History of Cable

Community Antenna Television (CATV), commonly called cable TV, was invented to solve a dire consumer problem: poor TV reception. Rabbit ears and rooftop antennas don't suffice for people who live in valleys where nearby hills block good over-the-air reception, such as in the upper Appalachian mountains. In fact, according to the Pennsylvania Cable TV association , cable TV began in Pennsylvania (although others contend that CATV was born in Oregon). The following message was posted on the mailing list of the Society of Cable Television Engineers:

SITE
OF THE FIRST COMMUNITY ANTENNA
TELEVISION INSTALLATION
IN THE UNITED STATES.
COMPLETED, FEBRUARY 1949
ASTORIA, OREGON

CABLE TELEVISION
WAS INVENTED AND
DEVELOPED BY
L. E. 'ED' PARSONS
ON THANKSGIVING DAY
1948. THE SYSTEM
CARRIED THE FIRST TV
TRANSMISSION BY
KRSC-TV CHANNEL 5
SEATTLE. THIS MARKED
THE BEGINNING OF
CABLE TV.

Whether Cable TV began on the East Coast or the West Coast, it was originally a small-town phenomenon. The culture of rural independence and opportunism continues to differentiate this industry from its competitors.

Despite their best efforts, cable TV operators were a struggling lot from their beginning until the mid-1970s. The business was very capital intensive, and the operator had to install thousands of miles of wires, erect buildings to house satellite and television transmission facilities, negotiate franchise agreements with municipalities, and conclude programming agreements before the first dollar was made. This was a risky investment proposition, especially because cable offered no distinctive programming at the time. It was funded primarily by subscription and local advertising, but there was no national advertising and little transactional revenue from pay-per-view.

Furthermore, cable had touchy relationships with the cities in which it operated. To offer service, cable required franchises from municipalities in which it provided service. Until the 1980s, local authorities exerted strong control over cable operators. Cities charged large franchise fees, could require carriage of local broadcast, and regulated prices to their citizens. These were costs that over-the-air broadcasters did not have, and they put cable at a competitive disadvantage. However, the difficulties in dealing with the cities were offset by the fact that the cable operator got an exclusive franchise to operate in the locality.

Even today, the subject of city-cable operator relationships continues to be sensitive. Franchise renewals are frequently challenged by consumers and cities asserting that the cable operator has offered poor service or has not fulfilled other provisions of the franchise agreement. Some franchise agreements included provision of public, educational, and government (PEG) access to channel capacity, increased bandwidth, and service-level agreements.

So, undercapitalized and lacking compelling content that could differentiate cable from NBC, ABC, and CBS, cable did not catch on in a big way until the mid-1970s. In 1974, a tech-nological innovation occurred that was to launch the cable industry out of its funk and into two-thirds of American homes today. That innovation was the commercial satellite.

Until the mid-1970s, satellites had been used exclusively for government purposes, mostly defense or space exploration. With satellites, however, programs from multiple producers could be broadcast on a single transponder (aggregated) and could be rebroadcast to cable operators all over the country. This provided a means for producers to challenge the ironclad hold that the movie distributors had on the distribution of first-run movies. Originally, satellite distribution was not directed at the broadcasters, but rather at the film industry.

The first company to aggregate and rebroadcast for cable distribution was Time Inc., which founded Home Box Office (HBO) in 1974. Viewers who wanted to watch HBO paid a monthly fee to watch programs they could not watch on over-the-air television. HBO caught on, and cable was on its way because it had content (movies) the broadcasters did not have, at prices that were competitive with or cheaper than movie theater tickets and video rentals. HBO is still the largest premium cable network in the United States, with more than 20 million subscribers.

After the success of HBO, other programmers followed. A climate for more original programming was created, and new channels carried only on cable—such as MTV, ESPN, and CNN—became part of popular culture both in the United States and abroad.

Cable had the advantage of greater channel capacity compared with over-the-air broadcasts. Some over-the-air bandwidth is set aside for use by police, fire, military, air traffic control, radio astronomers, and other public uses. The need to share the airwaves with public services, coupled with certain engineering issues, limits the number of over-the-air channels for a given metropolitan area to roughly 10 to 12. However, it was possible for cable systems to offer at least 30 channels over 300 MHz of cable bandwidth. Updated systems using fiber-optic cables have up to 750 MHz of bandwidth and offer more than 100 channels.

Decisions regarding use of over-the-air spectrum is controlled by the Office of Spectrum Management of the Federal Communications Commission (FCC). For details of spectrum allocation in the United States, see the Web page for the U.S. Department of Commerce Office of Spectrum Management (OSM), at www.ntia.doc.gov/osmhome/osmhome.html .

Because of superior reception, innovative programming, and increased channel capacity, cable operators succeeded in developing a new industry beginning with its inception in the 1950s. Table 3-1 shows some key cable statistics as of 1997.