. Where will Sezmi find that kind of bandwidth?

(If you want to see just how bad HD can look when overcompressed, watch ABC’s LivingWell HD service on the second minor channel of any ABC Owned & Operated (O&O) station, where you can witness 720p HD strangled to death at 6 to 8 Mbps. Yecchh!)

Sezmi can pretty much forget leasing bits from any network O&O station. That leaves quite a few independent stations with bits to spare (possibly), but those might amount to one or two standard-definition channels per station. Maybe that will work out fine in the Los Angeles market, which has upwards of 20 DTV stations, but it’s going to be tough sledding in other TV markets with fewer terrestrial broadcasters.

At the recent HPA Technology Retreat, one attendee from the Midwest told me Sezmi had approached their PBS DTV station about leasing bits, but wanted a ten-year exclusive deal, something the station frowned upon. And I suspect that station’s reaction will be quite commonplace across the country, what with the impending launch of the ATSC MH mobile DTV standard and broadcasters’ interest in it as a secondary revenue stream.

The FCC isn’t going to make this any easier. According to a Washington source, FCC Chairman Julius Genachowski is going to propose in mid-March a voluntary auction of UHF TV spectrum by broadcasters, with those auctioned channels to be put to future use as part of a national wireless broadband service. His plan will call for ‘clearing’ additional UHF spectrum for broadband, say channels 46 - 51, for example.

If true, that’s not good news for Sezmi. If some broadcasters who are simply ‘hanging on’ in a touch economy find that auctioning off their channel and shutting down makes more sense financially, that’s one fewer potential outlet for the Sezmi service in a given market. In which case, Sezmi — which has raised nearly $80M in venture capital — might be better off installing and operating two or three of their own transmitters in each market, just as FLO does.

Don’t get me wrong. I’m not down on Sezmi’s idea. Giving consumers more choice in cable TV channels while slashing their cable bills is always a good thing.

But I just don’t see how the service can be implemented nationally while providing both a wide range of cable channels and HD service. The infrastructure isn’t there, and the bandwidth and bit rate numbers just don’t add up, no matter what anyone "Sez"…