The cable industry generated nearly $23 billion in 1994. Over 95 percent of the entire country is wired for cable, and over 65 percent of all US households with TV sets, subscribe to cable for video programming.
Most cable operators face no direct competition in the geographic areas they serve. Limited competition is felt from alternative technologies like Direct Broadcast Satellite TV (DBS), Satellite Master Antenna TV, and Wireless Cable TV. Competition from these other industries is growing. Congress, aware the industry lacks competition, authorized the FCC in 1992 to reregulate cable rates for basic service. This may have lowered some cable companies' revenues from subscribers, but the cable industry continued to row. In 1994, advertising revenues exceeded $4.6 billion, the number of cable programmers increased to 99, and the number of subscribers continued to climb.
Much like the telco industry, the cable industry is dominated by big players with substantial financial resources. However, opportunities exist for all types of businesses. The most promising opportunities exist for small businesses and entrepreneurs who: (1) have direct knowledge of the technologies driving the changes; (2) have a vision of how the "new information infrastructure" (e.g. cable interconnectivity with the Internet, two-way communications, or interactive and multi-media programming) can be used by other industries; (3) are capable of conducting financial and acquisition analyses of cable businesses, and assist in mergers and acquisitions.
Examples of entrepreneurial opportunities in high-tech areas are: (1) development of software subroutines in the areas of digitization of analog signals and digital data compression; (2) development of error checking protocols for data stream transmission; (3) development of software routines to allow communication between multi-media systems; and (4) development of set-top boxes for decoding multi-media programming.
Examples of opportunities in low-tech application of cable technology would be to identify businesses in the areas where cable is looking to expand, such as two-way communication applications (public auctions and educational programs; (2) multi-media/interactive advertising sales and development; (3) real estate viewing and transactions; and (4) writing documentation and developing training programs for businesses and individuals on how to use their new systems. Likely markets would be: libraries, medical/health facilities, consumer services, and the travel industry.
As channels increase, opportunities will increase for content providers. Program producers may find more outlets for their programming concepts and video and film products.
Research opportunities are very viable in cable. Cable companies are interested in (1) what their consumers are looking for in interactive multi-media; (2) the effects of interactive multi-media on their various markets; (3) which specialized markets can best afford the new technology and use it; (4) how important is price in selecting a video programming system/technology; (5) how important are other system attributes in selecting a video programming system/technology.
Direct Broadcast Satellite will provide opportunities for ancillary services for enterprising companies. The subscriber base is expected to grow rapidly, thus the manufacture, distribution, installation, and servicing of reception equipment will be required.
Multichannel Multipoint Distributed Service (MMDS), is a pay television delivery system that delivers up to 33 channels of video programming to subscribers in a community via microwave transmission. MMDS systems consist of four parts; (1) a receiving earth station, or headend, located atop a tall building or mountain, where broadcast and cable TV signals are received and converted to microwave radio signals for retransmission. They are sent from the headend facility through (2) an omni-directional transmit antenna to subscribers who are equipped with; (3) receiving antennas which convert the microwave frequencies to lower frequencies, and send them to; (4) the subscriber's consumer electronic equipment such as a TV or VCR. MMDS is line of sight transmission, the receiving antenna must have unobstructed view of the transmitting antenna.
The wireless cable industry generated over $250 million in 1994, and serves about 750,000 subscribers.
As recently as 1992, certain business practices made it difficult for MMDS operators to compete against powerful cable systems because they did not have equal access to cable television programming. Congress was forced to step in, and included a provision in the 1992 Cable Act which required the cable industry to allow wireless cable systems fair access to cable programming.
In 1994 wireless cable operators raised almost $750 million in capital. These funds are being used mainly to acquire multiple systems, and form regional service clusters, much like conventional cable companies. This horizontal integration provides for economies of scale in business administration, and will help establish a critical mass in their operation areas.
Phone companies are beginning to invest more in wireless cable. In their rush to enter the "Video Dialtone" (VDT) industry, several of the regional phone systems have begun acquiring MMDS operators. In early 1995, Bell Atlantic and Nynex, agreed to invest $100 million for a minority stake in CAI Wireless Cable of Albany, NY; and Pacific Telesis recently paid $170 million to acquire Cross Country (Wireless) Cable of Southern California. Many of them plan to use existing wireless cable delivery systems to deliver multi-media video programming.
Research shows that the most opportunities for small business and entrepreneurs lie in the use of wireless technology by phone companies. These include high-tech, mid-tech, low-tech and ancillary possibilities:
(1) development of software subroutines in the areas of digitization of analog signals and digital data compression; (2) development of error checking protocols for data stream transmission; (3) development of software routines to allow communications between multi-media systems; (4) development of enhanced line-of-sight technology; (5) development of sophisticated sub-systems like VOD billion software; and (6) development of set-top boxes for decoding multi-media programming.
Additional opportunities exist in the areas of selling, installing and servicing new types of consumer electronics; (2) testing electronics equipment for large manufacturers; and (3) installing new equipment to upgrade wireless transmission.
LINKS TO FURTHER INFORMATION
Direct Broadcast Satellite is a high-powered satellite system which operates the same way as cable satellite dishes, only signals are broadcast directly to subscribers for pickup by way of an 18" dish antenna. The first DBS service launched in 1994, transmits over 50 channels and is said to have the potential to broadcast as many as 216 video and audio channel simultaneously.