Is this why H.264 got removed from TV Pack?

I can't imagine this would be the reason. Microsoft needs to support _today's_ standards first and foremost (i.e. the existing ATSC/H.264 formats) and then ensure they have a clear upgrade path to replace, update codecs, etc. to _whatever_ (i.e. any potential new ATSC/H.264 formats) the future may hold. The same goes for HDTV manufacturers (which have built in/firmware support for DTV standards), etc.

Microsoft actually has it much simpler, because their "space" has an implied software upgrade procedure (i.e. Microsoft/Windows update system). The HDTV and digital converter box manufacturers have no standard way (if any) to upgrade their software.

If I read the article correctly, they are proposing new ATSC formats (it is not clear what impact this would have on H.264). Also, there is no way the DTV broadcast format is going to change overnight. This type of change would take many, many years (i.e. decades) to implement and would require transition periods, etc. The reason for this is that any DTV standards changes would have a huge impact on every HDTV, digital tuner, digital converter box, etc. Since most of this equipment is brand new (esp. DTV converter boxes), those millions of HDTV, digital tuner, and DTV converters that have been recently purchased, won't be replaced for a very long time.

Since a digital tuner can pull down ANY dtv signal (the dtv processor) will down converted to, at least, your television's highest resolution. My guess all this dtv mess requires microsoft to have a license. At this point, or more correctly in the past, microsoft probably wasn't sure exactly what to expect. Now, that a codec has been selected it is a very good chance after february 19, 2009 (we - USA) will probably get QAM support in media center and possibley an included AVC codec. I personally don't expect an update to include an AVC codec (partly because microsoft doesn't want to pay for it) but you can count on cyberlink, arcsoft, and the others to have a plug-in ready.

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However, dropping the H264/AVC support in TV Pack has rendered Vista TV Pack obsolete in many regions outside the US...  In New Zealand, Norway, Ireland, Estonia etc. and most other countries adopting DVB-T for digital OTA, H264 is being used for both SD and HD NOW...  Brazil uses H264/AVC with ISDB-T (unlike Japan which uses MPEG2), and almost all European HD broadcasts - whether OTA, satellite or cable are H264.

Whilst the Fiji beta supported HD in the UK - the TV Pack doesn't...  The only reason I've heard is that the H264 implementation was causing too many crashes and wasn't ready for prime-time, which is a bit poor...

Whilst the US is considering adopting AVC (aka H264) for ATSC next generation services - it is unlikely that regular 8VSB will make the switch anytime soon. (H264 support is more relevant in the US for DirecTV support - which isn't yet available)

However - outside the US - H264 is being used NOW for regular SD and HD digital TV, not just Pay TV, and Microsoft's lack of H264 support is a real issue.  If you live in Norway or New Zealand, Microsoft offer no digital TV product at all...