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Cable Television Technology Deployment
The national information infrastructure (NII) is envisioned as having several components: an interconnected web of networks; information content, consisting of technical and business databases, video and sound recordings, library archives, and images; the software applications necessary for users to access and manipulate these stores of information; and the network standards that promote interoperability between networks and guarantee the security of information transmission. This infrastructure will potentially connect the nation's businesses, schools, health care facilities, residences, and government and social service agencies through a broadband, interactive telecommunications network capable of transmitting vast stores of data at high speed. Because information is a crucial commodity in an increasingly global service economy, the NII is of critical importance to the competitiveness and growth of the United States.
The cable television industry is providing a significant part of the technological infrastructure needed to make this telecommunications network a reality. This white paper discusses trends, predictions, and barriers surrounding the deployment of an advanced cable television network architecture over the next 5 to 7 years. This discussion lays the foundation for the subsequent consideration of the trends, projections, and barriers to the deployment of new services over that advanced cable architecture.
Trends in Cable Television Network Deployment
New technological developments within the cable industry are transforming the existing cable architecture into a state-of-the-art, interactive conduit for the NII. These developments are outlined in detail below.
The Evolution of Cable
Cable television reached its current form during the mid-1970s when the technology was developed that allowed cable customers to receive satellite transmissions via the cable architecture that had evolved from its beginnings as Community Antenna Television. This new delivery system enabled cable companies to offer customers more channels than standard terrestrial broadcasting companies. Cable then surpassed its original mandate to bring television reception to rural or obstructed areas and became a means for delivering new types of programming through specialty channels for sports, news, movies, home shopping, weather, and so on, and through pay-per-view channels. Cable television is a major video service provider, with 63 percent of all U.S. TV households subscribing to cable. As significant, 97 percent of U.S. households have access to cable facilities, making cable a nearly universally available telecommunications infrastructure.
Cable television historically operated through the technology of coaxial cable, implemented in a "tree and branch" architecture. Video signals, in analog format, from satellites, broadcast transmissions, and local television studios are received or generated at the cable facility's headend, which serves as the point of origination for the signals to be distributed to subscribers via coaxial cable. A trunk cable carries the signal from the headend to the feeder cable that branches from the trunk into local neighborhoods. Signal amplifiers are placed into this
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coaxial cable network to prevent the signal from degrading over distance and producing noise or distortion. Finally, a drop cable is run from the feeder cable into a subscriber's home and is attached to the television set.
Channel capacity for cable systems has grown from an average of 12 channels, mostly retransmission of broadcast signals, to an average of over 40 channels today. The number of cable subscribers served by systems with 30 channels or more has doubled from 48.7 percent in 1983 to 95.4 percent in 1993. Channels provided now include satellite delivered cable programming, and a variety of new educational, shopping, and entertainment networks. Using this same architecture as a platform, cable companies are currently exploring their role in the NII by initiating new applications and offering access to other networks and resources, such as the Internet. The expansion of cable's role in the NII requires building on the foundation that was laid over the last 20 years.
The Role of Fiber Optics
The cable industry has been upgrading its coaxial cable infrastructure into a hybrid fiber optic/coaxial cable (HFC) network. Cable companies have installed fiber-optic trunk lines to replace these major arteries of the cable architecture with wider bandwidth (higher capacity) links. Optical fiber is constructed from thin strands of glass that carry light signals faster than either coaxial cable or twisted pair copper wire used by telephone companies. It allows signals to be carried much greater distances without the use of amplifiers, which decrease a cable system's channel capacity, degrade the signal quality, and are susceptible to high maintenance costs. With further upgrades, hybrid coaxial/fiber technology will also be able to support two-way telecommunications. Therefore, a broadband cable network that is capable of delivering more channels as well as high-quality voice, video, and data can be created without replacing the feeder and drop lines with fiber optic technology. This is the reason that the cable industry is perhaps the best positioned industry to deliver on the promise of the NII with a reasonable and prudent amount of investment.
Cable companies began widespread installation of fiber technology into the trunk of the cable architecture during the late 1980s. This use of fiber improved signal quality and lowered maintenance costs. In effect, fiber upgrades paid for themselves in terms of immediate cost reductions and service quality improvements. At the same time, the installed base of fiber served as a platform for further deployment of fiber to serve new business objectives.
In the early 1990s, cable further pioneered the installation of "fiber trunk and feeder" architecture in some of its markets. This approach runs fiber deeper into the network, segmenting an existing system into individual serving areas comprising roughly 500 customers. Time Warner provided a "proof-of-concept" of this approach in Queens, N.Y., with its 1-gigahertz, 150-channel system completed in 1991.
This evolutionary step offered a number of benefits. Backbone or trunk fibers may carry a multitude of available cable channels out to fiber "nodes," and remaining coaxial cable to the home can carry a particular targeted subset of the available channels. Thus, customers may be presented with more neighborhood-specific programming. Penetration of fiber deeper into the network also reduces the number of amplifiers, or active electronics, remaining between the subscriber and the headend. In some designs, amplifiers may be entirely eliminated, resulting in a so-called "passive" network design. Removal of amplifiers considerably simplifies the use of the coaxial cable for return signals from the home or office back to the headend and beyond. The portion of bandwidth reserved for return signals, usually in the 5- to 40-MHz portion of the spectrum, is often subject to interference and other impairments. Any remaining amplifiers must be properly spaced and balanced, a labor-intensive process that must by performed on an ongoing basis. Other technical impairments are unique to the return path, and technical solutions must be optimized. These obstacles are the focus of current industry research and product development. A Cable Television Laboratories (CableLabs) request for proposals issued in the fall of 1994 has spurred a number of technology companies to accelerate the refinement of technology to address return path issues. It appears that the full two-way capability of the coaxial cable, already installed to 90 percent of homes, will be fully utilized beginning in the next 12 to 18 months.
