Cable television in the United States

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Cable television in the United States is a common form of television delivery, generally by subscription. Cable television first became available in the United States in 1948, with subscription services in 1949. Data by SNL Kagan shows that as of 2006 about 58.4% of all American homes subscribe to basic cable television services.^[1]

1 History and regulation
- 1.1 Federal interest
- 1.2 Public access television
2 Programming
- 2.1 A la carte
3 Cable television fees and programming lineups
- 3.1 Subscriber Fees
4 See also
5 References
6 External links

[edit] History and regulation

Cable television in the United States in its first twenty-four years was used almost exclusively to relay over-the-air broadcast channels to remote and inaccessible areas. Original programming came in 1972 with government deregulation of the industry.

During the television licensing freeze of 1948–1952,^[2] the demand for television increased. Since new television licenses were not being issued, the only way the demand was met was by Community Antenna Television.

In 1950, Robert Tarlton developed the first commercial cable television system in the United States. Mr. Tarlton organized a group of fellow television set retailers in Lansford, PA, to offer television signals from Philadelphia, PA broadcast stations to homes in Lansford for a fee. The system was featured in stories in the New York Times, Newsweek and The Wall Street Journal. The publicity of this successful early system set off a wave of cable system construction throughout the United States.

Very early Jerrold cable converter box from the late 1970s

Tarlton used equipment manufactured by a new company, Jerrold Electronics. After seeing the success of the Tarlton system in 1950, Jerrold President Milton Shapp reorganized his company to build equipment for the now-growing cable industry. In 1952, Tarlton went to work for Jerrold, helping to construct most of the major systems built by that company in the 1950s, including the landmark system in Williamsport, PA. Tarlton was also responsible for training many of the major operators of cable systems in the 1950s. In 2003, Mr. Tarlton was inducted in the Cable Television Hall of Fame for his work building the first widely publicized cable television company in America.^[3] ^[4]

A CATV System was developed in the late 1940s by James F. Reynolds. The cable started in his town of Maple Dale, Pa, then moved to his hometown in Sandy Lake, further progressing to Stoneborough, Cochranton, Poke. Large industrious companies then took the cable invention and began deploying it around the United States. James's company was incorporated as Reynolds TV Cable, in 1975 it was sold to Rick Reynolds. Rick sold the company at a later date.

Leroy E. "Ed" Parsons is known for building the first system in the U.S. that used coaxial cable, amplifiers, and a community antenna to deliver television signals to an area that otherwise would not have been able to receive broadcast television signals. In 1948, Parsons owned a radio station in Astoria, Oregon. A year earlier he and his wife had first seen television at a broadcasters’ convention in Chicago. His wife wanted a set. In the spring of 1948, Parsons learned that radio station KRSC in Seattle—125 miles away— was going to launch a television station that fall. He found that with a large antenna he could receive KRSC's signal on the roof of the Astoria Hotel and from there he ran coaxial cable across the street to his apartment. When the station went on the air in November, 1948, Parsons was the only one in town able to see television. Soon others in town wanted the same service, and Parsons helped them hook up to the system. He charged them a fee for his work and materials but never instituted a monthly service charge. In May, 1968, Parsons was acknowledged as the father of community antenna television.^[5] According to MSNBC's Bob Sullivan, however, Parsons charged a $125 one-time set-up fee and a $3 a month service fee.^[6]

[edit] Federal interest

On August 1, 1949 T.J. Slowie, a secretary of the Federal Communications Commission, sent a letter to a CATV pioneer in Astoria, Oregon, L.E. Parsons, requesting he "furnish the Commission full information with respect to the nature of the system you may have developed and may be operating." He did. This is the first known involvement of the FCC in CATV. An FCC lawyer, E. Stratford Smith, determined the Commission could exercise common carrier jurisdiction over CATV. The FCC didn't act on this opinion and Smith later changed his mind after working in the cable industry for some time and testifying in Senate committee hearings. Senator and future Federal Communications Commissioner Kenneth A. Cox attended and participated in these hearings. He prepared a report for the Senate Committee on Interstate and Foreign Commerce against CATV and supporting the FCC policy of a television station in every community.

