The growth of cable television transmission systems greatly affected the broadcast industry. The birth of cable television can be traced to the development of coaxial cable (copper wire inside an aluminum tube, both with the same axis), which was invented in the 1930s in the Bell Telephone Laboratories, primarily to improve telephone transmission. It was soon found that a coaxial cable could also carry television transmissions very efficiently. One coaxial cable can carry up to 500 television signals, enabling a cable system to offer a wide variety of programming and still reserve channels for public-service use.
No one knows for sure when or where the first cable television system was installed, but by 1950, early cable television systems were in use. The first cable television systems used a central receiving antenna to pick up programs from broadcast stations and were used to carry television signals to areas where conventional transmission could not reach: valleys, extremely hilly regions, and large cities where buildings interfered with radio waves. Cable systems were then built in areas with good reception as a way of offering subscribers an increased number of channels.
In the 1950s and 1960s, cable television operators began using microwave radio relays for signals. This allowed the Federal Communications Commission (FCC) to establish its authority over cable television, as the FCC regulates any use of microwave transmission systems.
Channel converters were introduced in the 1960s, allowing cable television systems to deliver a greater number of channels, and thus, a wider choice of programs. When cable television operators offered pay-TV to the public in the 1960s, there was much public outcry. The public was so accustomed to being offered TV programming at no charge that they could not accept what seemed to be an outrageous concept. California, in fact, passed a state referendum that actually outlawed pay-TV. The referendum was later overruled by the state supreme court as being unconstitutional.
The broadcast industry also opposed cable television, fearing competition in its markets. In 1968, the FCC actually forbade new cable construction in some areas. Though it later lifted this ban, it continued to restrict what cable television companies could offer the public.
In 1972, pay-TV, or pay-cable, was reintroduced by Home Box Office (HBO), which offered special programs to subscribers who paid a fee in addition to its charge for basic cable service. At first, HBO distributed its programs through a tape distribution system, then a microwave distribution network. Three years later, HBO began distributing pay-cable by satellite, which led to the rapid expansion of cable television as we know it today.
Satellites supply programming to cable television systems by relaying signals from one point on earth to another. To receive signals from a communications satellite, an earth station, or satellite receiving dish, is used. The signals are then transmitted across coaxial lines or hybrid fiber/coaxial cables to the subscriber's television.
In 2006, two-thirds of households with televisions subscribed to a pay service, and for the majority of these households the service is cable television. Other pay television services, such as satellite subscriptions, are also becoming popular. Cable operators began upgrading their systems to offer even more services, such as digital and high-definition television (HDTV) programming and high-speed Internet access. The FCC has also been involved in introducing digital television transmission. The FCC required major network affiliates in the top 10 markets to build digital transmitting facilities in 1999. All other commercial stations in all markets were required to construct digital broadcast facilities by 2006, and in 2009 commercial television stations made the switch to all-digital broadcasting.
By 2012, between 10 and 15 percent of all video viewers, including television and DVDs, were watching on Internet-connected devices—up from 1 percent only five years earlier. A 2015 survey by Deloitte revealed that streaming video services were used by more than 42 percent of American households. The study illustrated that streaming content has overtaken live programming as the preferred viewing method, with 56 percent of consumers streaming movies and 53 percent streaming television on a monthly basis, as compared to 45 percent of consumers preferring to watch television programs live. Many analysts predict that the popularity of streaming video will continue to increase still further in the years ahead.
The United States remained the largest pay-TV market in the world at the end of the decade, generating $94.6 billion in revenue (46% of the global total), according to PwC. However, cord cutting and the transition to streaming video was taking its toll on traditional cable TV. This trend was expected to continue into the early 2020s, with subscription revenue falling at a compound annual rate of 2.9 percent through 2023, to $81.8 billion. The United States also ranked as the world's largest market for over-the-top (OTT) video services, revenues for which were expected to climb from $14.5 billion in 2018 to $23.7 billion in 2023, following compound annual growth of 10.3 percent. In 2019, Apple+ and Disney+ were two major OTT services that made their debut, and more were on the way. In 2020, NBCUniversal/Comcast was expected to introduce an OTT service called Peacock, while WarnerMedia was preparing for the rollout of HBO Max.
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