Full activation of the return path will depend on individual cable company circumstances ranging from market analysis to capital availability. There may be intermediate strategies employed by some of these companies to speed the deployment of two-way or interactive services. Such strategies might include alternative
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return paths offering support for asymmetric services, services that may require a narrowband information signal that triggers delivery of broadband downstream information. Narrowband return-path options include wireless technologies such as personal communication service (PCS) or use of the public telephone network for Touch-Tone signaling or use of a narrowband modem.
Hybrid networks, then, are capable of delivering a variety of high-bandwidth, interactive services for a lower cost than fiber to the home, and still provide a graceful evolutionary path to full, two-way, broadband communications. Cable companies estimate that most subscribers will be connected to cable via fiber-optic technology by 1996 to 1998.
The Transition to Digital Television
Digital compression is another technological development that will vastly increase channel capacity in addition to fostering interactivity and advanced services via cable. In contrast to current analog technology, which can collect noise (such as shadows or snow) during transmission over the air and through cable, digital compression technology delivers a signal sharply and clearly while employing a fraction of the bandwidth used by analog technology. Digital technology converts a video signal into a binary form that is stored in a computer, compressing signal information into a fraction of its original size while still permitting its easy transformation into video signals for transmission. The result is that approximately 4 to 10 digital channels can be delivered over the same bandwidth historically required to deliver 1 analog channel.
Thus, compression technology will enable cable customers to have a greater diversity of programming options such as delivering niche programming to narrowly targeted audiences, expanded pay-per-view services that will rival the video rental market, multiplexing channels (carrying a premium movie service on several different channels with varying starting times), and high-definition television. Digital compression upgrades make economic sense for consumers as well, since the converters necessary to decompress digital signals will be provided only to those cable customers subscribing to these new services.
The cable industry has led the development of digital compression technology, and standards for digital compression have been established. The cable industry's innovative work with digital television was spearheaded by CableLabs' 1991 efforts with General Instrument Corporation and Scientific-Atlanta to form a cable digital transmission consortium, which emphasized cable's leadership role in the creation of digital transmission. technology. CableLabs has worked with the industry to foster convergence of digital coding and transmission for cable industry application, to provide technical support for the cable industry's work with the consumer, computer, home electronics, and entertainment software industries, and to cultivate awareness of digital compression technology. Cable companies will be ready to commence the delivery of the technology after hardware/software protocols are implemented. The industry is working to encourage its vendors to accelerate development, and CableLabs recently invented a universal analog-digital demodulation technique to enable the use of equipment using different forms of modulation being used by different vendors.
The cable industry also has looked closely at the impact of deploying digital video compression technology in the real world. CableLabs conducted a 2-year digital transmission characterization study, to (1) determine how well cable systems can transmit high-speed digital data, (2) gauge the maximum bit rate that can reliably transmit compressed video and audio, both NTSC and HDTV, and (3) identify the optimum modulation techniques for achieving three goals: maximum data rates, minimum data errors, and minimum costs for terminal equipment. This information has been distributed to vendors so that they understand the world in which their equipment must perform.
Advanced Television
Cable's leadership in digital compression manifested early in the development of high-definition television. This form of advanced display technology allows cable companies to bring subscribers a television picture with greater clarity and definition than current transmission standards permit. In the NII, new forms of
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information and video display will be just as important as new and expanded transmission media, and telecommunications companies must design networks that support such display technology.
The Federal Communications Commission convened a committee in 1987 to develop a broadcast standard for high-definition video transmission. Although Japan's NHK-MUSE analog solution was favored owing to its early deployment in Japan, cable industry-led efforts proved that a digital solution was a better choice for reasons of flexibility and efficiency. Since that time, cable industry representatives have worked with the FCC's Advisory Committee on Advanced Television Services to develop an industry digital compression standard. The cable industry presently has the broadband capacity to transmit HDTV; in fact, several cable systems in the United States and Canada already have experimented successfully with the delivery of HDTV in several locations, and CableLabs is working on further testing of HDTV standards of transmission.
Regional Interconnection
An important architectural and economic component of cable's ongoing evolution is the construction of regional fiber optic networks to link headends and ''regional hubs," so that cable operators in the same region can share services with one another in order to eliminate headends. Capital intensive network components, such as video storage, signal compression, or advertising insertion, may be shared among operators in a regional hub, thereby permitting operators to offer more services to customers. Beyond the economic benefits, regional hub designs allow cable operators to interconnect with other telecommunications services so that cable can provide video, audio, and textual data to homes and businesses from a variety of sources, and subscribers can request the delivery of specified services (such as electronic newspapers, home shopping, or video teleconferencing). Regional hub systems are being built in San Francisco, Denver, central Florida, Boston, Long Island, and Pennsylvania, among many other markets.
Interconnection of cable headends with each other and with other types of networks raises issues of interoperability. Cable already has the incentive to work toward standards for video transmission and other services in order to link cable systems together. Such standards must be extensible to other types of networks and have global compatibility as well. Both the cable industry and its competitors acknowledge that interoperability is critical to successful deployment of, and access to, the NII; thus, there is a great incentive for industries to cooperate to arrive at standards and otherwise foster open networks.
