The Unfulfilled Promise of Cable TV

...The group reaching that conclusion was appointed by the FCC, mostly from the ranks of the cable industry...

...Those social decisions have been left to the free market place—the cable industry...

...But the Media Research Division of the Needham, Harper, and Steers advertising agency predicts that by 1985 the national networks will together attract less than fifty per cent of the audience...

...In Utica, for example, the five network-affiliated stations were suddenly facing competition from a CBS affiliate in Albany, 100 miles away, and three non-network stations in New York City...

...The new rules also promise citizens local access to cable television studios and a local public process in the award of cable franchises...

...This attractive advertising package would now be threatened if viewers in large numbers started to watch cable-fed out-of-town non-network stations...

...In August 1971, the FCC had proposed a set of rules in an unorthodox "letter of intent" (to issue cable rules) submitted to Congress...

...In the case of cable television, the broadcast industry sees its entire existence at stake...

...Equipment manufacturers, looking for new markets, have something to say...

...At that time, all cable did was to bring broadcast signals into areas that had previously been unable to receive television at all...

...The Commission did not actually outlaw the importation of distant signals into the 100 largest metropolitan areas, but it made the procedure so tortuous as to rule it out effectively...

...Opera could be available to everyone for a couple of dollars—at home...

...This importation of distant channels was of marginal significance to the operators of the stations being imported...

...Rice concludes that "cable is going to make regional stations out of independents...

...For example, most cable systems in the upper Midwest import the popular WGN-TV from Chicago...

...Nobody wanted the FCC to do anything and the FCC left the industry to develop on its own...

...The new rules permit distant-signal importation and these are the stations that the cable systems will want to import, since they carry the only non-network programming (largely movies and sports...

...What has it, in its profit-seeking wisdom, decided the most important first function should be of the most important technological advance in communications since the telephone...

...The outlook, then, is for a lot more television networks—but this is my prediction, not the FCC's design...

...The courts also played a part by upholding the FCC's broad jurisdiction over cable television...

...One investment proposal circulating three years ago projected sixty-five per cent a year...

...Thus, the public interest is always compromised...

...Whichever prediction you favor, it is worth considering whether the FCC properly discharged its obligation to serve "the public convenience and necessity...

...At the same time, the copyright-holders can sell their movies to broadcasters on the basis that the purchase is necessary to keep it permanently out of the hands of local cable operators...

...Movie theaters, on the other hand, were not protected at all and they presumably face competition from movies-by-cable, whether on pay-cable channels or free channels imported from out of town...

...The cable operator can put his own programming on a channel if he likes (often this amounts to no more than a camera scanning three weather instruments and a bunch of ads) and a^ny channels left must be made available for lease...

...It is not quite so certain that non-network UHF stations will benefit so handsomely...

...Cable might make living on a farm the cultural equivalent of a condominium on the edge of downtown—complete with the latest movies, current theater, imported television, and even the city crime news...

...Yet little public policy has been developed to harness some of those profits to serve the people who pay them...

...The hardware is available, the technology is designed, the engineering is done...

...There is little question that it will flourish in small and middle-sized cities (in television markets smaller than the fifty largest), where one or two distant signals are permitted with few significant restrictions...

...the amount of pressure applied is in direct proportion to the amount of that money...

...This potential pressure valve for forum-seeking dissidents was also of some appeal to city administrations beleaguered by organized groups of unhappy constituents, many of whom could be quieted with the opportunity to speak...

...Hot disputes could be negotiated by the preparation of reasoned positions for transmission by the cooler medium of television...

...He has testified as an expert witness on cable television before state and Federal commissions...

...the additions to their audiences were small and, in any event, not reported by the ratings services...

...A report sponsored by some movie producers (who hope to reduce cable profits by the amount of their copyright fees) estimates that urban cable systems will return a profit on investment of as much as 23.4 per cent a year...

...Mass advertisers will no longer support them...

...Even more threatening to the networks was the perceived possibility that cable television would come into the largest areas, where the networks themselves own profitable stations, and attract audiences—and thus advertisers—away...

...Program producers, especially movie-makers, do too...

...Currently, the networks pull at least sixty-nine per cent of the audience in New York...

...Of these, one must be made available free to the public (together with some equipment and a studio) on a first-come, first-served basis...

...Paul Klein, once NBC-TV's program director and now a pay-cable executive, predicts the demise of the networks in their present form at such low (for them) audience levels...

...Eventually, they could even face extinction...

...The powerful networks and a weak FCC undermine the potential of cable television The Unfulfilled Promise of Cable TV JERROLD N. OPPENHEIM If the cable television industry were as responsive to social needs and desires as it is to balance sheets, the technology it exploits could help transform America...

...The station's audience is also spreading into Colorado and Utah...

...Since its job is to regulate the highly profitable communications industries, it tends to hear most often from members of those industries with a great deal of money riding on Commission decisions...

...Thus, most FCC decisionmaking is most intelligently viewed as a reflection of immense broadcast industry pressures...

...The FCC's role in the development of the cable television industry has thus been highly political, with little citizen participation, and often without clearly defined rules...

