Dr. Janet McMullen  Fall 2002  MWF 9:00

Updated: 10/03/02  

After the 6th report and order, there were still some areas which did not have television service.  These were called "white areas" because on the map they were white spaces, not covered by shaded or colored coverage areas of assigned stations. While some were rural or sparsely populated areas, some of these white areas were in fairly large cities.  Austin, Texas, the state capital, didn't get television until almost 1960.  Still these people wanted television, and efforts were made to help them get it: 

• Translators:  Allowed in 1960.  These carry the signal of the original station and essentially rebroadcast it.
• Boosters: These were boosting transmitters that helped to fill in blank spots in the coverage area
• Satellite Stations:  These were like "affiliates of affiliates".  They carried the programing of the larger station but might also have some local news.  They were used a great deal in the west where the only major TV station might be miles and miles away.  While the local area couldn't support a full station, it did have need of local news, weather, etc.

All of these extended the coverage of existing stations. 

Rise of Cable Television:

1950: CATV -- what we now call cable-- stands for Community Antenna Television.  It originated in a small community about 60 miles from Philadelphia, Lansford, Pa. The terrain was hilly and that made it very difficult to get a good TV signal from Philly stations.  An appliance store whose owner wanted to sell TVs, decided to put an antenna on the top of nearby hill and run a cable to the TVs in the store.  Customers liked what they saw, wanted to buy the sets, but they also wanted to be hooked up to the hilltop antenna. That's how cable television was begun.  Other entrepreneurs followed, carrying only 5 or six near by channels.  Broadcasters thought it was great because it extended their coverage area and subsequently their ad rates....

Still there were lots of people who had their own antennas and didn't have any problem getting local channels.  They didn't see the need for cable TV, and yet those same people were in the cities and suburbs-- the easiest and most economical customers to reach. So cable had to figure a way to attract those new customers.  The way augmentation -- to increase or augment their service in such a way that it was attractive to new customers. To do this they had to offer things those customers weren't getting over the air with their antennas:

• Increase the number of channels
• Local origination (i.e. suburban news, sports, feature programs like the local little league championship...)
• Special Programs: things not available on broadcast TV or in a different form. HBO offered full-length movies, uncut and without commercials.  WTBS offered Braves games, and other events not available on broadcast.

Augmentation worked, especially after HBO and Turner's super station took off.   Three key things happened that contributed to the successful growth of the cable industry:

• Domestic Satellites: (Domsats) This technological innovation allowed programs to be relayed without dependence upon coaxial cable or telephone lines. Anyone who could afford to get space on a "bird" could begin a cable network....It changed the distribution model in a major way.
• Super Stations: This was a programming innovation which also revolutionized thinking about how the industry operated. In 1970, Ted Turner purchased Channel 17 in Atlanta.  He changed the call letters to WTBS and contracted with a satellite to relay the station across the country, offering Braves games, movies and reruns.  He developed a new model for the industry:
  • Cable company had to buy the TVRO (the big dish)
  • Cable company paid a fee for every subscriber to the cable service, but it was only 10 cents.
  • Turner then made his money from advertising, because now, instead of a regional Atlanta audience, he now had a network-sized national audience.  While it was smaller than the big three were drawing, it was a bigger audience than local stations had, and far bigger than he would have had in Atlanta alone.
  • Turner started with 20 systems but in 2 years, he had 200 cable systems signed up.
• Pay Cable:  Another programming innovation.  While there had been earlier attempts at pay-TV, none had panned out.  HBO offered to distribute recent films, uncut, without commercials via cable if people would pay a monthly fee.  This was a something audiences wanted, especially baby boomers who were a large segment of the market and at the "small children/young family" stage when babysitters and other child care make movie going a challenge.
  • 1972:   HBO began providing movies on cable, delivering them via micro-wave relays or even by mail!
  • 1975:   HBO leased a transponder on a satellite (RCA's SATCOM 1) which substantially reduced their overhead costs by reducing distribution costs.
  • At that point HBO began a huge national advertising campaign emphasizing
    • Flat fee per month -- as opposed to a pay-per-view.  That made it easier and cheaper for consumers.
    • They also improved their programming, making major movie deals with key studios
    • Note that the VCR was not a factor at this point, so HBO was really the only way to watch movies at home because renting was not an option.