For example, CableLabs has tested the MPEG-2 (Moving Picture Experts Group) standard for compression and decoding of digital video and audio bitstreams, which allows software, hardware, and network components from different manufacturers to communicate with one another. The MPEG-2 standard will likely be implemented in 1995. Cable is also active in the ATM Forum, an international consortium chartered to accelerate the use of ATM products and services. ATM refers to a cell switching technology featuring virtual connections that allow networks to efficiently utilize bandwidth. The cable industry views ATM as a technology with great long-term potential, and the ATM Forum is a useful venue to discuss interoperability specifications and promote industry cooperation. The ATM Forum is not a standards body but works in cooperation with standards bodies such as ANSI and CCITT. And finally, CableLabs has taken a leadership role in the Digital Audio-Video Council (DAVIC) that was recently created to promote interoperability among emerging digital audiovisual applications, such as video on demand, particularly in the international marketplace. This interoperability among technologies will ensure that technological development will be less costly, that the free flow of information is promoted, and that the NII will be brought to consumers more quickly.
Information Technology Convergence
Cable is in the thick of communications and information technology convergence activity. As part of the ongoing development of cable technology applications, the cable industry is launching initiatives with the computer industry to combine high-capacity transmission with the latest developments in software technology. For example, software developments will enable cable carriers to provide the "road maps" customers will need to
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navigate the information superhighway (such as interactive program guides). Other developments will allow cable to offer expanded services, such as teleconferencing, transaction processing, and home shopping. Intel and General Instrument, in conjunction with Tele-Communications, Inc. (TCI), and Rogers Cablesystems of Canada, are working to create a cable delivery system that is capable of sending data to personal computers at speeds that are up to 1,000 times faster than today's modems. Intel is also developing services tailored to the cable market, including multimedia online services, personal travel planning, software distribution, and Internet access, which will allow the personal computer to become a powerful communications tool in the foreseeable future. Elsewhere, Silicon Graphics is playing an integral role in Time Warner's Full Service Network in Orlando, Fla. And Microsoft recently announced the demonstration of its server software architecture called Tiger for the delivery of continuous media, such as voice and video on demand. Tiger, which is deployed in a cable system's headend and in software for in-home receivers, is being tested by Rogers Cablesystems Limited in Canada and by TCI in Seattle.
Outlook for Future Deployment of Cable Television Architecture
Cable companies plan to invest about $14 billion to institute equipment and plant upgrades through the end of the decade. Some cable companies now predict that the construction of fiber/coaxial hybrid networks will be complete between 1996 and 1998. Upgrade costs for this hybrid network are relatively low since cable's broadband coaxial cable to the home is already in place, making the total investment in broadband/digital technology cheaper for cable than for competitors, such as telephone companies, to develop. The cost of media servers (the digital storage devices that cable systems will use to handle simultaneous requests for data, voice, and video services to the home) and of set-top boxes or home terminals that consumers will use to access multimedia and other digital services are relatively high at present, but will decline as production increases. Set-top boxes with digital decoders, which will bring such services as movies on demand and on-screen program guides to the home, are expected to be widely available in 1996 to 1998. Costs of servers and switching technology that could bring advanced services such as true video on demand or video telephony are expected to continue to fall and will likely be incorporated into cable architectures around the end of the decade.
Today, fiber nodes are being installed, upgrade planning is in progress, regional hubs are being developed, and a number of cable MSOs are conducting near-video-on-demand, video-on-demand, or full service network trials, in places like Orlando, Fla., Omaha, Nebr., and Castro Valley, Calif. Satellite-based video compression, near-video-on-demand services, and some first generation interactivity, such as customer navigation or program selection, will be deployed in 1995 and 1996.
By 1997 and 1998, 750-MHz upgrades should be complete in many areas, with that capacity likely allocated to 78 analog channels and the equivalent of 100+ digital channels. Also in this time frame, near-video on demand will be a mature service, second generation interactivity will begin to appear, and deployment of telecommunications services such as telephony, personal communication service (PCS), high-speed data, and perhaps video telephony will begin. By 2000, broadband, full-service networks will be widespread, featuring ATM/SONET technology, media servers used to provide true video on demand, full motion navigation tools, and advanced television services.
Barriers to Future Deployment of Cable Network Architecture
The ability of cable companies to make necessary investments in network upgrades and new technology may be affected by regulatory issues currently being debated within Congress. The telephone companies' state-regulated monopoly over local telephone service is a primary hindrance in the development of a competitive telecommunications marketplace. Moreover, the rate reregulation mandated by the Cable Act of 1992 has amounted to a loss of $2 billion in cable industry revenue through 1994. Capital formation critical for technological development requires a stable and competitively neutral regulatory environment. The cable industry's development of the hybrid fiber/coaxial network has nevertheless resulted in cable's increased ability to
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act as a competitor with telcos since the hybrid system provides a higher capacity than phone companies' twisted pair wire. Legislation is being debated in Congress that explores the possibility of eliminating the barriers to entry into local cable and telco markets and preempting state regulations that deter phone companies from making their network available for use by the cable industry. Regulatory reform efforts are under way in many states as well. State-imposed restrictions on competition within local telecommunications markets must be lifted so that cable companies can develop competitive services on a national scale; otherwise the information infrastructure may not become national in character. Moreover, competition must be promoted so that consumers can choose among service providers and so that diverse services will be available.
