Rural America Online: Cable Television Brings the Benefits of Broadband Telecommunications to Rural Communities
Ewalt, James H., Forum for Applied Research and Public Policy
Today's fast-evolving cable television industry offers a staggering array of advanced services and technologies, including high-speed Internet access, a multitude of video channels, and real-time interactive data services. These services offer rural communities, in particular, important economic and social benefits not formerly available, such as instant access to news, sports, movies, and other cultural entertainment; the ability to communicate with other people around the world; and the opportunity to transact business without leaving home. Access to the telecommunications superhighway promotes economic stability and quality of life by connecting people, even those living in rural communities, with the rest of the world.
Traditionally, communities seeking to secure the advantages of telecommunications services have looked to cable television. Other competing systems, such as telephone companies, direct broadcast satellite (a wireless system that delivers communication services to customers via satellite), and multipoint distribution systems (another type of wireless system that is delivered by land-based transmitters) also have the potential to supply telecommunications needs. Yet cable television with its unequaled capacity and speed is best poised to deliver superior service.
The primary challenge of bringing advanced telecommunications services to rural America is, of course, economic. It costs a lot of money to build and operate a telecommunications system. From the facility where the signals are gathered and then transmitted to substations, to the distribution plant, which is a combination of co-axial wire coupled with more-expensive fiber optics, to the converter boxes that convert cable signals into video, data, or other usable information for the subscriber, telecommunications equipment is costly. Meanwhile, the cost of programming, whether popular movies and sports purchased from commercial suppliers or originally produced programs, continues to rise at astronomical rates.
Compounding this economic challenge is the swiftly changing technological landscape. Communities demand - and cable operators want to provide - the latest technologies, including the ability to access an ever-increasing number of channels. Today, system upgrades make delivery of hundreds of channels possible, when only a few years ago the limit was 20 or fewer.
Other technological advances include digital signals, which produce a much clearer picture than analog signals, and high-definition television, which provides enhanced pictures.
In addition, cable transmissions are evolving from one-way to two-way interactive, thereby offering customers the ability to send and receive email, to conduct their banking business, or to shop at home via the cable system.
Moreover, providing telecommunications services is a capital intensive business where the money must be spent up front before new revenues can be generated. System operators cannot begin charging customers for delivery of additional channels of programming or access to Internet service until the new wires, converter boxes, and other technical equipment necessary to deliver it have been purchased and installed. Simple economics dictates that it will take longer and be more expensive to provide these services to small communities where there are fewer potential customers.
As the cable television industry changes, its relationship with local communities, particularly those that are small and rural, is also changing. Cable operators sometimes find themselves locked into adversarial relationships with local government officials. Many communities, dissatisfied with their local cable systems because of their failure to deliver satisfactory products and services, have resorted to traditional regulatory measures such as fines and lawsuits.
These communities - anxious to speed delivery of new services - lose sight of the fact that their demands may exceed the economic capability of their cable operator. …