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B.Millar
You are mostly correct, however your first statement about large TV's not looking good with direct analog cable is wrong. Technically the picture when watching analog cable channels will look better with the cable directly into the TV. This is because there is less "stuff" in the signal path - meaning less processing going on. And current flat panel displays have pretty good processing built into them. There isn't that much of a difference, but it is there. When I first got my SD cable box connected with S-Video - I compared the picture quality between analog cable directly into the tv, or though the cable box. There was a noticeably better looking picture with the cable directly into the tv. However, now that I have a HD cable box connected with component video cables, there is no difference between the two.
To the OP:
you can get an antenna for over the air HD - this will be for the local networks only (abc, cbs, nbc, etc.) Reception ability will vary depending on how close to the transmitters you live. If you go this route, look for a TV that has dual RF inputs on the back - not all of them have this. One RF input will be for analog cable, the other one will be for the HD antenna. This way you can use the remote to switch back and forth between them.
Also, and better yet, if you still subscribe to analog cable, you can receive local network HD channels directly to the TV through the cable line if your TV has a QAM tuner in it.
Most new flat panel TV's now have 3 tuners in them (make sure the one you're looking at does in fact have all 3) - NTSC (the normal analog over the air channels (going away in 2009) and analog cable CH 2-125), ATSC (the new digitally transmitted over the air channels), and QAM (the cable company's digital format).
Finding the QAM channels can sometimes be a little tricky (my 42" LG LCD found them all right away, but the replacement 42" Samsung Plasma couldn't find all the same ones) but if you can find them, you'll get all the local HD channels with out any additional expense.
For instance, in Milwaukee WI, analog ABC is RF 12 OTA & on analog cable. ABC HD is RF 34 and the tv automatically maps it to 12-1. ABC HD through QAM is 109-12.
Ultimatly what I ended up doing was subscribing to digital cable with a cable box/HD DVR. I used to have basic analog cable (no cable boxes) and RoadRunner high speed internet. I paid $98.00/mo for this. Now I have one cable box connected to the plasma - it has a built in HD DVR so that I can record two shows at once when I'm not at home. I also have the lowest digital tv package which includes many more channels than analog, the best of which is Discovery HD. This was the one channel that I really wanted and the main reason I upgraded. I can still watch all the normal 2-125 channels on the rest of my tv's throughout the house. I get all of this for only $12.00 more a month because of a package deal by having two services from Time Warner.
Now this is alot of new technology and language for you to try to learn, but if you have any questions ask here, or check out http://www.avsforum.com This is the saabnet.com equivalent for TVs.
Michael
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