Cable Television, History of

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CABLE TELEVISION, HISTORY OF

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.

Expanding Cable Channels and Programming

In 1983, HBO's The Terry Fox Story was the first made-for-cable film, while Showtime ran original episodes of The Paper Chase, a critically acclaimed drama that had been dropped by the broadcast networks. Cable-originated programming became eligible for Emmy Award consideration in 1988 and has since become a regular contender. Original series and films, though not always of award-winning caliber, are common on both cable networks and premium services.

HBO's successful use of satellite delivery opened the floodgates for premium services and cable networks, many of which continue to remain popular. Of course, not every new cable service was a national network. In 1976, Cablevision Systems Corporation founder Charles Dolan created the first regional cable sports service, Sports Channel New York (now FOX Sports Net New York). Several regional sports channels still service selected markets across the country.

Ted Turner launched his Atlanta-based independent station (WTCG, later WTBS) as a "super-station" in 1976, using satellite distribution to reach a national audience. As president of Turner Broadcasting Systems, Turner continued to paint the cable network landscape with a number of national networks. For example, his Cable News Network (CNN), the first live, all-news channel, was launched in 1980. Less than two years later, CNN was followed by CNN Headline News, which provided highly structured thirty-minute newscasts around-the-clock.

Many industry executives predicted a quick death for CNN, which was referred to as "Chicken Noodle News" in its early days. The network, however, proved early critics wrong. Its twenty-four-hour schedule and continuous coverage of breaking news provided unparalleled coverage of several events, including the assassination attempt on President Ronald Reagan in 1981, the Challenger space shuttle disaster in 1986, and the Gulf War in 1991. Its extensive coverage of these and other "big" stories has helped make CNN a popular and respected source for news.

CNN also gained the respect of broadcast and cable networks through its budgetary efficiency. After almost ten years on the air, CNN and CNN Headline News shared an annual budget of approximately $100 million for around-the-clock coverage, while ABC, CBS, and NBC were each spending two or three times as much for only thirty minutes of news per day. The discrepancy resulted in layoffs and reorganization at the broadcast networks in the late 1980s.

While CNN was redefining television news, Music Television (MTV) was redefining television itself. The music video cable network debuted in 1981, essentially re-creating the album-oriented rock (AOR) radio format for television. It was a radical concept; MTV was programmed more like a radio station than a television network, and it had few regularly scheduled shows.

Filled with rock music videos, unique contests, and a generous helping of rebellious attitude, the channel was designed to appeal to males who were between eighteen and thirty-four years of age. MTV not only made music videos popular (and some say legitimized music video as an art form), it quickly spawned imitators, with more than three hundred music video programs on broadcast and cable networks competing for its audience in 1983.

Rock performers such as Rod Stewart and Journey were typical early MTV stars. Artists such as Michael Jackson, who would become a huge influence in music video, were not part of MTV's original play list. Jackson's videos, in fact, did not debut on MTV until 1983. Later, MTV's play list would become more diversified, welcoming rap, hip-hop, and alternative music. In the 1990s, the network became more structured, with "reality-based" original series and other regularly scheduled programs. MTV reaches more than 200 million households worldwide and is available in dozens of countries on every continent but Antarctica.

Most early cable networks employed a programming concept called narrowcasting, targeting their content to specific niche audiences. The Christian Broadcasting Network (CBN) began its national cable network in 1977. Viacom followed the movie formula in 1978 when it created Show-time, another premium service. A year later, the first network targeting children, Nickelodeon, debuted. Chicago's WGN and New York's WOR became superstations, and sports took center stage on the Entertainment and Sports Programming Network (ESPN).

From 1979 to 1985, more new networks established additional choices for viewers. In 1980, Bravo gave voice to high culture, while the Home Shopping Network (HSN) provided viewers with an alternative to the mall in 1985. Other additions to the cable network ranks included American Movie Classics (AMC), Arts & Entertainment (A&E), Black Entertainment Television (BET), The Discovery Channel, The Disney Channel, Eternal Word Television Network (EWTN), Lifetime, The Nashville Network (TNN), the Playboy Channel, USA Network, and The Weather Channel. The 1990s saw the launch of several more successful cable networks, including the Sci-Fi Channel and Cartoon Network in 1992. Many of these channels have expanded their programming for international audiences.

As new cable networks were being developed in the early 1980s, smart executives learned to follow the "rule of one." Due to limited channels and advertising dollars, if two cable networks tried to narrowcast to the same target audience, one was doomed to fail. Turner's Cable Music Channel (CMC), for example, tried to duplicate the success of MTV with adult contemporary music, but it was shut down after only thirty-four days of programming in 1984. Even MTV's sister station, Video Hits One (VH1), took years to build a respectable audience after its 1985 debut. Increased channel capacities and viewership have made the rule of one obsolete and allowed cable networks to include multiple choices for music, sports, and news.

Cable also expanded its services to include event programming, also known as pay-per-view (PPV). Addressable converters allow subscribers to order specific, one-time programming without a technician visiting the premises. Warner Amex's Qube system in Columbus, Ohio, was the first to offer PPV to its subscribers. The system featured five interactive channels but failed to generate a profit from 1977 to 1984. Still, national PPV services began to appear by 1985, and more than seventeen million homes were equipped with addressable converters by 1991.

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).

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Mark J. Pescatore

Encyclopedia of Communication and Information