HBO's success soon led to a bunch of new cable channels wanting to achieve the same type of success...Showtime, and Cinemax offered movies, and CNN offered 24 hours news.  MTV was soon offering videos and so many new channels were cropping up that cable companies didn't have room on their systems to carry them all.  Coaxial cable could only handle so much and to use larger cable meant rewiring miles and miles of infrastructure.  As it was, a new cable system could count on NOT making money for 10 years because the capital costs of start up were so intensive.  Getting money wasn't always that easy....

Additionally, there were new technologies threatening..

• STV was subscription television.  It was first offered in the 1940s but never really caught hold. People liked their free TV, and a pay-per-program system was just too cumbersom. When Cable Premieum services were established, this offering faded away.
• MMDS:  This is wirely cable and it operates at a very high frequency.  It was developed to serve large apartment complexes, hotels, etc. where the signal would come in on broadcast and be distributed to multiple units. 
• MATV/SATV: Offers the same type of thing, but it is more like a cable service.  The signal comes from satellite to TVRO and then is distributed to multiple units at a hotel or apartment or business building.
• DBS:  What we call Satellite Television (DirecTV, etc.) The signal is downlinked from a satellite to a dish in the homeowner's yard.  Dishes vary in size from several feet in diameter to 18" for newer systems.  At one point it was less expensive than cable, but no longer. Further, DBS has never had must carry demands, rather local stations would not allow DBS providers to carry local signals, so people who relied on DBS for all of their television might not get a local signal at all.  That inhibited DBS growth for years.  Congress has mandated some carriage under some circumstances, but local stations can still refuse to let DBS providers have their signal.  However, as number of cable networks and program providers increase and digital signals make more and more demands on cable bandwidth, DBS may have an advantage because it is not limited to a specific size "pipe". Only time will tell.

 All of a sudden, cable was a threat to broadcasters, and they didn't like it.  They wanted the FCC to protect them from competition from this new technology.  The chronology of regulation looks some thing like this:

What happened in 1984 to cause such a drastic turn-around?  Poor service, high rates and churn, the practice of subscribers signing up and then canceling cable service after a short period of time. 

Piracy was another problem.  People were rigging their own connections to the cable system and stealing the service. 

These things, as well as additional pressure to upgrade systems in order to carry multiple cable channels were making it hard for cable companies to be profitable.  They begged Congress to give them some relief, promising to maintain reasonable rates and offer good service.  

What happened was somewhat different.  Service dipped, cable rates soared and  customers complained to their Congressmen.   Congress responded emphatically, RE-regulating cable and re-instituting some of the very regulations which were taken out in 1984, including "Must Carry."

The cable companies complained that they could not upgrade to fibre optic systems in order to carry digital signals and further expand their carriage without some flexibility of rate structure and some regulatory relief, and Congress incorporated some of those needs in The Telecommunications Act of 1996, deregulating cable and other broadcast media as well.

In the last decade, the cable industry has been heavily impacted by mergers and acquisitions between MSOs (Multiple Systems Operators) and other media companies.  This convergence has caused concern among program producers, citizens groups and others who are concerned about media monopolist practices and the free flow of information.  We'll discuss that more in our next unit.

Terms and people to know from Chapter 5

• transistors
• Bardeen, Brattain, and Shockley
• SNG
• Low earth orbit
• geostationary orbit
• Intelstat
• Teletext
• Betamax
• VHS
• DAT

Resources:

• Head, Sydney W. , Thomas Spann, and Michael A. McGregor( 2001). Broadcasting in America: A Survey of Electronic Media. Houghton-Mifflin, Co. : New York. 
• Smith, Leslie F., John W. Wright II and Daid H. Ostroff. ( 2002) Perspectives on Radio and Television: Telecommunication in the United States, 4th Ed.  LEA, Mahwah, NJ 

Copyright, 2002

Dr. Janet McMullen

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