The Cable Story

A subscriber paid a weekly or monthly fee to be connected to the cable. From the connection the subscriber could receive broadcast television and radio. The TV sets in the home had no tuners. Around 2.5 million homes received their TV service from cable. These systems were restricted by law to relaying broadcast signals. They were not allowed to provide other programming.

In ‘The Teleputer Story’, the Teleputer 3 could receive broadcast TV via an aerial and it could communicate down a domestic dial-up telephone line . The transmission speed of the dial-up connection was between 75/1200 [Prestel] and 1200/1200 bps. For comparison purposes – if in 2008 a PC is connected to the internet by dial-up telephone line the transmission speed is around 31,200 bps or around 30 times the speed of Prestel . And 31.2 kbps is considered too slow even for e-mail where the content often includes graphics and pictures. To run internet video on a modern PC, a transmission speed of over 1,000,000 bps is needed even using the most advanced data compacting techniques. That is 800 times faster than Prestel. A speed of 1m bps is in 2008 considered a basic transmission speed for home communications.

If we had tried to integrate voice, video, text, graphics and communications on the Teleputer [if we had known how to do it] so that we could send and receive at reasonable speeds, we would have needed also huge bandwidth as well as very sophisticated switching technology for the transmission system. This bandwidth [ imagine a big fat pipe ] is today called broadband[width]. Even in 2008 this bandwidth cannot be handled at high speed by copper telephone wires in spite of the efforts at optimisation through data compaction by some of the world’s cleverest people. If you wanted high- speed broadband [at least 50mbps} you had to re-wire. Basically the whole of the UK needed re-wiring. That was going to be hugely expensive, take years and would promote major cultural changes.

Having reached this conclusion in the middle of 1980, I put the idea aside for a few months probably frightened by the implications of re-wiring. Then curiosity returned. How would you do it? How would it work? How would you make money out of it? Who would do it? How would they raise the capital to do it?

The obvious choice for the job was the PTT who would soon be the privatised British Telecom. It owned the phone networks. It would reap the rewards over generations for the new networks with a typical public utility-style investment. However a little research showed that the soon-to-be British Telecom had not the slightest interest in re-wiring the UK. It was too busy with privatisation to think about it and the capital program was already tied up for years ahead with the System X digital exchange programme. On top of that profits had to be made from existing assets to provide dividends for the new shareholders.

British Telecom was not going to be a player. This was seriously bad news.

The only feasible alternative was the cable TV companies, one of whom was a sister company to our own company. Would the cable companies re-wire Britain? The first question would be ‘why.’ There had to be commercial justification for even spending time thinking about it. The TV supply industry was totally dedicated to trying to find the new VCR format – Betamax or VHS. The last thing it was thinking about was cable TV. How could it be commercially viable?

I had already looked at the Prestel model of selling information for profit and found it less than compelling. Why would consumers pay for better bandwidth in the home when the services that might utilise this bandwidth had yet to be invented. If they weren’t going to pay for information what would they pay for that existed but couldn’t be accessed? The answer had to be entertainment – new TV channels, films and sport. Out of the fog an idea was born. Build new cable TV systems that could handle interactive computer services and recover the costs by delivering multi-channel TV and make the profits from the new services. Most of the people I talked to about the idea thought I was nuts. My cable TV colleagues liked the idea of multi-channel TV delivered by cable but they went glassy-eyed when I started talking about interactive digital services including my recently invented online shopping, messaging [later called e-mail], telebanking and home working via interactive computer links. These people were analogue people. They didn’t do digital-speak. I was never interested in interactive television. [In the USA cable systems had been introduced that provided an additional controller to the TV that allowed the viewer to vote by pressing a key –useful for game shows etc- but useless for digital services. It seemed to me that interactive television was a frivolous gimmick. It did not last very long] My cable TV colleagues were very kind and humoured me by explaining how an interactive digital system might work conceptually and how to do a basic cost-justification. They even knew the cost per yard of laying cable. It was a wonderful education and I was very grateful. [Eventually they worked up a hybrid design which can be found elsewhere in the Archive].