Trends in Telephony Deployment
This discussion has described the historical and prospective evolution of cable television architectures to deliver entertainment and educational video. This deployment has reached a watershed in that evolution, as the existing cable platform becomes capable of delivering a range of new services, including competitive telephony services.
Telephone service has historically been a monopoly service, but this situation began to change with the opening of the old Bell systems as early as the 1950s. By the 1970s, long-distance markets had become competitive, and technological and regulatory forces led to the divestiture by AT&T of its local telephone companies. In the 1980s, further advances in technology led to the birth and rapid growth of competitive telecommunications companies, called Competitive Access Providers (CAPs), that targeted network access services connecting local telephone customers to interexchange carriers. Such competitive options were initially limited to large business customers, but the trend has led inexorably to the need to open up the local loop to competition. This trend has led a number of cable television providers to recast themselves as full-fledged cable telecommunications companies. Several cable companies operate competitive access subsidiaries, and a consortium of cable companies now owns Teleport Communications Group, one of the two largest competitive access companies.
Outlook for Deployment of Telephony Services
Many cable companies are assessing their technological and financial capabilities for competing in the telecommunications business. The advanced capabilities being provided by the evolving cable architecture will provide a platform capable of providing telephony services. A request for proposals (RFP) for telecommunications service was issued by CableLabs in 1994, and the RFP served to announce the intent of six leading cable companies to buy up to $2 billion worth of hardware and software. This equipment would enable cable operators to provide telephone service to residential and business customers over cable television hybrid fiber/coax networks. The RFP has focused vendors on devising affordable answers to issues of reliability and bandwidth management of multiple services over the same HFC network. Further, cable companies are fully aware of the particular demands of lifeline telephone service, and the RFP stipulates requirements for full network reliability.
Regional hub evolution has already led a number of cable companies to deploy class 5 telecommunications switches. Continental Cablevision in New England, Cablevision Systems on Long Island, and Time Warner in Rochester, N.Y., and Orlando, Fla., are among the companies that have done so, aggregating a large number of customers on a regional basis in order to share costs.
Cable companies Tele-Communications, Inc., Comcast, and Cox Cable formed a consortium with Sprint in 1994 to provide telecommunications services nationwide. The consortium's initial action was to participate in PCS spectrum auctions, but plans also commit the companies to invest in network upgrades and to provide capital to other cable companies that may wish to upgrade plant in order to participate in the telecommunications venture.
Time Warner in Rochester, N.Y., may be the first cable company to provide head-to-head competition with a local telephone company. Regulatory actions have cleared the way for competition, and Time Warner has
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devoted resources to upgrading its HFC network in Rochester and installing a complete service management system accommodating back-office functions such as billing.
Personal Communication Service
Personal communication service, or PCS, is a form of wireless two-way communication using a lightweight handset similar to cellular telephone technology. This technology is compatible with existing cable network architectures. Using microcells that transfer a user's call from one cell to another as the user travels, PCS uses the cable industry's fiber optic backbone and feeder plant to interconnect the cells, and thus cable has a built-in advantage over other potential providers by virtue of an existing infrastructure. PCS will distinguish itself from cellular telephone service primarily by its lower cost and greater convenience. More than 26 cable companies received FCC approval to test PCS technology. Cox Cable received the FCC's "pioneer's preference" license for spectrum space to explore PCS systems, and Time Warner has successfully completed testing in Orlando, Fla., of PCS technology and its interconnection with the cable infrastructure. The Sprint-TCI-Comcast-Cox consortium successfully bid for licenses covering 29 of the top 50 markets, covering 180 million POPs (points of presence), making it the largest winner in the recent PCS spectrum auction.
Barriers to Deployment of Telephony Services
Current modes of telecommunications regulation hamper cable efforts to enter the telephony business. In particular, a number of states still prohibit or hinder any competition to the entrenched local telephone company monopoly. The cable industry is seeking to safeguard competition by careful removal of regulatory restrictions. The cable industry is supporting telecommunications reform proposals currently before Congress. These proposals will clarify the rules governing the development of the NII. Ultimately, competition will best stimulate development of new technology and services; furthermore, domestic competition will best build U.S. competitive strengths.
Current legislative proposals can provide a rationally managed transition to foster facilities-based competition for telephone service. Permission to enter the business must include provisions for reasonable access to unbundled elements of the public switched telephone network, as it is in the public interest for interconnection to be as fair and as seamless as possible.
The ability to make decisions in a competitive environment in turn will stimulate appropriate investments in R&D and technology deployment. Presumably, appropriate allowances can be made for joint ventures and mergers, especially for small companies serving lower density areas, to permit the capital formation necessary for building a truly national information infrastructure.
Apart from regulatory barriers, cable companies have recognized that providing lifeline and other telecommunications services requires a high standard of customer service. The cable industry in 1994 initiated a comprehensive customer service program including "on-time" guarantees and other elements that it recognizes are crucial elements in playing its part in the NII. Further, the industry is implementing a new generation of network management and business support systems that are an integral part of a multiple service endeavor providing transactional and other two-way services. In fact, cable is deploying state-of-the-art systems for telecommunications that give it an advantage over existing telephone companies, which are hampered by dependence on "legacy" network management and business support systems.
