Cable and Other Multichannel Services

1. 9 Cable and Other Multichannel Services

2. Cable and Other Multichannel Services • A Short History of Cable and Other Multichannel Services • Cable Today and Other Multichannel Services • Trends and Convergence in Cable and Other Multichannel Services • Developing Media Literacy Skills • Chapter Review

3. A Short History of Cable and Other Multichannel Services • Cable Reception and Distribution • 65% of all locally televised baseball games are unavailable unless you subscribe to cable, satellite, or some other multichannel service—that is, a fee-based provider of video content (Berkowitz & Joshi, 2002). • Concentration of ownership is an issue in cable with multiple system operators (MSOs), vertical integration, and conglomeration. • The interaction between the telcos (phone companies) and the cable industry promises even more convergence.

4. Cable and Other Multichannel Services • Cable Reception . . . (continued) • 1948 - John Walson of Mahony City, Pennsylvania established a community antenna television (CATV) system. • Milton Jerrold Shapp set up master antennae and connected the sets in surrounding buildings, employing a signal booster he developed, to start master antenna television (MATV). • 1975 - Time, Inc. began distributing the HPB movie channel by satellite, and pay cable was getting into the broadcasters’ audience.

5. A Short History of Cable and Other Multichannel Services • Cable Reception . . . (continued) • Signals are collected from receiving antenna at the headend. • The signals are sent over a super trunk cable to a hub, typically the cable system operation itself, at which they are processed and boosted for distribution. • The cable that leads from the hub into the community is the trunk cable, which divides into feeder cables to access individual neighborhoods or areas. • The line that runs from the feeder to our homes is a drop cable.

6. A Short History of Cable and Other Multichannel Services The Cable Signal—From Source to Home: A typical cable operation collects and distributes content in this manner from headend to homes.

7. A Short History of Cable and Other Multichannel Services • Cable’s Economic Structure • Pass-by rate—the number of homes with the potential to take cable. • Density—the number of households per mile of cable.

8. A Short History of Cable and Other Multichannel Services • Cable’s Economic Structure (continued) • Penetration—the number of homes passed by that cable that actually subscribe. • Increased penetration means more income from basic cable (the “free” channels provided automatically by virtue of subscription) and offers the promise of added income from pay cable, pay-per-view, video-on-demand (VOD), and add-in services such as home security, various forms of data delivery, Internet access, and phone service.

9. A Short History of Cable and Other Multichannel Services • Early Regulation of Cable • 1965 - the FCC expanded its regulatory control over cable. • Local carriage rules required cable systems to carry every station within a 60-mile radius. • 1969 - the FCC ruled that operators make available channels, equipment, and studios for locally originated programming. • Public access channels—cable channels reserved on a first-come, first-served, nondiscriminatory basis for use by groups or individuals who maintain editorial control of their programming.

10. A Short History of Cable and Other Multichannel Services • Early Regulation of Cable (continued) • The 1972 Cable Television Report and Order • Systems had to submit to local community franchising authority control over their rates. • They were forbidden from importing all distant network and syndicated programming. • Telephone companies, local broadcasters, and television networks were forbidden to own cable operations. • Pay channels could show only one feature film per week (which had to be more than 2 but less than 10 years old).

11. A Short History of Cable and Other Multichannel Services • Early Regulation of Cable (continued) • The Cable Franchise Policy and Communications Act of 1984 • Limited the municipal franchising authorities’ control over rates and access programming andmade it a federal offense to steal cable signals.

12. A Short History of Cable and Other Multichannel Services Cable Systems and Subscribers Sources: National Cable Television Association, 1999; Paul Kagan Associates; Marketing News Media, March 16, 1998; Cable TV Investor, April 14, 1998; Broadcasting & Cable Yearbook, 1999; Broadcasting & Cable Yearbook, 2000: NCTA.com, 2002

13. Cable Today • Programming • Tiers—groupings of channels made available to subscribers at varying prices. • The Cable Television Consumer Protection and Competition Act of 1992 requires operators to offer a truly basic service composed of the broadcast stations in their area and their access channels. • Expanded basic cable—composed primarily of local broadcast stations and services with broad appeal such as TBS, TNT, and the USA Network, and the Family Channel.