In 1959 and 1961 bills were introduced in Congress that would have determined the role of the FCC in CATV policy. The 1959 bill, which actually made it to the floor of the Senate, would have limited FCC jurisdiction to CATV systems within the contours, i.e. the broadcast range, of a single station. It was defeated. The 1961 bill proposed by the FCC would have given the Commission authority over CATV as CATV, and not as a common carrier or broadcaster. The Commission could then adopt rules and regulations "in the public interest" to govern CATV in any area covered both by CATV and broadcast television. No action was ever taken on this bill.

More important than Congressional action in determining Federal Communications Commission CATV policy were court cases and FCC hearings. Frontier Broadcasting Co. v. Collier was a hearing in which broadcasters tried to get the FCC to exercise common carrier authority over 288 CATV systems in 36 states. The broadcasters maintained that CATV went against the FCC's Sixth Report and Order, which advocated at least one television station in every community. In 1958, the FCC decided that CATV was not really a common carrier since the subscriber did not determine the programming. Carter Mountain Transmission Corp., a common carrier that already transmitted television signals by microwave to CATV systems in several Wyoming towns, wanted to add a second signal to two of the towns and add two signals to a previously unserved town. A television station in one town opposed this and protested to the FCC on the grounds of economic damage. A hearing examiner supported Carter Mountain but the Commission supported the television station. The case was taken to appeal, as most are, and the Federal Communications Commission won. "The fact that no broadcaster has actually gone off the air due to CATV competition at the time the government moved to expand its authority (nor have any since) did not stay the momentum for the expansion of regulatory authority. That some economic impact was merely plausible sufficed as the basis for government concern and government action." The FCC overruled a hearing examiner in favor of broadcasters again in the "San Diego Case". The CATV systems in San Diego, California wanted to import stations from Los Angeles, some of which could be seen in San Diego; the television stations in San Diego didn't want the signals imported. The television stations won, not allowing the signals on future cable lines in San Diego and its environs. The FCC's reasoning was to protect the present and future ultra high frequency stations in San Diego.

In the First Report and Order by the Federal Communications Commission on CATV the FCC gave itself the power to regulate CATV. This Report and Order was designed to protect small town television stations. It did this by imposing two rules, which in slightly altered form still stand: one requires that a CATV system carry all local stations in which the CATV system is in the "A" (best reception) contour of the station. The second prohibits the importation of programs from a non-local station that duplicates programming on a local station if the duplication is shown either 15 days before or 15 days after its local airing. This 1965 report reasoning is as follows: 1) CATV should carry local stations because CATV supplements, not replaces, local stations and the non-carriage of local stations gives distant stations an advantage since people will not change from the cable to the antenna to see a local station; 2) non-carriage is "inherently contrary to the public interest"; 3) CATV duplication of local programming via distant signals is unfair since broadcasters and CATV do not compete for programs on an equal footing; the FCC recommends "a reasonable measure of exclusivity".

The 1966 Second Report and Order made some minor changes in the First Report and Order and added a major regulation. This was designed to protect UHF stations in large cities. The new rule disallowed the importation of distant signals into the top 100 markets, thus making CATV at that time profitable only in cities with poor reception. In 1968 the Supreme Court upheld the FCC's right to make rules and regulations concerning CATV. In its decision on United States v. Southwestern Cable, the "San Diego Case", it said "the Commissions authority over 'all interstate ... communications by wire or radio' permits the regulation of CATV systems."

[edit] Public access television

Main article: Public-access television

In 1969 the FCC issued rules requiring all CATV systems with over 3500 subscribers to have facilities for local origination of programming by April 1, 1971. The date was later suspended. In 1972, Dean Burch steered the FCC into a new area of regulation. It lifted its restrictions on CATV in large cities, but now put the burden of more local programming on CATV operators. In 1976, the FCC used its rule making power to require that new systems now had to have 20 channels, and that cable providers with systems of 3500 subscribers or more had to provide PEG (public, education, and government access) channel capacity, and facilities and equipment necessary to use this capacity.