Trends in Deployment of Personal Computer-Based Services
Cable companies have historically carried a number of data services. These have ranged from news and weather feeds, presented in alphanumeric form on single channels or as scrolling captions, to the X*Press information service, a one-way transmission of data over classic cable systems. X*Press has transformed itself in recent years, forming a multimedia educational service called Ingenius in order to respond to the ongoing changes
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in the cable infrastructure, which now supports expanded capabilities. X*Press/Ingenius is now joined by a host of information providers targeting cable as the delivery mechanism of choice for advanced data services.
These changes parallel those taking place in the commercial and residential data transmission markets. The PC explosion of the 1980s was rapidly followed by leaps in computer networking technology. More and more people at work and at home were becoming familiar with computer networking, ranging from commercial services such as CompuServe or Prodigy to the wide-ranging global Internet. Increased awareness has led to increasing demand for service, and for enhanced levels of service. Cable is in a unique position to meet these demands.
The same highly evolved platform that enables cable to provide telephony also supports high-speed data services. Here, cable's high bandwidth pipeline offers a strong advantage in delivering useful data services accessible by residential and commercial customers over their personal computers and other data terminals.
Information Services
Cable technology can provide customers with access to a variety of information services, including catalog shopping, financial data, and household bill-paying. Because cable systems have a higher capacity for data, audio, and video information, cable subscribers can send and receive information services through their computers at a much faster rate than traditional telephone lines offer. One such service, Ingenius Executive, is offered by cable systems across the country and permits subscribers to connect their personal computers to their cable, using a software interface to receive information services via their computers without tying up their telephone lines. Ingenius Executive subscribers may access news, sports, and weather information as well as stock market and consumer information. Ingenius also operates a service called X*Change, which provides subscribers with a news feed from journalists in more than 20 locations throughout the world, as well as other educational data. The on-line service Prodigy is offering similar services in several markets across the country via Media General, Cox Cable, Viacom, and Comcast. Some of the informational features available through Prodigy over cable include reference databases that offer Consumer Reports, restaurant reviews, and political profiles; children's features such as Sesame Street, National Geographic, and the Academic American Encyclopedia; stock quotes and charts of key economic indicators; travel services; bulletin boards; shopping; and local community information. Several continually updated videotext services are available via cable as well, such as UPI DataCable, which features international and national news, financial reports, and weather, or CNBC, a commercial-free version of the cable channel's programming combined with financial presentations to corporate clients.
Companies may take different or evolving approaches to on-line service access. For some applications, customers may be accessing information stored on CD-ROM databases at or near the cable headend or regional hub. Some forms of information, such as encyclopedias, are particularly suited for such an approach. This may serve as a transitional approach until wide area cable interconnections are in place to allow information access from any remote sites. Some forms of frequently updated material may require such networked access.
Internet Access
In addition to these information services, upgraded cable networks are now able to provide high capacity access to the Internet to customers with home computers. With a cable connection to the Internet, businesses and consumers can pay a flat monthly fee for access and can receive electronic mail, access to USENET discussion groups, ability to connect to computers around the world via telnet, and access to information archives through file transfer protocol (ftp) and gopher. This option was recently offered to Continental Cablevision customers in Cambridge, Mass., in a joint project with Performance Systems International, Inc. Subscribers receive Internet access for a monthly fee through a cable converter box that does not interfere with cable television service and works at speeds hundreds of times faster than telephone modem calls. The half-megabit per second cable link allows customers to download large data files in a fraction of the time it takes over the telephone, and it even
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provides enough bandwidth to watch videos over a personal computer. Cable's Internet gateway not only allows customers faster access to the Internet but also a greater variety of creative applications of Internet multimedia features.
LAN Interconnection
Some larger businesses presently use cable-provided facilities to link their local area networks to transmit high volumes of data. The evolving cable network architecture will soon enable smaller businesses to benefit from advanced telecommunications services. TCI and Digital Equipment Corporation are working jointly to develop new business telecommunications applications using TCI's HFC facilities and DEC's computer networking (Ethernet) technology. Cable's high bandwidth infrastructure combined with DEC's computer networking technology will allow remotely located LANs to share computer resources and data. Cable networking technology also will enhance opportunities for product design and manufacturing as well as science and engineering research. For example, Times Mirror Cable, DEC, and Arizona State University have tested a broadband metropolitan network called Economic Commerce Net (EC Net) that supports manufacturing applications for aerospace businesses in the Phoenix area. EC Net allows these businesses to collectively improve manufacturing by offering desktop videoconferencing on manufacturing processes, a computer aided design (CAD) tool that permits remote businesses to view and manipulate designs simultaneously, and a multimedia storage and retrieval facility for data, video, purchasing specifications, and other information.
Cablecommuting
The cable industry's HFC infrastructure has the potential to increase the already popular notion of working from home via the information superhighway. Approximately 8 million Americans already work through some form of telecommuting, and cable's high-volume, high-speed broadband technology will allow millions more to "commute" to work through cable. This technology will lessen the burden of commuting for both businesses and their employees who may be geographically isolated, physically disabled, or single parents. TCI is currently testing a cablecommuting project that will allow its Denver area customer service representatives to receive customer calls at home. TCI is also testing a service, developed by Hybrid Networks, Inc., in the San Francisco area that transmits high-speed data over a standard cable channel and low-speed data through telephone lines to create an interactive corporate/home network. In addition, technologies such as video teleconferencing and high-speed fax transmission that will be delivered via cable in the future will enhance cable commuters' options.
