Cable and Other Pay-Television Services
SIC 4841
NAICS 513210
Participants in the global subscription television industry deliver live and recorded programming, most often via cable lines or satellite transmission, to businesses and consumers. Carriers may provide closed circuit television services, direct-broadcast satellite (DBS) or direct-to-home (DTH) satellite services, multi-channel multipoint distribution systems (MMDS) services, and satellite master antenna systems (SMATV) services. Certain firms in the industry also participate heavily in other telecommunications services; see also Telecommunications Services later in this chapter for more detailed treatment of those activities. Television networks are not included in this discussion.
Although the industry's two main segments, cable and satellite, have coexisted for some time, some industry observers foretell the ultimate ascendance of one over the other. Predicting which one might prevail in this struggle depends on the observer: cable companies claim their broadband digital format far exceeds the interactive abilities of satellite, yet satellite proponents have a much easier time implementing mass-audience systems and claim to offer impressive interactive capabilities in their own right. To date, cable is winning the battle in terms of subscriber counts, and cable systems' ongoing technology investments is equipping them to quickly deploy digital services on a large scale in most places. Even Microsoft's Bill Gates has been hedging his bets: while pumping billions into cable, Microsoft also has sizable interests in low-orbit satellite systems that promise to extend the satellite medium into all corners of the global telecommunications field.
In reality, cable television tends to be strongest in parts of the world where satellite is weakest, usually where cable installations were begun in the 1970s and early 1980s, and satellite services lead in markets in which cable infrastructure is lacking. Such an arrangement is unlikely to change anytime soon, even as the respective systems upgrade to digital services. Microwave-based MMDS systems, on the other hand, have thus far only attracted small followings and few expect them to gain a mass viewership on the scale of the other two formats.
The outlook for pay television remains positive. Changes in consumer preferences for video-on-demand and enhanced viewing capabilities have allowed the pay-TV industry to make huge inroads into traditional broadcast markets. Increased disposable income in countries such as China and India with their huge potential markets will also be of benefit to the industry. Countries continue to deregulate industries, allowing companies to pursue foreign investment, although many countries continue to top such investment levels at 49 percent.
In many markets the industry's fastest-growing segments are satellite services and the rapidly increasing digital television market. Indeed, the two formats are increasingly offered in conjunction by leading-edge firms. Satellite service enables operators to establish broad geographic presence rapidly in a relatively non-intrusive way compared to cable or microwave infrastructure, a significant benefit when local laws or terrains restrict the laying of cable. These services also often boast a mix of programming different from that of cable or other alternatives. Aggressive deployment and marketing efforts by such leaders as DIRECTV and some of the Sky Broadcasting ventures have also contributed to the medium's growth. The digital side entices subscribers with higher technical quality in programming and, particularly with digital cable, the potential for interactive services such as Internet browsing and home shopping.
As opposed to terrestrial broadcast methods used by traditional network channels, which may be received essentially by anyone within a certain geographic range, subscription television services employ three methods to transmit controlled-access, high-quality signals: cable, microwave, and satellite. First, coaxial or fiber-optic cables may be directly wired between subscribers and distribution points. Subscriber lines are fed signals by a local "headend," or distribution facility; a network of one or more headends serving a geographic region forms a cable system. All of the world's major cable operators run more than one system, and thus they are sometimes referred to as multiple-system operators (MSOs). Second, services may use a multi-channel, multipoint distribution system (MMDS) to carry signals from a television studio to a microwave transmitter, which then relays them to rooftop receivers. This method is also known as wireless cable. Third, subscription services may offer satellite transmission in which a broadcaster uplinks a signal to a transponder on a satellite, which retransmits either to home dishes (known as DBS or DTH service) or to a satellite master dish (SMATV). Companies offering satellite services may own the satellites used to transmit their signals, but more often they lease space from a third-party satellite vendor.
A separate and increasingly important technological difference is whether services are analog or digital. While both transmit signals via electromagnetic waves, digital services first encode the pictures and sound as binary information, much like computer data, that is then decoded by the receiving television set. Thus, digital signals minimize deterioration during transmission and enable more powerful technical manipulation and embellishment of the programming information. Digital programming may be disseminated through any of the three transmission methods, as well as through terrestrial broadcast, but requires equipment capable of processing digital data at both the sending and receiving ends. Digital technology is in some cases less expensive for operators as well; estimates place the operating cost of digital satellite channels at one-third of that for their analog counterparts. Many analysts say that analog will be history nearly everywhere in the world by 2010.
In addition to their competing technologies, pay-television services differ in pricing and programming options. Most of the world's subscription services involve some form of flat fee, typically monthly, to obtain the most basic level of service. Many operators also offer premium or elective services for additional fees, and some provide programming on a transaction basis known as pay-per-view (PPV) television. Pricing for comparable services in different parts of the world varies widely, as do programming choices. PPV services can be distributed in analog or digital formats via any of the three transmission methods.
Pay-per-view (PPV) services represent a small but expanding world niche. These services typically offer high-profile programming, such as recent movies and live sporting events, on a transaction basis. Broadcasting & Cable, a U.S. journal for the trade, reported that at the close of the century viable PPV markets were established only in France, Germany, Hong Kong, Italy, Japan, the Netherlands, and the United States. Test runs were underway in other nations, however.
The industry's structure varies by region and by country. In Western Europe, for instance, several countries possess similar technological infrastructures, but language and regulatory differences make for highly divergent programming. These countries' telephone carriers, many of which until recently were state owned, provide the bulk of cable television services. However, in an era of deregulation and privatization, they are beginning to face challenges from other vendors. The reverse has been true in the United States, where phone companies and cable operators were traditionally separate and only recently have phone services begun to explore cable services. Similarly, parts of Europe and Asia, such as the United Kingdom and Japan, possess limited infrastructure for cable services, and thus satellite and MMDS services predominate. In such places as the United States and Germany, extensive cable networking exists and, as a result, cable is considerably more common than other forms. Meanwhile, cultural norms, socioeconomic conditions, and the quality and breadth of local terrestrial broadcasts help fashion pay-television demand in particular countries and regions; it may not be taken for granted that programming and delivery methods popular in one well-established market will be popular elsewhere.
Subscription television carriers are often different from, although they may...
To continue reading
Request your trial