The costing information that I put together has long ago disappeared and I can remember little. I do recall working a spreadsheet with percentage of homes passed connected, average revenue per subscriber and subscriber churn rates. Investment costs were ball-parked based on best estimates that we had. It wasn’t possible to come up with any definitive conclusions except that it might
be possible to make the figures work if the costs in our ball-park could be firmed. An accountant observed that it might work if the then current 100% capital allowances in the first year continued to be allowed by the government and if investment by a company with the ability to develop the required technology was carefully controlled to offset profit elsewhere with annual capital investment in cable. Effectively this meant that only large profitable companies were likely to invest. Existing and new companies could raise capital by debt/equity but that might be difficult and they would have the additional problem of securing good management in depth to bring the large number of projects in on time, on budget and on specification. It would be a tough business for start-up companies.

It seemed that it was possible for the UK to be re-wired by private investment and it would likely be profitable in the medium term and very profitable in the long term [15-20 years]. It was rather like the profile of a Victorian public utility investment. I remember looking at the telephone line into our house and wondering how long it would take to replace it with fibre optics.[ In 2008 it is still copper].

A decision point had been reached. The UK needed re-wiring. British Telecom wouldn’t do it. Other people might do it on the back of multi-channel TV. If I wanted home shopping and a market for the offspring of the Teleputer there was only one way to go. Then I discovered that you could not legally deliver non-broadcast TV programmes over cable in the UK. That was a huge blow! I had run out of options

Information Technology Advisory Panel

The Information Technology Advisory Panel [ITAP] was established in 1981. It was and is common practice for British Governments to set up ad-hoc teams to advise on specific issues. These teams are generally recruited by civil servants and the people they select are not vetted for political allegiances. The selected people are usually expert in the particular issues that the Government wishes to explore. The people are not remunerated. The teams operate until the work is done and then they are disbanded. Team members normally receive a letter of thanks.

ITAP was unusual only because it did not work within a Ministry. The advisors were to provide advice to the Prime Minister and thus they worked in the Cabinet Office in Whitehall, London. This arrangement was indicative of the interest of the Government in Information Technology [IT] at a time when few people in Parliament and Whitehall had any real grasp of the potential of the new technology .One of the few was Kenneth Baker MP and he was made Minister of Information Technology[1981-1984.] Baker was instrumental in setting up ITAP and locating it in the Cabinet Office.

Six people were appointed as members of the panel. They were all working practitioners in IT with busy day jobs. I was one of the six. I never discovered the reason for my appointment. The panel was supported by Cabinet Office civil servants. We met and worked in the delightful surroundings of the Palace of Whitehall. ITAP was disbanded in 1986. Three reports were published.

Sadly I remember little of ITAP. My papers were lost or destroyed many years ago after a number of office moves. I do recall that colleagues and civil servants supporting us were exceptionally bright with a terrific work ethic. There was no time-wasting and a cheerful can-do attitude. It was an invigorating place to be.

At one of the first meetings, as the work plan was being developed, it was suggested that we could submit discussion papers on issues that the panel might find interesting. I thought of my cable idea, and then wrote a discussion paper about consumer telecommunications in the UK talking about jobs and investment opportunities around ‘infotainment’. [This paper is in the Archive as ‘The Original Discussion Paper’]. I never expected it to get more than a cursory look. Strangely enough it provoked much discussion and it wasn’t too long before the panel decided to put together a paper fleshing out some ideas. A small working party of which I was a member was set up to research and write the paper. We made a plan and implemented it, reporting back to the panel as a whole on progress and discussing issues as we found them .After a while, probably because we were asking many people many questions, it gradually emerged to other people in Whitehall that we were interested in telecommunications and television. These people were not enthusiastic about our research. There were the makings of a turf war.

We were not politicos. It had never occurred to us that there were politics in IT. We thought technology was a politics-free zone. How wrong we were.

In 1981, the UK Home Office was a conglomerate Ministry housing in effect the Ministry of the Interior and the Ministry of Justice .It was also the dumping ground for any issue that did not fit neatly into other Government Ministries. This unholy confection proved to be the graveyard for many political careers. [Some of the absurdities were resolved when it was broken-up in 2007.]

One of the responsibilities of the Home Office was the allocation of the radio spectrum of the UK for various uses including broadcasting. Cable did not use the radio spectrum but multi-channel television would obviously have an effect on broadcast television and the Home Office issued licenses for the TV companies to use the radio spectrum. So there could be a Home Office interest but that didn’t quite square with the negative vibes we were getting. We thought our idea of using multi-channel television as the means to generate revenue to re-wire the UK was a technical/economic/industrial issue. We found out that television was a political issue.