Research Support
The cable industry's broadband architecture will allow researchers in a variety of fields to share advanced computing applications or scientific instruments from remote locations, resulting in comprehensive research at a fraction of current costs. One such network is being offered by Cablevision Systems in the New York City metropolitan area. FISHNet (Fiber optic, Island-wide, Super High-speed Network) is a high-capacity fiber optic network that links the State University of New York-Stony Brook with the Brookhaven National Laboratory and Grumman Data Systems. The system has been used to revolutionize the efficient use of medical imaging and diagnostic techniques as well as to develop modeling procedures for the transport of contaminants in groundwater.
Outlook for PC-Based Applications
Personal computers continue to penetrate the home market. Moreover, most home PCs today include a CD-ROM attachment. This indicates strong demand for content-based services running over PCs. CD-ROMs, however, may be a short-term solution. Network-based content servers interconnected via cable company high-speed
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links are a more efficient way for customers to access updated databases, news, and other forms of information.
Further, data networking has been an explosive growth area within information technology in recent years. Business applications require more and more bandwidth, especially in interconnecting disparate LANs, and cable is the provider with the greatest capacity to meet the mushrooming demand for bandwidth.
Barriers to Deployment of PC-Based Services
There appear to be very few barriers to cable deployment of high-speed data transmission. The cable platform is steadily evolving to a hybrid digital and analog transmission system. Data modems already exist, and improved models are under development by such companies as Intel, LANCity, Zenith, General Instrument, and Hybrid Networks, Inc. Modem prices are dropping precipitously—LANCity announced in May 1995 that its 10 Mbps cable modem was priced at $595, compared to several thousand dollars just 8 months earlier. Return path issues that were mentioned previously in connection with cable plant upgrades also will need to receive attention in the context of PC-based services. Customers may not desire totally symmetrical data communication, particularly residential user, but the return path still must be reliable. Bandwidth demand for return signals may be very dynamic, requiring cable systems to be able to allocate frequency in an agile manner. Upstream, broadband transmission over cable is expected to be fully supported within 5 years.
Trends in the Deployment of Interactive Television
The convergence of telecommunications and computer technology is transforming American society. In the cable industry, the convergence of cable's high-speed transmission capability and computer hardware and software intelligence is not only enabling cable to deliver telephony and high-speed data services, but is creating new opportunities in entirely new forms of entertainment, education, health care, and many other areas. Cable companies, such as Time Warner in Orlando, have now deployed operational systems actually delivering such services.
Video on Demand
Digital compression technology, which enables cable companies to offer a greater number of channels as well as interactive capability, ensures that video on demand will be part of the information superhighway's features. This service allows customers to select from a range of movies, sporting events, or concerts for viewing at their convenience. Many cable operators, such as Paragon Cable in San Antonio, are already offering the less costly option of near-video on demand, which allows customers to view programs with start times every 15 or 30 minutes. True video-on-demand systems are currently being tested in Omaha, Neb., by Cox Cable; in Yonkers, N.Y., by Cablevision Systems; in Orlando, Fla., by Time Warner; and in Littleton, Colo., by TCI. A specific service, Your Choice Television (YCTV), packages and delivers television programs on demand. For about $1 per program, viewers can order a weekly program up to a week after it airs and a daily program the day after it airs. YCTV has been tested in eight markets, including Continental Cablevision in Dayton, Ohio, and TCI in Mount Prospect, Ill.
Interactive Entertainment
With the pioneering technology that allows interactive capability, many new information and entertainment options are being created within the cable industry. For example, the ACTV network, which was tested via Continental Cablevision in Springfield, Mass., and is now being offered to subscribers in Montreal, allows viewers to alter the content of the TV screen during the course of a program. Viewers can call up
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statistical information on players during sporting events, watch a synopsis of the daily news headlines, and choose the stories on which to receive detailed reportage, or even change the pace of an exercise program. Interactive commercials will soon be available on ACTV so that customers may receive more information or discount coupons for particular products or services.
Education and Distance Learning
Cable technology has enabled the development of interactive educational applications and distance learning that improve not only the way students learn but also the way teachers teach. Jones International's Mind Extension University has been offering college courses via cable television for years, and cable companies are expanding educational opportunities by building networks devoted to education. Students can now learn from national experts or students in different cities, access online libraries from around the world, or take "virtual field trips" to museums while remaining in the classroom. One such interactive learning pilot project, called the Global Laboratory Project and currently run by Continental Cablevision and the National Science Foundation, connects students in Cambridge, Mass., with those from 27 other states and 17 foreign countries to explore environmental problems. The students monitor climate change, pollution, and ultraviolet radiation and share their data among themselves and with scientists to gain a global perspective on the environment.
As part of its effort to expand learning opportunities through the use of cable technology, the cable industry has initiated a nonprofit program to provide schools with basic cable service, commercial-free educational programming, and teacher support materials. The project, Cable in the Classroom, serves nearly 64,000 schools and supplies more than 525 hours of commercial-free programming for educators each month. Highlighting the industry's role in distance learning, Continental Cablevision now operates an interactive learning network called the Cable Classroom in Enfield, Conn. It permits teaching in one school district and simultaneously offering to several others advanced math and language classes that would otherwise not be offered because of low enrollments. Because the system uses two channels, the teacher can also view the students and home cable customers can change channels to watch either the students or the teacher. The Cable Classroom also offers teachers professional development by conducting interactive meetings with teachers in four Connecticut school districts. In another example, the Ohio Cable Foundation for Education and Technology is promoting distance learning through a range of applications throughout the state. For example, TCI in Zanesville provides data retrieval services and other multimedia distance learning applications.
