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Cable Television, History of - Early Development of Cable Television, The Growth of Cable Television

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Cable television has its roots in community antenna television (CATV), which was developed to bring television to communities that did not have their own channels in the early days of television broadcasting. Just as television was starting to grow in popularity, the Federal Communications Commission (FCC) pulled the plug. In 1948, the FCC initiated a television broadcast license freeze in an effort to cope with the demand for frequencies. For four years, no new television stations were authorized to begin operation, and with only 108 stations already established, many communities were left without stations. The solution was CATV.

Early Development of Cable Television

One of the first CATV systems was established in 1950 by Robert J. Tarlton in Lansford, Pennsylvania. Because they were cut off by the Allegheny Mountains, the community had extremely weak signals from Philadelphia-based stations. Tarlton, an appliance salesman who was looking for a way to cash in on the television business, convinced some friends to invest in his company, Panther Valley Television. At the top of a mountain, he erected a master antenna that was able to receive the television signals from Philadelphia and amplify them. Signals were distributed to subscribing households via coaxial cable. Subscribers paid an initial $125 hook-up fee and a $3 monthly charge.

Industry experts did not expect CATV to survive long after the FCC licensing freeze was lifted in 1952. Interference remained problematic, however, so the FCC limited the number of stations that could operate in a community. As a result, cable suddenly served a dual purpose; it became a service that would both provide clear reception of stations for communities that did not have stations, and it increased the number of stations that could be received in a community that already had stations.

In 1952, when the FCC lifted the license freeze, seventy CATV systems were serving close to fourteen thousand subscribers across the country. Cable had been the answer for many appliance dealers who were missing out on the booming television business because their communities were not serviced by local channels. By 1961, there were approximately seven hundred cable television systems across the United States.

At first, broadcasters welcomed the CATV systems; after all, cable extended their service area, and a larger audience could justify increased advertising rates. The FCC was also pleased since cable helped expand the audience of the fledgling television industry. In fact, the FCC declared in its decision in Frontier Broadcasting Company v. Collier in 1956 that the commission had no jurisdiction over CATV systems (because they were not broadcasters or common carriers).

By the 1960s, however, opinions began to change. Cable television services began to enter larger markets, providing channels from other markets to subscribers using microwave transmission. These imported channels sometimes duplicated the programming of local network affiliates, and neither affiliates nor independent stations wanted the additional competition. In 1962, the FCC stepped in with regulations for cable systems that brought in distant signals. By 1966, the FCC declared regulatory control over all cable systems. In 1972, the commission enacted its first comprehensive regulations of the cable industry, which were designed to protect broadcasters from competition from cable.

The Growth of Cable Television

Despite legal complications, cable continued its slow growth. Cable had about 2 percent of U.S. household penetration in the early 1960s and had grown to about 8 percent in 1970. Most early cable systems had a limit of twelve channels, but Ronald Mandell patented a converter in 1967 that was placed on the subscriber’s television set and broke the twelve-channel barrier. This set-top converter also solved the interference problems that plagued many of the systems.

Still, industry experts began to question the further growth of cable, especially when they considered the potential infrastructure costs in urban areas. How could cable companies hope to attract the necessary subscribers to justify financially the massive start-up costs in an area that received clear local signals?

The answer was a rented transponder on a geo-stationary satellite named Satcom I that was launched in 1975 and was used to transmit a new television service to cable systems across the country. This service, Home Box Office (HBO), did nothing less than change the face of cable and spark unprecedented growth in the industry. (Time, Inc. had introduced HBO as a pay service on the cable system in Wilkes-Barre, Pennsylvania, in 1972, but its satellite delivery and potential national distribution were new developments.)

On September 30, 1975, HBO launched its service (on only a handful of cable systems) with coverage of a boxing match between Muhammad Ali and Joe Frazier. The new program service also offered commercial-free motion pictures that were not edited for television. HBO started slowly because cable systems had to buy an expensive satellite receiving dish to pull down signals that were transmitted by satellite, but HBO soon revolutionized the industry. Finally, cable television could provide something other than retransmitted broadcast signals. In addition, HBO was a pay-TV service (i.e., a premium service), which meant a new source of revenue for cable companies.

To further improve matters, the FCC had also realized that its 1972 regulations were severely limiting the growth of the cable industry. As a result, the FCC essentially reversed its earlier thinking and decided to encourage competition between cable and broadcast stations. In 1984, the U.S. Congress passed the Cable Communications Policy Act, which gave cable system operators fewer regulations regarding rates and programming. Local communities were given clearer control over cable through the franchise process.

Cable companies cannot simply decide to build a system in a particular city; the company must be awarded a cable franchise by city officials. Usually, systems must pay a monthly franchise fee to the municipality and often negotiate other concessions, such as community studio facilities, free cable for local schools and government agencies, and a government information channel.

The combination of satellite program distribution and less regulation led to a period of explosive growth in cable. Within twelve years, from 1975 to 1987, the number of cable systems tripled and the percentage of U.S. homes with cable jumped from 14 percent to 50 percent. The booming industry attracted big-business investors, and the cable television landscape became dominated by multiple system operators (MSOs). By 1988, the five largest MSOs serviced more than 40 percent of cable subscribers in the nation. In the wake of the success of cable, as well as the increased popularity of videocassette recorders (VCRs) and independent stations, broadcast networks watched their audiences erode.

The Cable Television Consumer Protection and Competition Act of 1992

After years without government regulation, cable rates had increased swiftly in some areas, prompting Congress to approve the Cable Television Consumer Protection and Competition Act of 1992. The law reintroduced rate regulation for the industry and provided a new wrinkle with local broadcasters.

While the FCC’s 1972 rules required cable systems to carry local channels, the U.S. Court of Appeals for the District of Columbia threw out the rule in 1985. Most cable systems, however, kept local channels in their lineup, since clear reception of local channels was (and remains) a major draw for many subscribers. The Cable Act of 1992, however, provided the option of “must-carry” or “retransmission consent” to local broadcasters. As a result, broadcasters could either choose guaranteed carriage on a cable system or demand compensation from the cable system to carry their signal. Some local channels had to be dropped from cable lineups because agreements could not be reached.

Conclusion

The new cable systems of the 1980s had offered thirty-five or more channels, and operators were experimenting with fiber-optic technology. By 1995, the cable industry was looking to integrate high-speed Internet access into their services, as cable modems can provide data transfer rates thousands of times faster than conventional phone lines. Six of the ten largest MSOs launched cable modem services in limited areas in 1996. Within a year, nearly 100,000 customers across the country subscribed to the service. Cable telephony service was also launched in limited communities in 1997.

Despite increased competition from direct broadcast satellite (DBS), the cable industry remains prosperous and ratings continue to rise. In 2000, the cable landscape featured more than eleven thousand cable systems across the country serving more than seventy-three million homes. The industry has also begun preparations for digital television (DTV).

Cable Television, Programming of - Programming Tiers, The Windowing Concept, The Major Cable Programmers, Programming Through the Years [next] [back] Cable Television, Careers in

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