Beginning in June, if you live in a certain part of Arlington, you will be able to turn on your television and see any of the following programs:
Continual stock market quotations with added financial news.
Twenty-four-hour audio news accompanied by newsphotos.
Full-length, feature motion pictures - "Annie Hall," for example.
Comparative shopping guides showing the day's prices of the same products at three dozen Arlington drugstores.
Adult education classes at an Arlington school.
Continuously updated satellite weather photo of the area.
Local news from a San Francisco independent television station.
An Atlanta Braves baseball game.
And more, including perfect reception of all Washington and Baltimore commercial television stations and four area educational stations.
Welcome to the world of cable television, an institution that is scaring the ratings off of those int he government who worry about how to regulate this 20-year-old communications force.
The Arlington Telecommunications Corp. expects to start serving its first homes in June with a cable system that it hopes will reach about 72,000 homes in Arlington County by 1980.
There is one word to describe the state of the art in the cable television industry - confusion. One only has to read the federal cable regulations to realize just how confusing the subject has become.
Meanwhile, cable television companies are popping up around the country with the approval of local governmental bodies charged with awarding franchises. There are approximately 3,700 cable TV systems in the United States, serving 8,000 communities and 12.5 million homes.
Estimated annual revenues of the cable industry are $900 million and profits are better than they have ever been.
By the end of this year, according to the National Cable Television Association, an estimated 14 million homes will be wired to cable - nearly one-fifth of all the homes in the U.S. with television.
A recent study by the Department of Commerce projects that cable subscribers will be added at a rate of 9 percent annually to a total of about 25 million in 1985.
With an apparent move toward deregulation in the offing from congressional staffers who are rewriting the Communications Act of 1934 - which made no mention of cable - there is a chance that growth could even be faster.
Just what is cable television, and why is the government having so much trouble trying to figure out what to do with it?
Community Antenna Television (CATV), often referred to as cable television, was created in the early 1950s to bring distant television signals to isolated communities. The idea was to erect one huge antenna in an area that because of local terrain or distance from transmitters has little or no television reception, and then, for a fee, string wires from that antenna to a subscriber's home to improve reception.
But in the late 1960s, cable TV evolved into its own entertainment medium, offering not only improved receptionof existing television signals, but programming from distant cities and - generally for an added charge - additional forms of entertainment. First-run movies, for example, could be run on special channels with no commercial interruption.
But as the cable industry grew into a major entertainment force, the broadcasting industry began to worry that it would have a serious effect on traditional broadcast business.
"The Federal Communications Commission backed into regulation of cable television because of its potential negative impact on conventional broadcasting," according to a report issued in January 1976 by the House Communication Subcommittee of the Interstate and Foreign Commerce Committee.
The FCC began to regulate cable in the 1960s, "because it concluded that broadcasting, and thus the public interest, would be adversely affected by cable's unregulated growth," the report said.
In a far-reaching decision in 1972, the Supreme Court - in the case of U.S. vs. Midwest Video Corp. - ruled that cable operators must originate their own programming, affirming a rule set by the FCC. That decision also affirmed the FCC's authority to regulate cable.
In that five-to-four opinion, Chief Justice Warren Burger wrote a separate affirmative opinion. He indicated his support of the government's stand in that case, but cautioned that the FCC's action "strains the outer limits" of its jurisdiction. Burger cited "the need of a comprehensive reexamination of that statutory scheme as it relates to (cable), so that the basic policies are considered by Congress and not left entirely to the commission and the courts."
Basically, the problem was that Congress had never considered the role of cable systems in the communications spectrum, because cable did not exist in 1934 when the Communications Act was written.
Since 1972, there has little activity in cable regulation as the FCC moved on more pressing, and less confusing, issues. But the House Communications Subcommittee held hearings last year on the entire Communications Act as the basis of a complete rewrite of that legislation.
"The FCC promulgated its rules backwards," says subcommittee staffer Chip Shooshan, "protecting the major markets and not the smaller markets. We want to know just what local programming is being protected by FCC regulation restricting cable operations."
Karen Possner, another subcommittee aide who is drafting the cable section of the new act, says Congress first must decide just what cable TV is.
"What is the nature of cable television?" she asks in a subcommittee option paper. "Is it a distribution service, a programming service, or both? What is its relationship to other communication media that provide similar services?"
And, she asks, what degree of regulation should be imposed on cable, and by whom?
At present the FCC regulates the kinds and numbers of television signals that can be carried on a cable system. For example, the commission will not allow certain programming to be brought into an area if it is an economic threat to an existing broadcaster.
In the top 50 markets in this country, a cable television operator is limited to at most three distant signals, that is, signals from other cities. And those must be independant stations that do not threaten the economic base of local network affiliates. But if there already is at least one local independent station, the cable license limit is cut to two signals.
In the next 50 markets, there are a maximum of two outside stations allowed. in all but the top 100 markets, only one outside signal is allowed, presumably because a larger number of stations would have a drastic effect on the existing one or two on-the-air stations in that market. Cable systems presumably do not pose an economic threat in a large market with many stations.
From that point on, the regulation is basically unintelligible.
Cable television poses other difficult questions.
One issue is royalties. How much should be paid for programming relayed over cable systems?
Right now, for example, an Atlanta station that will be viewed in Arlington via cable - WTCG, Channel 17 - receives no money for its programming. Instead, an independent common carrier pulls in WTCG's signal from microwave transmissions and relays it by satellite to an estimated 170 cable systems areound the country. The common carrier - Southern Satellite Systems - receives whatever royalties are paid by the cable systems using the channel.