Interactive Program Guides and Navigators
Because of the expected explosion in future cable programming and service choices, customers will seek greater choice, control, and convenience with regard to their viewing environments. These needs will spur demand for a personalized form of channel navigation. Several interactive subscriber guides are being developed and tested. One of these on-screen guides, StarSight, is available in Castro Valley, Calif., through Viacom Cable. Time Warner has developed its own navigation system for the Orlando Full Service Network.
Interactive Shopping and Advertising
Companies like Time Warner are testing interactive shopping services, such as ShopperVision, that enable customers to see and evaluate products over interactive video catalogs before purchasing. Immediate ordering and the requisite billing and payment mechanisms are integrated as well.
Interactivity will permit cable subscribers to request consumer information on businesses, products, and services at the touch of a button. Real estate advertisements have been among the first to make an impact in the burgeoning marketplace. A program called Home Economics, available throughout New England via Continental Cablevision, permits viewers to request specific information about homes. Moreover, an interactive channel devoted to classified real estate advertising is in the works; the Real Estate Network will provide customers with
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the ability to view real estate in full-motion video and to access details on contractors, mortgage rates, and lending institutions.
Games
The Sega Channel, a joint venture between Time Warner and TCI that offers a library of Sega video game titles for download through cable systems, is being tested in several markets. Subscribers use a "tuner/decoder" cartridge that tunes in the channel, provides a menu, and downloads a game choice. Scientific-Atlanta and General Instrument Corporation are presently manufacturing adapters that will permit their set-top boxes to serve as vehicles for the Sega games. Multiplayer games are also a possibility across full service networks such as Time Warner's Orlando system.
Health Care
The cable industry's bridge to the information superhighway has important consequences for new developments in health care. Through the use of telecommunications technology for medical applications, doctors can consult with researchers or specialists in other locations, conduct video seminars throughout the country, consult visual information from remote libraries or medical centers, and share medical records or images such as X-rays. Paragon Cable in Portland, Ore., uses its institutional network to transport a telemedicine or "cablemedicine" network that connects 12 medical facilities and schools throughout the city to provide information from video conferences held across the United States. Cable also has the potential to deliver a standardized means of electronic health insurance claim filing, and personalized health information systems are being tested that use terminals in the home to connect consumers to a health care databank that advises customers about self care based on their personal medical records.
Outlook for Interactive Television
The preceding discussion outlined a variety of potential interactive services that may be provided over cable. The range of experiments, both technical and market trials, appears to bode well for the flexibility of cable to provide the services. There have been no technology hurdles discovered in making the cable systems perform at a level needed to support interactivity. Consumer demand for such services over the next 5 to 7 years is the wild card for all prospective services. But early cable trials point to reasons for optimism. TCI's trial in a Denver suburb compared near video on demand (offering a small selection of hit movies starting every 15 minutes) to video on demand (offering a large library of movies, starting immediately on demand). Indications were that customers are receptive to increases in choice and convenience. The initial reports on the new DBS services also indicate increased buy rates from customers given a larger menu of programming from which to choose. Thus, along the dimension of upgraded entertainment services with elements of interactivity in terms of navigation and control, it appears that consumer demand will support growth of such services over the next 5 to 7 years.
More advanced levels of interactivity also appear to make sense. The same desire for choice and convenience appears to be driving early success for the Sega Channel, which delivers video games to the home. The availability of more video game choices in the home is attractive, and one might assume further that adding elements of interactivity, such as multiplayer games, would drive increased customer acceptance.
In the area of shopping and related services, many providers are optimistic about market prospects. Electronic commerce over the Internet is spawning a flurry of activity by companies trying to perfect a secure means of conducting business over electronic networks. Cable's broadband capability appears to provide significant enhancement to such commerce as a natural showcase for products through video catalogs incorporating customer interaction.
As noted above, the cable platform supporting such interaction is likely to be widely available within the next 5 years.
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Barriers to Deployment of Interactive Television
Barriers to interactive services may manifest as financial concerns or as marketing uncertainties. As with data services, interactive services will take advantage of the in-place cable platform capable of flexible, high-capacity support. Deployment of interactive services will require only incremental investments, largely in the customer premise equipment necessary to plug into the cable platform. Such an incremental approach will minimize financial risk given remaining uncertainty about the potential size of the market. As noted above, technology and market trials give reason for optimism. Nevertheless, cable's evolutionary approach offers welcome security in the event that forecasts are too optimistic.
Conclusion
Cable television companies operate a highly evolved platform capable of delivering a variety of telecommunications and information services. Additional technology components that will enable particular services contemplated for the national information infrastructure to run over that platform appear to be coming on stream at reasonable time frames and cost levels. The evolutionary nature of cable allows cable companies to invest incrementally and cost effectively only in those technologies that serve clearly defined needs or market demands. There are no significant technological or financial barriers to continued deployment of cable architecture. However, regulatory uncertainty still remains problematic.
