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configured this way can provide for extremely high-speed access to both symmetrical and asymmetrical data services, as well as the ability to evolve to even higher speeds and higher usage levels through further segmentation of the coaxial "last mile" of the network. Further, because analog and digital carriers using completely different modulation schemes and protocols can coexist, an evolutionary path is kept open for continuing advances in digital services and technologies, while, at the same time, allowing the pragmatic adoption of technology options to build cost-effective systems today.

In building a hybrid fiber coax plant, the cable television industry is providing a cost-effective, reliable, ubiquitous transmission system that can simultaneously support many separate networks, the sum of which makes the necessary upgrade investment a sustainable one for any company in our industry. Time Warner, for example, currently has plans to build at least four separate networks on the foundation of its fiber-upgraded plant. Cable Television Laboratories, an industry R&D consortium, is working with a group of broadband equipment manufacturers to develop an open standard that is called the Spectrum Management Application, to allow the coexistence of these multiple networks and the maximization of the efficiency with which the radio frequency spectrum within the transmission plant is used.

In Time Warner's upgraded plant, for example, there are plans for the coexistence, and separate operation, of networks that will continue the broadcast of scores of analog TV channels and will begin the delivery of high-quality digital telephone service, the provision of high-speed personal computer interconnection service, and access to a wide range of interactive video services. An additional network designed for interconnecting PCS radio microcell sites may be integrated into that residential network, or may be operated independently.

Time Warner's personal computer interconnection services will incorporate support of the Internet Protocol (IP), and they are in the process of working with a number of companies that are designing the necessary hardware and software systems needed to provide a service of this type. Many companies in the cable television industry envision initially offering access to a variety of online service providers, as well as e-mail and direct connection to the Internet at speeds currently unavailable to almost anyone, anywhere. We do not pretend to know how the Internet will evolve; there are those who claim that it will one day provide video, shopping services, and all the rest. It is far from that today and has many shortcomings, as recent security problems have demonstrated. But regardless of whether PC interconnection ultimately flows through a number of competing national online services or through the laissez-faire anarchy of the Internet, cable intends to offer a highly competitive avenue for local residential and business access to any viable service provider.

On a separate front, the industry is just beginning to understand interactive television services through projects like Time Warner's Full Service Network in Orlando, and while this and other trials are beginning to teach us a few hard-won lessons, it is far too early to set the standards for technologies that are still in their early innovative phase. We are, however incorporating standards wherever we can, particularly for content (MPEG, for example.) There will still be public policy questions to be dealt with in interactive TV, but they should wait until the technology and business mature at least to the point that such issues can be intelligently debated based on information and experience that we will gain from the trials that are under way.

An example of the harm that government regulation can do is evidenced by the so-called rate regulations that the Federal Communications Commission (FCC) enforces on the cable television industry. These regulations are over 600 pages in length and are so complicated that the commission has issued corrections and clarifications that total several hundred additional pages. While many people think that these rules are just about the subscription fees that operators may charge to a customer, they do not understand that these regulations also directly affect whether or not we can include the cost of a new piece of equipment or a mile of fiber-optic cable in the cost of "doing business" and adjust our rates to recover the expense. In fact, the top FCC official recently replied, in response to a question about "upgrade incentives," that upgrades are just a code word for rate hikes. Any premature attempts to set either mandated technological standards or regulations shaping business structure have the real potential to slow innovation in a field that may have great future value to American business and society. Such standards may be called for by industries that have a stake in the status quo and wish to limit or confine the directions that innovation may take, but these calls must be resisted if the country is to benefit fully from the fruits of the process of invention and exploration.



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