Cable TV Firm Sees Itself As On-Ramp to `Highway'
Private firms will shoulder the lion's share of investment in a new fiber-optic network
TO talk with Gary Weik, the president of a medium-sized cable television company, is to get a glimpse of how America's "information superhighway" is already taking shape - and how the name "highway" fails to convey its complexity and variety.
The Clinton administration wants to modernize the communications system on which American business, science, and education depend. But because the upgraded networks are so costly, their shape will depend largely on private-sector innovation and investment.
While in Boston recently, Mr. Weik spoke about the superhighway from the perspective of KBLCOM Inc., of which he is chief operating officer.
He foresees not a single information "highway," but a "hybrid system" in which cable, telephone, and wireless networks all play distinctive roles. As with transportation, the information system will include not just "express lanes" but also "ring roads" and "ramps" to allow users to get on and off.
He warns, however, that a big question mark for all the players is market demand: How much information and communication do consumers want? How much can they afford?
"The video media will proliferate" just as the print media developed thousands of specialized publications, Weik predicts.
He says demand for video entertainment may become the catalyst for financing new information pathways. Personal-computer sales took off with the rise of popular word-processing and spreadsheet programs, he notes.
Even using the coaxial cables that already reach most American households, cable companies could expand their capacity tenfold - to 500 channels, for example - by using digital compression technology to squeeze more data through the pipeline. Some of the largest firms are already test-marketing such offerings. Cable TV cables reach about 95 percent of US neighborhoods.
KBLCOM plans to spend $40 million over the next few years to lay fiber-optic cable for its roughly 1 million customers in nine states. The high-capacity strands of fiber will reach down to neighborhoods of 2,000 homes. Smaller neighborhoods will use traditional cable lines.
WEIK says this new carrying capacity may make it feasible to send hundreds of video channels into each of these neighborhoods. Viewers could be offered "video-on-demand" - a specific program played exactly when an individual wants to see it. But this would require expensive centralized equipment to coordinate the programming, Weik notes.
KBLCOM has been experimenting with interactive television. Last fall the company introduced an interactive television system called Star Response. Customers in San Antonio have the option of responding to advertisements, such as ordering information about a car, by simply pushing a button or two on their remote control pads (rather than having to call an "800" number).
The system, which involves attaching a "converter box" to the television set, could also be used for opinion polling during televised town meetings. The company has been offering these converter boxes since 1989 to customers interested in ordering "pay-per-view" programming.
Weik downplays the idea of using cable lines to compete directly with the Bell companies to deliver local telephone service. "It's not that lucrative," he says. Cable firms are currently barred from this business, but there is speculation that those restrictions might be loosened since phone companies are winning greater freedom to offer video and information services over their lines.
KBLCOM, a subsidiary of Houston Industries, is exploring other non-TV lines of business. A product called Digital Music Express offers 30 channels of high-quality music over cable. "We've been very successful competing with Muzak" in providing music to businesses, Weik says.
Although cable revenues come predominantly from residential customers, Weik sees a promising commercial market. On May 15, for example, San Antonio's new 65,000-seat Alamodome opens. KBLCOM will provide services ranging from a wireless phone system to feeding television coverage of events to satellite uplinks through its cable network.