[edit] Programming

See also: Premium television

Cable television programming is often divided between basic and premium programming. Basic cable TV networks are generally transmitted without any scrambling or other special methods and thus anyone connected to the cable TV system can receive them. Basic cable networks receive at least some funding through fees paid by the cable TV systems for the right to include the network in its channel lineup. Most basic cable TV networks also include advertising to supplement the fees, due to their programming cost being greater than the fees paid by cable TV systems. Premium cable refers to networks, such as HBO, Cinemax, and Showtime, that scramble or encrypt their signals so that only those paying additional monthly fees to their cable TV system can legally view them (via the use of cable box or converter). Because these networks command much higher fees from cable TV systems, their programming is generally commercial free.

There are several features of cable programming that distinguish it from broadcast television. Because cable television carries more bandwidth than broadcast TV (10 to 20 times as many channels), there is room for more specialized channels catering to particular demographics or interests. Also, because cable TV networks rely much less, or in some cases not at all, on revenue from commercials, they can feature programming (such as specialty sports or programming in foreign languages) that draws much smaller viewer numbers than what broadcast networks would find acceptable. And finally, since cable TV channels cannot be viewed by those (e.g., children) without the proper equipment, the FCC’s rules regarding acceptable content do not apply to cable TV networks, allowing greater freedom in the use of profanity, sex and violence.

The lack of restrictions on content has led to cable TV programs with more adult-oriented content such as nudity and strong language, including some premium cable networks broadcasting pornography programs. Premium cable networks have traditionally been the loosest with regard to content, since they require a cable box to view, making it easier to restrict children’s access to them. Thus, one can find nudity, foul language, and even pornography on these networks. Basic cable, on the other hand, has not traditionally been as loose with regard to content. While there are no FCC rules that apply to content on basic cable networks, many basic cable networks self-regulate their program content, particularly with regard to language and nudity. In recent years though, some basic cable networks have begun to relax their self-imposed restrictions, particularly late at night. Thus, programs like Comedy Central’s South Park often contain content deemed unsuitable for U.S. broadcast TV. Some basic cable networks have also recently aired R-rated movies, uncut, late at night (i.e., Comedy Central's The Secret Stash).

[edit] A la carte

Further information: Family and Consumer Choice Act of 2007

There has been a recent push to create laws that force cable providers to allow consumers to purchase individual cable TV channels "a la carte," i.e. to allow them to pick and choose which channels they would like to have available in their homes.^[7] This is not likely to occur until digital cable television becomes popular, although technically, analog cable television would be sufficient if all channels were scrambled, as it is very difficult to notch out individual channels from a cable TV line without scrambling. For example, many cable providers have a "basic plan" consisting of local channels and a few national cable networks; and an "economy basic" plan consisting of local channels only. Both plans are supplied on the same cable, but the cable company can filter out the expanded channels to the "economy basic" subscribers using a low-pass filter which filters out higher channels. Notch filters are available which can filter out a "notch" of channels (for example, channels 45-50 can be "notched" out yet the subscriber can receive channels below 45 and higher than 50). However, to do this individually for a single subscriber who wants many "notches," would be very difficult unless a scrambling system is used requiring a set-top box. These problems are alleviated with the use of digital cable, which requires a set-top converter box. This converter can be programmed remotely to allow or disallow access to channels on an individual basis. The use of IPTV (i.e., delivery of television over an internet or IP-based network) makes it even easier, since the provisioning of channels can be fully automated.

The current cable and satellite delivery systems provide an opportunity for networks that service niche and minority audiences to reach millions of households, and potentially, millions of viewers. Since a la carte could force each channel to be sold individually, many of these networks could face a significant reduction in subscription fees and advertising revenue, potentially driving them out of business. For these reasons, cable/satellite providers and programmers are reluctant to introduce an a la carte business model. Others however believe that by allowing a less expensive entry point into the cable marketplace the a la carte option would actually increase overall sales through the addition of new subscribers. Often when programming distributors would like to sell channels a la carte they are prevented by contract from the program creators who force an all-or-nothing approach.^[8]

On June 14, 2007, United States Representatives Dan Lipinski (Democrat, Illinois) and Jeff Fortenberry (Republican, Nebraska) introduced into legislation HR 2738, the Family and Consumer Choice Act of 2007, which intends to allow families to choose and pay for only the cable television channels that they want to watch. As of January 2008, it is still in committee.^[9]

[edit] Cable television fees and programming lineups

Cable TV systems impose a monthly fee depending on the number and perceived quality of the channels offered. Cable TV subscribers are offered various packages of channels one can subscribe to. The cost of each package depends on the type of channels offered (basic vs. premium) and the quantity. These fees cover the fees paid to individual cable channels for the right to carry their programming, as well as the cost of operating and maintaining the cable TV system so that their signals can reach subscribers homes. Additional fees and taxes are often tacked on by local, state, and federal governments.