14. Cable Today • Programming • Pay Cable • Addressable technology—enables pay services to be switched on and off at the hub • Interdiction technology—descrambles the signal outside the viewer’s home, doing away with the set-top converter and even enabling operators to sell pay services to homes that are not already basic cable subscribers. • Keeping Subscribers • Churn, or turnover in subscribership whereby new subscriptions are offset by cancellations, is damaging to a system’s financial well-being, and it is common.

15. Cable Today Top 20 Cable Networks, 2002 Source:NCTA, 2002b

16. Other Multichannel Services • Satellite master antenna (SMATV) • Operates as MATV, but the signals are captured by a satellite dish and then distributed throughout the structure. • Microwave multidistribution systems (MMDS) • Employ a home microwave receiver to collect signals and then pipe them through out the house via internal wiring.

17. Other Multichannel Services • DBS (Direct Broadcast Satellite) • The multichannel system—other than cable—used by most viewers.

18. Other Multichannel Services Percentage of U.S. television homes with multi-channel systems, 2001. Source: Television Bureau of Advertising, 2002

19. Trends and Convergence in Cable and Other Multichannel Services • Digital cable television—the delivery of digital images and other information to subscribers’ homes. • Interactive Cable • Digital compression—“squeezes” signals to permit multiple signals to be carried over one channel. • Interactive cable—the ability of subscribers to talk back to the system operator.

20. Trends and Convergence in Cable and Other Multichannel Services • Concentration (continued) • Five MSOs control 80% of all American cable households. • Vertical integration—wherein a company holds a financial interest in more than one aspect of the industry—production, distribution (the satellite service), and exhibition (local franchises). • Conglomeration • The ownership of large MSOs by even larger companies.

21. Trends and Convergence in Cable and Other Multichannel Services The operation of a fiber optic cable.

22. Trends and Convergence in Cable and Other Multichannel Services Top 10 Cable MSOs, 2002. Source: NCTA, 2002b

23. Trends and Convergence in Cable and Other Multichannel Services • Phone-Over-Cable and Bundling • The Telecommunications Act of 1996 made it legal for regional Bell operating companies (BOCs, often called “Baby Bells”) to enter the cable television business. • Cable can become a one-stop communication provider: television, VOD, audio, high-speed Internet access, long-distance and local phone service, multiple phone lines, and fax. This is called bundling.

24. Trends and Convergence in Cable and Other Multichannel Services The Value of a Subscriber in a Bundled Cable World, 2002 High-speed cable service brings multiple communication services to subscribers. It is the promise of millions of homes buying multiple services that make cable franchises so attractive to telcos and others wanting to deliver bundled services. Here is one estimate (Higgins, 1999) of how much a typical cable home would have spent each month in 2002 if bundled.

25. Developing Media Literacy Skills • Understanding Cable Pricing • The media literate cable viewer needs to understand how quickly the bill for cable services can grow and just what value is received for what is now an average monthly basic cable price of $31.58 (NCTA, 2002b). • The media literate viewer, who understands that the average cable user watches only about six of the scores of available channels, must ask if that increase has produced a commensurate rise in value from the medium.

26. Chapter Review • The visions of two Pennsylvanians, John Walson and Milton Shapp, eventually became the mass communication giant we now call cable television. • The growth and development of cable has been shaped by often conflicting government regulation. • There are multichannel services other than cable, including Satellite master antenna (SMATV, microwave distribution systems (MMDS), and DBS.

27. Chapter Review • Digital cable, especially when combined with digital compression, makes possible multiplexing, carrying two or more different signals over the same channel. • Concentration, in the form of MSO’s, vertical integration, and conglomeration, is widespread and controversial in cable and increasingly involves telcos, eager to enter people’s homes over the same wires that deliver video signals.