One of the most difficult challenges facing the early cable entrepreneurs concerned the attachment of cable on existing poles so it could reach consumers. And it seems that the topic is as popular as ever. I followed the recent Gulf Power vs. the FCC court case with interest, but what continues to catch my eye is the Google entry into Kansas City.
As a free market guy, I look forward to seeing the value proposition that Google will present to its potential customers. In the interim, the company will face many of the same difficulties that the early cable entrepreneurs confronted. Of course, the technology has changed. In fact, the cable industry has actually paved the road to make their entry into the market much easier. This is the nature of new opportunity in a fast-changing marketplace driven by technological advances. With that in mind, let’s review the challenges facing the cable industry in its early days.
Cable found its original niche in the late 1940s and early 1950s not in the big cities, but in rural America. They were the days of community antenna and very limited programming. Cable solved a basic problem for the consumer, which was how to bring the distant signals from the large metropolitan areas to people living more than 50 miles away from the television transmitter. Television was the hot technology and owning a set was a symbol of success to the burgeoning middle class.
It must have been very frustrating to be in a place like Liberty, New York, and have the broadcast signal from New York City just out of reach. There were many models for building out systems across the United States. In some cases, the local community would turn to one of its trusted local business people to help finance the first cable system in town. The entrepreneur would find a high point near his location, clear the land, build a base, and install an antenna on a tower to capture the distant signal.
The pioneer operator might obtain a bank loan to invest in the plant and technology that would get the signal into town and out to the customer. There was a sense of community accomplishment that their town could receive a television signal just like the large cities across America. The entrepreneur did this without assistance from the federal government, often risking his reputation and family fortune in the process.
One of the entrepreneur’s biggest and most expensive challenges was attaching the cable to a number of poles until it reached the consumer’s home. AT&T owned many of the poles and at the time was a national monopoly. If the telephone company did not own the pole, the municipal utility did. Each made a financial claim on the fledgling operators, some more outrageous than others, for the right to use the pole. The cable industry and the National Cable Television Association (NCTA) fought this battle for almost 30 years before receiving some relief from Congress in 1978. As the Gulf Power vs. the FCC case demonstrates, that battle continues to this day.
In Kansas City, Google benefitted from the battles fought by the cable industry. The utility companies in Kansas and Missouri own the poles and Google has the right to string its fiber optic network in the same space used by the cable and telephone companies by paying the going rate. Competition of this type is bound to be a driver of innovation. There is significant competition in Kansas City and Google, when it comes online, is simply one more competitor. Cable is a highly innovative business and up to the challenge. I expect the story will become even more interesting over time.
(Larry Satkowiak is president and CEO of The Cable Center, the nonprofit educational arm of the cable industry. The Center preserves cable’s enduring contributions to society, strengthens relationships between cable and academia and unites the industry around the advancement of exceptional customer service. www.cablecenter.org)