Most cable systems divide their channel lineups into three or four basic channel packages. A must-carry rule requires all cable TV systems to carry local broadcast stations on their lineups. Cable TV systems are also required to offer a subscription package that provides these broadcast channels at a lower rate than the standard subscription rate. The basic programming package offered by cable TV systems is usually known as "basic cable" and provides access to a large number of cable TV channels, as well as broadcast television networks (ABC, FOX, PBS, et cetera), and local-access television channels. Some systems refer to this package as "expanded basic", with their most minimal package being referred to as basic cable. In addition to the basic cable packages, all systems offer premium channel add-on packages offering either just one premium network (e.g. HBO) or several premium networks for one price (e.g. HBO and Showtime together). Finally, most cable systems offer pay per view channels where users can watch individual movies, live programs, sports, etc. for an additional fee for single viewing at a scheduled time. Some cable systems have begun to offer on-demand programming, where customers can select programs from a list of offerings including recent releases of movies, concerts, sports, and reruns of TV shows and specials and start the program whenever they wish, as if they were watching a DVD or a VHS tape. Some of the offerings have a cost similar to renting a movie at a video store while others are free.

Starting in the late 1990s, advances in digital signal compression (primarily Motorola's DigiCipher 2 technology in North America) have given rise to wider implementation of digital cable services. Digital cable provides many more television channels over the same available bandwidth, by converting cable TV channels to a digital signal and then compressing the signal. Currently, most systems offer a hybrid analog/digital cable system. This means they offer a certain number of analog channels via basic cable service with additional channels being made available via digital cable service. Thus subscribers wishing to have access to digital cable channels must have a special cable box (or, more recently, a "Digital Cable Ready" TV and a CableCARD) to receive them. Additional subscription fees are also usually required to receive these digital channels. Digital cable channels are touted as being able to offer a higher quality picture than their analog counterparts. This is often true, with a dramatic improvement in chroma resolution (120 lines for NTSC versus 270 for digital). However digital compression has a tendency to soften the quality of the television picture, particularly of channels that are more heavily compressed. Pixilation and other artifacts are often visible. On November 1, 2006, Comcast dropped its hybrid digital/analog broadcasts on their digital cable system. which means even the basic cable channels (typically channels 99 and lower) now appear as clear as the digital cable channels (typically channels 100 and higher).

Many cable systems operate as local monopolies in the United States, as only one cable company typically receives the right to serve a region as a result of a franchise agreement with a local government. For some franchises the agreement is explicitly exclusive; for others the local authority retains the right to franchise overbuilders but does not do so. Overbuilders in the US have traditionally had severe difficulty in financial and market penetration numbers, compared to their incumbent brothers. therefore they are exception, not the norm in the United States; though overbuilders have had successes in the MDU market, in which relationships are established with landlords, often with contracts and exclusivity agreements for the buildings, sometimes to the anger of tenants. In some areas that is changing as competition has been allowed to enter the market, including, in some cases, city run cable systems. The rise of Direct Broadcast Satellite systems providing the same type of programming using small satellite receivers, and of Verizon FiOS and other recent ventures by ILECs such as Uverse, compete with cable, have also provided competition to cable TV systems, opening the possibility of cable television declining.

[edit] Subscriber Fees

In order to support themselves, some cable channels charge "subscriber fees" in addition to airing commercials. These fees are collected directly from the cable company, who passes the cost onto the customer. The fee the cable TV system must pay to a cable TV channel can vary depending on whether it is a basic or premium channel and the perceived popularity of that channel. Because cable TV systems are not required to carry cable channels, they may negotiate the fee they will pay for carrying a channel. Typically more popular cable channels are able to command higher fees than less popular channels. For example, ESPN typically charges $2.90 per subscriber per month in order to support its airing of sports events. Other cable channels charge, on average, 50-60 cents per subscriber per month. ^[10] The excess funds collected from subscriber fees can net cable channels an extra billion dollars per year. ^[11]