...What they objected to were the new television signals the cable brought to compete with their own...

...By this time, most of the outlying areas without prior television service from over-the-air stations had been cabled if it was economically feasible to do so...

...But Whitehead responded with a series of closed-door sessions with the various industry interests: the National Cable Television Association, the National Association of Broadcasters, and the Motion Picture Producers Association...

...Rather, like any other agency of government, the FCC is a political body and it responds to whatever political pressures are applied to it...

...Perceptions began to change around the late 1950s, though, as the cable industry itself entered a new phase...

...What is not clear is what will happen in the fifty largest metropolitan areas...

...Chicago, for example, is served by seven commercial stations...

...If any public benefit spun off the Commission's deliberations, it was purely fortuitous...

...The present television networks could well follow Life and Look into picture heaven, as viewers with the choice of sixty or eighty channels become discontented with more Lucy...

...Roger Rice, vice president of Cox Broadcasting and chairman of the Association of Independent Television Stations, happily cites the "profound effect" cable carriage is having on independent station circulation...

...In this way, cable operators in these areas are prevented from purchasing many popular programs...

...The results for the other participants are not as clear...

...The networks are probably still threatened, especially by new kinds of special-interest networks that will soon be inexpensively created by satellite...

...Robert J. Lewis, president of Cable-com-General, Inc., describes the rest of this social theory: "The solution is much closer cooperation between the movie producers and other program sources with the various pay television entrepreneurs and cable television companies willing to take some risks...

...The pressure that the frightened broadcast industry put on the Commission resulted in the so-called freeze of 1968...

...The consequence was pressure on the FCC to change its proposal...

...A lot of these developments might provoke some people to flee to the countryside to avoid the newfangled gadget, but they would probably find that cable television has been there even longer than in the city...

...A movie purchased by WGN-TV in Chicago cannot be carried into Chicago by cable when it is played on a Milwaukee outlet, even if WGN never puts it on the air...

...The big winners, on the other hand, appear to be the large-city stations that are not affiliated with any network and therefore produce or buy their own programming...

...Some of the major rules from 1972 that remain more or less intact require cable operators in the 100 most populous areas to provide at least twenty channels...

...The industry also cultivated community groups on the basis of the increased access to the television studio that could be possible if there were a large number of cable television channels in every city...

...A city that had been served with clear pictures by three outlets and marginally by two others was suddenly well-served by nine stations...

...Political leaders could appeal to large groups of people over one of the ubiquitous cable television channels...

...But no agent of national public policy has gone on record about which of these developments should be encouraged and which should be discouraged...

...If any private interest got the short end of the stick in the compromise, it was the network affiliates, especially those in smaller cities that are unused to much competition...

...Cable television could replace crowded Main Street stores with giant distant warehouses, connected to our living rooms by a wire over which we could both see and buy—an electronic Sears catalogue...

...In these places, cable offered not only better reception but brought in additional television signals from more distant points...

...This article on the impact of cable television on the broadcast industry will be followed in the March issue with his examination of Federal, state, and local regulation of cable television and the public interest...

...Cable was now entering markets where television sets were already present in virtually every home, so cable did not create many new sales...

...Each had spent the past twenty years or so building its stable of local affiliates to carry network programs to some ninety per cent of America...

...It is clear that the Commission went to great lengths to determine what would be convenient, if not necessary, for the various economic interests involved...

...It depends on what these stations have to offer...

...Chicago White Sox baseball encouraged at least seventy-seven cable systems in five states to import WSNS-TV from Chicago...

...All local broadcast stations must be carried, and additional signals can be brought in from out of town...

...Because of the lower costs of networking by satellite, Teleprompter's director of satellite development, Robert Button, predicts "a network bigger than anything we've ever seen...

...The price of a movie becomes the price of survival in the broadcasters' eyes, potentially a handsome sum indeed in the moviemakers' pockets...

...Essentially, the FCC has said that a local broadcaster in the biggest cities may buy up broadcast-and-cable rights to a program and thereby prevent, forever, that program from being carried on the cable via a distant signal...

...If, as many think, the economic basis of cable in the big cities has more to do with new services—banking, shopping, neighborhood channels, public access, specialized programs—than with distant signals, then the FCC's elaborate attempt to protect big city broadcasters will not make much difference to cable operators...

...Jerrold N. Oppenheim is editor of "Cable Report," a Chicago-based publication...

...So the cable industry continued to grow slowly in the outlying areas of America...

...As regionalization and specialization spread, audiences for the present three networks may well diminish...

...Religious leaders could reach their flocks during the week, instead of Sunday morning when their potential audience is at services...

...The committee declared in a report last August^ that "after eighteen months of experience, it appears that the FCC's non-directive posture is promoting a regulatory free-for-all...

...If it is to be the importation of distant signals (movies from Milwaukee, for instance), then the Commission has wounded cable by making distant signal importation difficult in the top fifty cities—perhaps insuperably difficult...

...The station he manages, KTVU-TV in Oakland, is carried by cable into more than 610,000 homes in at least thirty-six California counties...

...But the broadcasters in the cities where the new cable systems were being built felt that their territory had been invaded...

