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Cable TV
Strong competitor to traditional
TV networks and affiliates
Big growth in cable revenues
1980 - $3 billion business
Today - $30+ billion business
(even with total revenues of broadcast TV)
Cable TV
Channel capacity
Beginnings 12-channels
Mid-1970s 35 channels
1980s 54+ channels
Today 100+ channels
Fiber optics
Digital compression
Cable Programming
Three broad classifications
Basic Cable Services
Pay Services
Specialty Services
Basic Cable
Available for lowest subscription
rate
Two types of basic services
Local & regional broadcasts
Advertiser-support cable services
Basic Cable
Local/regional broadcast signals
Must carry rules
Cable system "required"
to carry local stations
Must carry rules declared
unconstitutional in 1985
Retransmission consent
Result of local stations seeking
compensation for cable system’s carriage of their signals
Broadcasters had to choose Must
carry or retransmission consent
Basic Cable
Must carry
Cable company required to air
local TV station, but station gets no $$
Retransmission consent
Negotiated between local
broadcasters and cable company
Station gets some $$ for allowing
cable system to carry their signal
Basic Cable
Many major networks chose to let
cable system carry signals for free, but stations got more channel space for new services,
like news channels
Local and regional broadcast
channels remain the backbone of basic cable programming
Advertiser-supported services
CNN, Headline News, TNT
BET, A&E, TNN, Nickelodeon,
Weather Channel, MTV
These are cable networks
supported by national advertising
Also allow time for local cable
systems to air their own advertising spots
Pay Services
Popular in 1970s (movies, sports,
specials)
Must pay additional fee
HBO is the leader (30 million
house-holds) (owned by Time-Warner-Cinemax too)
Showtime and Movie Channel
competitors (owned by Viacom)
Regional sports are popular
MSG Network, Fox Sports Chicago
Specialty Services
Regional news channels
Electronic program guides (EPGs)
Local governmental channels
Shopping channels
Music channels (juke-box-style)
Also trying to provide Internet
access and local telephone service
Trail of Tiers
Tiering is process of packaging
cable services
Majority of revenue is provided
by basic subscribers
Profitability in cable is based
on # of homes that upgrade to higher tier
Trail of Tiers
Homes passed (HP) -Could
subscribe (97 million homes passed by cable)
Cable households
Subscribe to cable
Basic penetration is ratio of
subscribers to HPs
Pass 100 homes, 85 have cable,
then basic penetration is 85%
Trail of Tiers
Pay households
Pay additional fees for services
like HBO/Showtime
Multipay households
Subscribe to more than one pay
service
Pay largest cable bills
($75+/month)
Trail of Tiers
Pay-per-view
Requires special technology
Need addressable converters (send
program to your home only)
Multievent PPV
Impulse PPV
Buy lots of events when you feel
like watching them (boxing)
Cable
Who licenses cable?
Cable & Local Gov’t
No content regulation
FCC sets rates
Cable Co. pays city 5% fee
Alternatives to Cable
Satellites
SMATV: Private Cable
Wireless Cable
Direct Broadcast Satellite
Major Players: USSB/DirecTV
Requires mini-satellite receiver
(compared to TVRO-big dish)
Use of satellite technology
alleviates need to "wire" an area for service
Potentially every household has
access to DBS service
Cable serves only those homes
that are "wired"
Wireless Cable (MMDS)
Multi-channel multipoint
distribution services--using high operating frequencies (2000 MHz to 2700 MHz) via
straight-line microwaves
First residential test, 1981 Utah
Cable Act of 1992 gave MMDS
operators equal access to programs
SMATV: Private Cable
Satellite master-antenna
television
Rose rapidly in the 1980s
Typically find service in
apartment complexes
Offer lower rates than cable
Growth has slowed
Lawsuits by cable
industry-private cable violated regular cable’s rights to provide service in
franchise area
Scrambling
© B.L. Yates 2000
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