Addendum
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The cable industry already provides broadband facilities to 64 percent of television households, and makes such facilities available to 96 percent of television households. Cable facilities are available to approximately 90 percent of business locations as well, although businesses have not historically subscribed to cable. Beyond this level of service, cable companies are currently upgrading existing systems by migrating fiber optics deeper into networks, creating individual service areas of roughly 500 homes. This expands available bandwidth to around 750 MHz. The deployment of such upgrades may develop as follows:
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Telephony
Capabilities for providing wireline telephony over cable will track the progression of cable system upgrades as described in the response to question 1. Telecommunications switch deployment is under way as systems migrate to regional hub designs. Several cable companies have formed partnerships with Sprint and other companies to provide a full range of telecommunications services, including wireless personal communications services. Actual penetration of such cable-provided services in a competitive market is difficult to project. In the United Kingdom, cable operators offering local telephony service have reported selling telephony services to over 20 percent of homes where the service is available, indicating a significant market for competing providers of telecommunications.
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PC-Based Applications
Digital, PC-based applications may be rolled out almost immediately, based on cable's broadband pipe into the home and the development of affordable cable modems, which are probably less than a year away. Alternate return paths such as telephone lines could be used in a hybrid approach. Availability of a broadband return path for such services will follow the progression of cable system upgrades as described in the response to question 1. Penetration of such services is difficult to project, particularly in the face of phenomenal growth rates in Internet connectivity.
Interactive Television
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Again, it is important to note that interactive services may be deployed on an incremental basis matched to customer demand, once an upgraded infrastructure is in place. Thus, availability of these services will closely track the progression of cable system upgrades as described in the response to question 1. Evidence from early interactive field trials indicates a definite customer preference for increased choice, convenience, and control by the customer.
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This question is answered in the foregoing white paper.
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Cable's existing bandwidth to the home, combined with upgrades described previously, will reach 750 MHz. Using 64 QAM digital modulation, this implies a total digital bandwidth of close to 3 gigabits per second. Allowing for preservation of existing analog services, available bandwidth would be closer to 1.3 gigabits per second. Current industry plans call for reservation of the 5- to 40-MHz portion of the spectrum for the return path use by customers for upstream transmission. Using QPSK or 64 QAM digital modulation, 35 MHz could handle anywhere from 50 Mbps to 135 Mbps. Thus, the amount of raw bandwidth available over cable is substantial.
Cable modems under development call for effective bandwidths up to 27 megabits per second per 6 MHz channel. The actual amount available depends upon usage within the roughly 500 home nodes described previously. Assuming subscriber penetration of 60 percent gives 300 potential users. For PC-based services, one may further estimate that 40 percent of homes have PCs (numbers are roughly similar for cable or noncable homes). Further, less than 20 percent of PC homes have PCs with modems, so that the range of potential data service users may fall anywhere between 8 percent and 40 percent. Assuming growth in PC penetration, we may assume that 33 percent of subscribers are potential data transmission customers, or 100 homes. And probable peak usage will be less than 33 percent, so that one might expect 33 simultaneous users. Thus, close to 1 mbps would be available given the above assumptions. Of course, data are packetized so that individual customers would use considerably less than a full Megabit per second at any given time.
This is a lower limit. One might initially increase capacity by allocating additional 6 MHz channels on demand. Cable companies may migrate fiber further into distribution networks, creating even smaller nodes and expanding bandwidth from 750 MHz up to the feasible maximum of 1.2 GHz. Cable companies are researching dynamic bandwidth allocation techniques allowing the flexibility to meet demand. Digital modulation techniques will also continue to allow greater amounts of data to be transmitted over existing bandwidth.
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The cable industry plans to spend $28 billion over the next 10 years on plant and equipment upgrades (according to Paul Kagan Associates). This works out to approximately $460 per subscriber. Upgrades to evolve cable systems to
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multipurpose platforms cost in the range of $100 to $150. Costs are rapidly dropping for cable modems necessary for PC-based data services, and should reach the $200 to $300 range in the next year or two. Capital investment for such services is incremental, and will be matched to new revenue streams, which may in turn expand capital available for further technology deployment. Costs for telephony service over cable are difficult to quantify because they are highly dependent on penetration assumptions. Interactive television applications may require server and other technology costing as much as $500 per subscriber when widely deployed. Again, investment will be incremental and matched to new revenue streams.
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The cable platform is steadily evolving to a hybrid digital and analog transmission system. Data modems already exist, and improved models are under development by such companies as Intel, LANcity, Zenith, General Instrument, and Hybrid Networks, Inc. Return path issues that have been raised in connection with cable plant upgrades do not appear to present obstacles to customer generation of content. Bandwidth demand for return signals may be very dynamic, requiring cable systems to be able to allocate frequency in an agile manner. Upstream, broadband transmission over cable is expected to be fully supported within 5 years.
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Current modes of telecommunications regulation hamper cable efforts to enter the telephony business. In particular, a number of states still prohibit or hinder any competition to the entrenched local telephone company monopoly. The cable industry is seeking to safeguard competition by careful removal of regulatory restrictions. The cable industry is supporting telecommunications reform proposals currently before Congress. These proposals will clarify the rules governing the development of the NII. Regulatory relief from some cable pricing regulation will permit rational capital investment. Ultimately, competition will best stimulate development of new technology and services, and further, domestic competition will best build U.S. competitive strengths.
Current legislative proposals can provide a rationally managed transition to foster facilities-based competition for telephone service. Permission to enter the business must include provisions for reasonable access to unbundled elements of the public switched telephone network, as it is in the public interest for interconnection to be as fair and as seamless as possible.
The ability to make decisions in a competitive environment in turn will stimulate appropriate investments in R&D and technology deployment. Presumably, appropriate allowances can be made for joint ventures and mergers, especially for small companies serving lower density areas, to permit the capital formation necessary for building a truly national information infrastructure.