...If their audiences were attracted away by the new stations that cable made available, their ratings could plummet and advertising would become difficult to sell...

...It also became somewhat more sophisticated about political infighting at the FCC and developed an imaginative rhetoric about the marvelous technological possibilities that cable television represented—especially, of course, in the largest cities, where one might expect a demand for services like banking-by-cable, automated meter reading, and school-by-television...

...That represents a lot of money—many big city broadcast operations make forty to sixty per cent profit on sales before taxes—so broadcasters exert a lot of pressure...

...Costs will be low enough to permit several more networks to operate at once and when they run out of over-the-air broadcast television stations with which to affiliate, as they will quickly, they can turn to the plethora of unused cable television channels...

...Or how the technology that brings us the ability to order books and speeches over the tube at home ought to be controlled to prevent cabletappers from keeping track of which books and speeches have been ordered at each home...

...Now the FCC was in the middle of a real battle: the networks and network affiliates versus the cable industry and its new coalition, with citizens inadequately represented as an uneasy and demanding part of the latter...

...It was codified, albeit with a sweeping waiver provision, by rules issued in February 1972, to take effect on the last day of the following month...

...The Chicago area has 2.6 million television homes, compared to metropolitan Utica's 91,000...

...Sell us your pictures, moviemen, and we will all profit by hitching pay-TV boxes to home television sets...

...The networks will be able to get blanket coverage of the nation by leasing channels on a full-time basis on each cable system instead of affiliating with local entrepreneurs who do not always broadcast every show the network offers...

...And what has it come up with...

...Others could watch excerpts prepared for viewing at a more convenient hour...

...The networks were also somewhat shaken by that possibility...

...In theory, of course, cable television is a regulated industry, and the instrument of regulation is the Federal Communications Commission (FCC...

...Of course, there are other pressures, which is the reason the cable television industry has not been totally wiped out...

...This is not atypical of the way policy is developed at the FCC...

...The result, as befits a political process, was a compromise more or less representing the relative political strengths of the parties...

...Cable can now bring one or two distant signals in to compete, plus whatever nonbroadcast competition it can find, such as pay-television movies...

...Not-quite-first-run feature films on a premium payment basis...

...Sometimes the public interest even gets considered in the battle, especially if there is someone around to advocate it...

...Another channel goes to the municipality and a third to educators...

...The policy had been shaped mostly by the FCC, the broadcast industry, the cable industry, movie producers, Congress (by silent ratification), and the White House...

...Congress did not react, largely because it adjourned for the summer the next day...

...More important, cable could be the means for opening up lines of communication that have never existed before...

...The industry is virtually united: the only way cable will sell in big cities is if it offers a new service...

...The reason for the confusion over whether the new rules help cable television in the big cities is that no one really knows what the economic base of cable in the cities will be...

...Utica broadcasters, and all other broadcasters in similar positions, were scared...

...So cable systems sprang up in places where television reception was already present, if often marginal...

...When cable television was first invented in the late 1940s, broadcasters and television set manufacturers viewed the new industry as a boon to coverage and sales, respectively...

...What really counts is how seriously the Commission takes its own rules, how it enforces them, how it interprets them, and even how it waives them (sometimes into oblivion...

...To understand FCC "policy" on cable television (or anything else), you must understand that the Commission does not sit down and make rational plans or decisions based on what would be best for the inarticulate public it is commissioned to protect...

...But it all sounds like a fairy tale...

...Community group leaders could mount their soapboxes during prime time...

...In assessing the committee's conclusion, it is important to consider more than the rules themselves...

...Perhaps the most inconclusive results were those obtained by the cable industry itself...

...The cable industry itself can exert a little pressure of its own...

...The one dream about cable television that has come to pass is the corporate profits it is capable of producing...

...Movies...

...The most active compromise-maker turned out to be the White House, in the person of Clay T. Whitehead, director of the White House Office of Telecommunications Policy (OTP...

...They did not object to the better reception, especially on color sets, that the cable brought to their audience...

...However, little of what I have just described is a reality today, although isolated experiments have been conducted of just about all of these examples (and many, many more...

...In effect, these stations are slowly becoming regional networks...

...Public participation in political events and meetings might even be increased by their direct cablecast...

...The potentials of cable television—sometimes called broadband cable communications—are well known to many government officials...

...Ethnic singing and dancing might appear on television regularly from some of the many diverse cultures that never really melted into the pot...

...But it is never more than one of the interests to be compromised against all the others...

...The present set of FCC cable television rules went into effect on March 31, 1972, but the FCC's own advisory committee has criticized their laxness...

...The organized public was not formally represented at any of these meetings...

...in most of the country, they do considerably better than that...

...Motion picture producers would seem to come out ahead since the cable industry has been given enough growing room to become a substantial customer...

...But the FCC offered little enforcement, if any, and only one ambiguous line about the protection of privacy...

...Up until that time, only a few of the nation's largest cities had been thought by broadcasters to be capable economically of supporting so many stations...

...From the manufacturers' point of view, there was also little to get excited about...

...In the long run, it is possible that the networks will find the affiliates superfluous...