THE THIRD PHASE

A FORECAST OF THE FUTURE OF THE CABLE INDUSTRY
PUBLISHED IN ‘CABLE COMMUNICATIONS’ IN 1980

It is easy to predict that the cable industry is on the edge of a period of substantial growth. The question is: which edge?

It is now reasonably clear that the cable industry is entering its third phase of development. Earlier phases were:

1. Start-up – during the fifties and early sixties the main concentration of cable companies was on gaining credibility. The concept itself needed to be sold to the public and to be understood by governments at various levels.

2. Expansion – during the late sixties and early seventies the industry in Canada expanded to cover most major metropolitan areas and gained a very high level of public acceptance. The main service offered, however, continued to be, essentially, improved video signals. The success of this phase meant that without new products there could be little revenue expansion in Canada for the 1980’s and beyond.

3. The Broadband Network – the phase we are now entering is one in which the industry will offer a wide range of services to be marketed to our well established subscriber base. The potential of this phase will be the arrival of the long predicted Wired City, making full use of the broadband capabilities that the cable companies alone provide to individual homes.

The transition to this new phase, however, will not be easy. Competition from the telephone companies and others will be keen. Despite the leading edge thinking of the Department of Communications and other government bodies, regulatory legislation may well lag the capabilities of the industry to realize its full potential.

Most important, however, the cable industry leaders will have to change their approach from being passive carriers of other people’s signals to being entrepreneurial retailers of a wide variety of services. This will require continued meaningful discussions with governments at all levels to ensure that the public is protected where it should be, i.e. in the area of rates and quality of service for what may now be considered our basic service. However, the industry must ensure that the government does not feel it could, or should, regulate all the other innovative services that could be provided by the cable companies or other suppliers of services on cable.

The current reliance of the cable companies on pay television as the main thrust of the 1980’s may be misplaced. I view pay TV as being only one of a number of exciting opportunities.

The challenge to our industry will be to define a new and comprehensive role as a national, and indeed international, retailer of broadband services to offices and homes.

Some specific predictions for 1980 would include:

• the practical realities of communications’ technology will finally cause a breakthrough in the pay TV bottleneck in Canada.

• if the federal government does not keep to its announced schedule of licensing pay TV in Canada by December 1st, 1980, the provinces will move in aggressively to ensure that this desired new service will be available to their provincial constituents.

• the Pay Television Network consortium of the cable companies will be the chosen vehicle for pay television in Canada, and the broadcasters and film producers in Canada will accept the invitation to join in this national effort.

• during the early part of the eighties, the larger MSOs will continue to expand in the United States to fill the revenue gap until a freer regulatory atmosphere is established in Canada. This should be welcomed by all levels of government as it is providing a new form of export from Canada to the United States and elsewhere.

• the regulation of the cable industry will partially move to the provinces during 1980 in advance of a new Broadcast Act being put into place. I doubt that a new Act will be passed during the year despite the best efforts of the federal government.

Meeting the challenge of the eighties rests with the industry. It is too easy to blame regulators or others for lack of progress. The industry must be ready to negotiate with government the legitimate expectations of the government from industry and get acceptance of an unregulated approach for anything beyond these.

The third phase of the cable industry promises to be an exciting one.