Cable Retransmission Agreement by mlz56749


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									Cable Industry

     Richard Craig
Chapter 2 Cable Television

 Cable delivers Multichannel high-quality
  video to subscribers for monthly fee.
 Can also provide two-way services for
  data & telephony
Cable System
   Cable System Consists of
    – Headend- point at which all program
      signals are received, assembled &
      processed for transmission by the
      distribution network
    – Distribution network- carries the
      program signal through the community,
      using coaxial or fiber optic cables.
       • Consist of 2 elements
          – Trunk- large cable that leaves the headend,
            travels thru the community, and splits at various
            points, stops at the end of service areas
Cable System
        – Feeder-smaller cable running along the streets in
          a neighborhood to which subscribers connect.
            • Bridge amplifiers-spread throughout trunk to
              maintain strong signal.
   – Subscriber Drop-then takes the signal
     from the feeder system to the
     sbuscriber‟s home, where it is picked
     up by television reciever.
 Entire system makes sure the original
  signal stays strong.
Cable Television (Background)
   Original purpose of cable to extend the
    reach of regional broadcast stations

   First deployed in the 40‟s for rural
    locations w/ bad broadcast reception

   Early predecessors include
    – Community Antenna Television (CATV)
    – Parsons Experiment
Cable (Background)
   1949 Robert Tarlton Developed the
    “Lansford System”-building a master
    antenna at the base of the Allegheny
    Mountains to amplify televison
Nature of Cable
   Changed in the 70‟s
    – with new software in programming
    – no longer an extension for broadcast stations
   „75 HBO makes first communications
    satellite network exclusively for cable
    – Cable operators now could offer multiple
      channels of unique programming to
Nature of Cable
   Ted Turner
    – Uplinks signal of his small, independent
      Atlanta television station (then WTCG,
      now WTBS) to the same satellite
      carrying HBO signal.
      • Allowing any cable system distributing HBO
        to distribute his station as well.
         – First Superstation
         – Inspired creation of new cable channels (CNN,
           MTV, ESPN)
Nature of Cable
 Opens up Niche Market Capabilities
 Cable companies needed to upgrade
  system to offer more channels
 Number of available cable channels
  sparked interest in cable from consumers
  in urban areas
 Growth in urban areas caused # of cable
  subscribers to increase drastically
Cable Milestone
   1999 Emmy Awards milestone for
    Cable Industry
    – Cable programs had 134 nominations
    – HBO winning more prime-time Emmy
      awards than broadcast networks
Early Cable Regulation
   Local regulations
    – Local governments claimed authority over
      cable systems. Regulated prices, channel line-
      ups and more.
   Cable Act of „84 removed most of these
    – Late „80‟s investment poured into industry
    – # of systems & subscribers increased
    – Profitability led to consolidation
       • Small systems purchased by Multiple
         System Operators(MSO‟s)
Early Cable Regulation
   Price Deregulation
    – Led to rapid rise in cable rates
   By early „90‟s cable experienced
    significant regulatory and
    competitive problems.
    – Complaints from consumers about increasing
      subscription fees.
    – Deteriorating services
Early Regulation
   Complaints led to the Cable
    Television Consumer Protection &
    Competition Act of „92
    – re-regulated cable industry
        • imposed price control
        • customer service requirements
    – Delivered major victory to broadcast television stations.
       • Allowing them to dictate to local cable systems whether
         they had to be included on cable line-up(must carry).
       • Or whether the cable operator had to negotiate for
         permission to carry the station (retransmission consent)
Competitors to Cable
   Experiments with alternative technologies
    to deliver cable
    – Wireless Cable
    – Multichannel Multi-point Distribution Service
    – Direct Broadcast Satellite (DBS)
       • has experienced significant growth in past several years
       • Now has “local-in-local” capabilities
    – Video Dial Tone (VDT)
   Competition Act required cable program
    networks to sell their services to
Cable Expands

   Bandwidth upgrades begin in the
    – went from coax to Hybrid Fiber/Coax (HFC)
       • optical fiber backbones deliver greater bandwidth &
         better signals to feeder networks & the nodes in local
    – Two-way interactive capacity also engineered
      into new systems.
New Cable Service
   Tested cable-delivered telephony
    – Encountered problems
       • uninterrupted power to cable telephony
         systems when electrical outages occurred
          – needed to preserve for 911 and emergency
       • Plus consumer acceptance was low.
    – Pilot studies suggested telephony could be
       • State & federal regulators slow to grant
       • Cable operators slow to make huge
New Cable Services
   Broadband
    – Explosion of internet shifted calbe companies
      interest from telephony to data.
    – Driven by consumer demand for faster Internet
      service, to accommodate graphics and video.
   Developed data transmission capability w/
    – Broadband link that provides much more
      speed than telephone lines.
    – Offers downlink data rates of up to 10 Mb/s,
      compared to 28.8Kb/s of telephone
New Cable Service
   Cable companies also began to offer
    satellite delivered digital audio
    services in the late „90‟s.
    – providing subscribers with high-quality
      music channels for home stereo.
TC Act of ‘96
   Developed to encourage competition
    among Telecommunications Industry
    – Deregulated cable rates again
    – Prescribed conditions in which competitors
      could begin to enter the video distribution
      business & freed cable companies to deploy
      telephony, data and other services.
   MSO‟s were interested in telephony.
    – Became apparent other competitors such as
      resellers could enter market quicker with less
      investment, compared to huge capital cost of
      cable entrance.
Digital Conversion
   Also in „96 FCC authorizes
    deployment of a digital over-the-air
    television service in the U.S.
    – Projected date of 2006 for the retirement
      of analog
Digital Conversion
   Major Barriers to overcome for digital
    – Have to address process of converting signals
      from one format to the other,
    – or cable systems converting to a different
      digital modulation standard
   Agreement will need to be made between
    broadcasters & cable companies whether
    the cable company will transmit a
    broadcasters digital signal, analog signal
    or both.
Digital Conversion
 – Cable argues that if they make room for
   two channels per broadcaster they will
   have to drop carriage of existing
 – Claim that such a demand constitutes
   an “illegal takings”
Current Status of Cable
   By year 2000cable reached into
    approximately 70% of American HH‟s
    – Distributing an average of 57 channels
    – approximately 600,000 residential subscribers
      to cable telephony services and 1.5 mil. with
      data services using cable modems.
       • Problem with data deployment is in the complexity
         and cost of installing cable modems.
Current Status of Cable
 Most cable systems owned by MSO‟s
 Traditional cable companies disappearing
  as large telecom. companies are
  purchasing them for broadband network
    – Acquistions tend to produce higher stock
      prices for the companies.
    – Yet have raised anti-competitive concerns
      amongst congress and regulatory agencies.
Future of Cable
   Cable will continue to dominate residential
    video delivery.
    – May diminish a little with growth of DBS
    – And inability to convert to digital could worsen
      the churn of subscribers
   Cable telephony will continue to grow
    – will be reliable and cost less than traditional
      wired and wireless telephony services
    – wired telephony will continue to be viable.
Future of Cable
   Cable has taken lead in delivering
    high-speed online data services
    – greatly due to deployment of broadband
    – some cable companies plan to offer their cable
      modem customers open access to there
      choice of competing ISP‟s, using their
    – Digital Subscribe Line(DSL) service being
      offered by some LEC‟s, competition to cable
       • Combat competition w/ services at an attractive price and “point-
         to-point” data network services to businesses
Digital is Crucial
   Currently cable is major residential
    broadband delivery system in the
    U.S. in order to maintain success
    must make conversion to digital.
    Offering services at prices below
    competitors, and continue to be a
    reliable telecommunications

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