Cable Industry

1
Cable Industry

• Richard Craig
• Telecommunications Technologies

2
Chapter 2 Cable Television

• Cable delivers Multichannel high-quality video to
  subscribers for monthly fee.
• Can also provide two-way services for data
  telephony

3
Cable System

• Cable System Consists of
• Headend- point at which all program signals are
  received, assembled processed for transmission
  by the distribution network
• Distribution network- carries the program signal
  through the community, using coaxial or fiber
  optic cables.
• Consist of 2 elements
• Trunk- large cable that leaves the headend,
  travels thru the community, and splits at various
  points, stops at the end of service areas

4
Cable System

• Feeder-smaller cable running along the streets in
  a neighborhood to which subscribers connect.
• Bridge amplifiers-spread throughout trunk to
  maintain strong signal.
• Subscriber Drop-then takes the signal from the
  feeder system to the sbuscribers home, where it
  is picked up by television reciever.
• Entire system makes sure the original signal
  stays strong.

5
Cable Television (Background)

• Original purpose of cable to extend the reach of
  regional broadcast stations
• First deployed in the 40s for rural locations w/
  bad broadcast reception
• Early predecessors include
• Community Antenna Television (CATV)
• Parsons Experiment

6
Cable (Background)

• 1949 Robert Tarlton Developed the Lansford
  System-building a master antenna at the base of
  the Allegheny Mountains to amplify televison
  signals.

7
Nature of Cable

• Changed in the 70s
• with new software in programming
• no longer an extension for broadcast stations
• 75 HBO makes first communications satellite
  network exclusively for cable companies.
• Cable operators now could offer multiple channels
  of unique programming to customers.

8
Nature of Cable

• Ted Turner
• Uplinks signal of his small, independent Atlanta
  television station (then WTCG, now WTBS) to the
  same satellite carrying HBO signal.
• Allowing any cable system distributing HBO to
  distribute his station as well.
• First Superstation
• Inspired creation of new cable channels (CNN,
  MTV, ESPN)

9
Nature of Cable

• Opens up Niche Market Capabilities
• Cable companies needed to upgrade system to offer
  more channels
• Number of available cable channels sparked
  interest in cable from consumers in urban areas
• Growth in urban areas caused of cable
  subscribers to increase drastically

10
Cable Milestone

• 1999 Emmy Awards milestone for Cable Industry
• Cable programs had 134 nominations
• HBO winning more prime-time Emmy awards than
  broadcast networks

11
Early Cable Regulation

• Local regulations
• Local governments claimed authority over cable
  systems. Regulated prices, channel line-ups and
  more.
• Cable Act of 84 removed most of these
  restrictions.
• Late 80s investment poured into industry
• of systems subscribers increased
• Profitability led to consolidation
• Small systems purchased by Multiple System
  Operators(MSOs)

12
Early Cable Regulation

• Price Deregulation
• Led to rapid rise in cable rates
• By early 90s cable experienced significant
  regulatory and competitive problems.
• Complaints from consumers about increasing
  subscription fees.
• Deteriorating services

13
Early Regulation

• Complaints led to the Cable Television Consumer
  Protection Competition Act of 92
• re-regulated cable industry
• imposed price control
• customer service requirements
• Delivered major victory to broadcast television
  stations.
• Allowing them to dictate to local cable systems
  whether they had to be included on cable
  line-up(must carry).
• Or whether the cable operator had to negotiate
  for permission to carry the station
  (retransmission consent)

14
Competitors to Cable

• Experiments with alternative technologies to
  deliver cable
• Wireless Cable
• Multichannel Multi-point Distribution Service
  (MMDS)
• Direct Broadcast Satellite (DBS)
• has experienced significant growth in past
  several years
• Now has local-in-local capabilities
• Video Dial Tone (VDT)
• Competition Act required cable program networks
  to sell their services to competitors

15
Cable Expands

• Bandwidth upgrades begin in the 90s
• went from coax to Hybrid Fiber/Coax (HFC)
• optical fiber backbones deliver greater bandwidth
  better signals to feeder networks the nodes
  in local neighborhoods
• Two-way interactive capacity also engineered into
  new systems.

16
New Cable Service

• Tested cable-delivered telephony
• Encountered problems
• uninterrupted power to cable telephony systems
  when electrical outages occurred
• needed to preserve for 911 and emergency
  services
• Plus consumer acceptance was low.
• Pilot studies suggested telephony could be
  delivered
• State federal regulators slow to grant approval
• Cable operators slow to make huge investment

17
New Cable Services

• Broadband
• Explosion of internet shifted calbe companies
  interest from telephony to data.
• Driven by consumer demand for faster Internet
  service, to accommodate graphics and video.
• Developed data transmission capability w/ HFC
• Broadband link that provides much more speed than
  telephone lines.
• Offers downlink data rates of up to 10 Mb/s,
  compared to 28.8Kb/s of telephone

18
New Cable Service

• Cable companies also began to offer satellite
  delivered digital audio services in the late
  90s.
• providing subscribers with high-quality music
  channels for home stereo.

19
TC Act of 96

• Developed to encourage competition among
  Telecommunications Industry
• Deregulated cable rates again
• Prescribed conditions in which competitors could
  begin to enter the video distribution business
  freed cable companies to deploy telephony, data
  and other services.
• MSOs were interested in telephony.
• Became apparent other competitors such as
  resellers could enter market quicker with less
  investment, compared to huge capital cost of
  cable entrance.

20
Digital Conversion

• Also in 96 FCC authorizes deployment of a
  digital over-the-air television service in the
  U.S.
• Projected date of 2006 for the retirement of
  analog

21
Digital Conversion

• Major Barriers to overcome for digital conversion
• Have to address process of converting signals
  from one format to the other,
• or cable systems converting to a different
  digital modulation standard
• Agreement will need to be made between
  broadcasters cable companies whether the cable
  company will transmit a broadcasters digital
  signal, analog signal or both.

22
Digital Conversion

• Cable argues that if they make room for two
  channels per broadcaster they will have to drop
  carriage of existing channels
• Claim that such a demand constitutes an illegal
  takings

23
Current Status of Cable

• By year 2000cable reached into approximately 70
  of American HHs
• Distributing an average of 57 channels
• approximately 600,000 residential subscribers to
  cable telephony services and 1.5 mil. with data
  services using cable modems.
• Problem with data deployment is in the complexity
  and cost of installing cable modems.

24
Current Status of Cable

• Most cable systems owned by MSOs
• Traditional cable companies disappearing as large
  telecom. companies are purchasing them for
  broadband network access.
• Acquistions tend to produce higher stock prices
  for the companies.
• Yet have raised anti-competitive concerns amongst
  congress and regulatory agencies.

25
Future of Cable

• Cable will continue to dominate residential video
  delivery.
• May diminish a little with growth of DBS
• And inability to convert to digital could worsen
  the churn of subscribers
• Cable telephony will continue to grow
• will be reliable and cost less than traditional
  wired and wireless telephony services
• wired telephony will continue to be viable.

26
Future of Cable

• Cable has taken lead in delivering high-speed
  online data services
• greatly due to deployment of broadband network
• some cable companies plan to offer their cable
  modem customers open access to there choice of
  competing ISPs, using their systems.
• Digital Subscribe Line(DSL) service being offered
  by some LECs, competition to cable modem.
• Combat competition w/ services at an attractive
  price and point-to-point data network services
  to businesses

27
Digital is Crucial

• Currently cable is major residential broadband
  delivery system in the U.S. in order to maintain
  success must make conversion to digital. Offering
  services at prices below competitors, and
  continue to be a reliable telecommunications
  provider.