The motion picutre industry claims it is not being paid nearly enough for selling its movies to common carriers for resale to cable.
Motion Picture Association President Jack Valente recently complained to the Justice Department that Home Box Office, which is owned by Time Inc., had an unfair grip on the pay-TV business - that part of the cable industry which sells motion pictures to individual cable firms. HBO controls about 80 percent of the market.
At least one of HBO's competitors is owned by member film companies of the MPA, but Valente still companied that HBO was able to pay just about what it wanted to for films.
Since "80 percent of the people going to the movies are under 30," according to Henry Geller, head of the Office of Telecommunications (which has just moved from the White House into the Commerce Department), then cable is one of the most attractive growth areas - if not the only growth area - open to the movie industry. "Filmmakers love it," Geller adds.
Arlington Telecommunications Corp. (Artec) is bringing cable television to the Washington area for the first time. Artec offers 36 channels of programming, including 23 that are exclusive to its system. By nature it is more of an entertainment medium than anything else, the 24-hour news service is little more than all-news-radio accompanied by still photos.
To reach its estimated audience of 72,000 homes, Artec is running 360 miles of cable on existing Virginia Electric Power Co. power poles (for a fee of $4 a pole a year) and into apartment houses and private homes throughout Arlington. For obvious reasons, Artec will be available in the more densly populated sections of Arlington first.
Artec charges a one-time installation fee of $25 for each television set attached to its system. After that, subscribers will be charged $7.95 a month (for one set - each additional set is an extra $2 a month) for a basic service, which promises perfect reception of all local and Baltimore stations, automated news, weather and feature channels, and two out-of-town independent station (from Atlanta and either San Francisco or Chicago).
For a total of $16.90 a month, however, the premium programming package is included. THat premium programming is independently fed to Artec by Home Box Office. It includes such fringes as first-run movies, and most of the other features listed at the beginning of this article.
That Artec has been able to get off the ground at all is a tribute to the improved economics in the cable industry, which many bankers looked upon as a high-risk venture only five years ago. Artec is being financed by $2 million in venture capital from Business Development Services Inc. of Connecticut, a division of General Electric, and a $4.7 million line of credit from the American Security Bank here.
The cable television business is not a guaranteed gold mine. Already there have been failures and bankruptcies, although most can be traced to inadequate funding or mismanagement rather than difficulties in selling the system. The cable business is extremely capital intensive, requiring huge capital outlays initially to install the costly coaxial cable which must be in place before the first subscribers are signed up.
According to Artec President John Evans, "For every $1 we take in, we spend $3.10 on our capital plant. That compares to $2.25 spent for plant by the telephone company and about $1 by the broadcasting industry."
To be sure the future of cable is bright. There are entire areas of potential revenue that only now are being cultivated. Both WTCG in Atlanta and WGN in Chicago, independent stations that are fed to many cable systems around the country, are exploring the possibility of selling advertising time based on the number of cable homes they reach - which would be the first time any on-the-air station made money off of cable.
"I believe when the numbers get big enough, when we reach 25 million homes on cable for instance, that we will attract advertisers and somebody will build a network to service cable systems," says Don Anderson, vice president for cable relations for Turner Communications Corp. owner of the Atlanta station.
That station has become sort of a mainstay in the south. The closest independent stations to Atlanta are in New Orleans and St. petersburg. Fla. There are none in Mississippi, Alabama, Arkansas and South Carolina. So WTCG has become a force in those southern states which get it by cable. It is a heavily sports-oriented chaannel, carrying all the games of the professional baseball, basketball and hocket teams in Atlanta as well as the exhibition games of the city's football team. Ted Turner, who owns the basketball Hawks, baseball Braves and hockey Flames, also owns the television station.
In addition, WTCG is a 24-hour station, bringing all-night television to many markets for the first time.
One experiment being watched by everyone involved in the cable business is QUBE, a Columbus, Ohio, cable system owned by Warner Communications Inc.
Warner has spent an estimated $12 million starting up QUBE, which is a 2-way system that charges customers on a per-show basis. In other words, you watch what you pay for. Viewers use a selector to pick the programs they want from a program guide. A Frank Sinatra concert tape costs $2, while movie prices range from $1 for classics, like the Marx Brothers, to $3.50 for recent releases, like "Network" or "Rocky." A high school football game might cost about $2.50.
"Warner is betting millions that the public will spend a significant part of their entertainment dollar on this," Geller says.
In fact, according to the most recent issue of TV Digest, a trade publication, Warner can't even predict when QUBE will break even.
"We had start up costs last year, and we had them in 1975 and 1976. We're doing something that's never been done before, so there's no way to predict," said Warner Cable Chairman Gustave Hauser in TV Digest. QUBE's pre-tax losses for 1977 were $7.8 million.
Cable's attractiveness is evidenced by the fact that most cable firms are owned by other communications firms - interests that are acutely aware of its eventual marketability.
A third of the existing cable companies are owned by broadcasters, newspapers own about 13 percent of the systems, and other publishers own another 13.2 percent.
Down the road is the possibility of attaching home fire or burglar alarmsto the system. Since Artec is wiring its entire system with what could be used as a two-way cable, at some future date a cable viewer may be able to press a button at home and set off a fire alarm at a central station.
How about a dating service, Artec president Evans is asked? A photo could appear on the screen with a phone number below.
"If it makes economic sense, we'll look at it," Evans says.