As we neared completion of our work on the paper, the unhappiness of the Home Office was registering in high places. Some high authority decided there should be a meeting of all the interested parties to debate the issues and to reach a consensus. The meeting was called on a Saturday morning to be held on neutral turf at Lord’s Cricket Ground. All the interested parties were invited. So we duly turned up. We had no idea who would attend.

As the meeting gathered in a large room, a top table began to fill. The Home Secretary Willie Whitelaw, a prominent and much respected senior member of the Government was there. And then a shock! Settling herself at the top table near to Whitelaw was Mrs Mary Whitehouse, a media personality who was a vociferous critic of broadcast television for its depiction in thought, word and deed of anything sexual. The penny dropped! The Home Office reluctance to support cable was down to Mrs Whitehouse and sex.

The Chairman called the meeting to order, stated the purpose of the meeting and began to introduce the top table. Willie Whitelaw’s body language was amazing. He was sitting slumped forward with a lugubrious hang-dog look, his neck down as if waiting for the guillotine. The Chairman then began introducing Mrs Whitehouse and I realised we were going to spend the rest of the morning
being harangued about porn. The Chairman mentioned taste and decency and Mrs Whitehouse smiled knowingly. I thought this is crazy. So I jumped up from the back of the room and shouted- ‘Point of Information, Mr. Chairman.’ He stopped mid-sentence and stared at me. Privates do not interrupt Generals. I jumped in as firmly as I could and said – ‘Mr Chairman, if it would help the meeting, broadcasting is exempt from the Obscene Publications Act of 1959, hence the topic of taste and decency as perceived in broadcast television is much discussed. Cable systems, however, are not exempt from the legislation. There is no obscenity issue here. Thank you.’

There was total, absolute silence. Then, Willie Whitelaw’s face gradually started to change; first the most beatific smile I have ever seen appeared as he looked round the room and beamed glorious sunshine into every nook and cranny; he straightened up, breathed in and glowed over Mrs Whitehouse and I may even have seen slim halo over his head. Mrs Whitehouse scowled but said nothing at all during the meeting . I think that was the moment when the political battle was won.

The Government decided to publish our paper,’ Cable Systems’ HMSO 1982. There was absolutely no political input in the paper. It was genuinely independent. There was huge public interest, much debate and long arguments. But the Panel was finished with the subject and moved on.

Further Developments

The Government announced that it was setting up another committee, the Hunt Committee, on the day our report was published to take our proposals forward and work out how to legislate. The Government then passed the Cable and Broadcasting Act [1984] and the Telecommunications Act [1984]. The regulatory body, the Cable Authority began work in January 1985. New generation cable systems were now legal and regulated. As far as I know ITAP was never consulted about any aspect of cable systems after its report was published and ITAP never returned to the subject to review progress. At the first Budget after the report the Government abolished 100% capital allowances. Effectively, only start-ups could play the cable game.

As the new cable industry started to emerge, one great entrepreneur spotted an opportunity. Multi-channel TV on cable had been conceived merely as a means of funding the re-wiring of the UK to bring a new era of consumer telecommunications. [Satellite was seen as complementary, being useful for rural areas that would not be cabled for economic reasons]. But what if the means became the end? There were other ways of delivering multi-channel TV. Neither the Cable Systems report nor the legislation limited multi-channel TV to cable. What about satellite direct to the home everywhere? In a breath-taking entrepreneurial coup Rupert Murdoch set up BSkyB, took the UK multi-channel TV market and with it the revenue to re-wire the UK.

By 2007, 25 years after the ITAP report, the UK cable industry had consolidated into a single company with 95% of the market, passing around 12 million homes and serving around 5 million subscribers. BSkyB was serving around 6 million homes. Except for a number of cable systems, there was little prospect of delivering 50 mbps broadband to UK homes. BSkyB was selling a broadband telephone service as part of its TV service and had succeeded in achieving high revenues per subscriber. Most cable systems were offering or planning to offer telephone services. British Telecom were offering video-on-demand down a telephone line. The original dream was fractured; a great opportunity had been missed.

Conclusions

A number of conclusions can be drawn from the cable story. The first is that it is extremely difficult for governments to pursue sophisticated policies. Government tends to operate at the lowest common denominator and is a very blunt instrument. Governments find joined-up thinking virtually impossible. All of this is in spite of good intentions. The prime law of government is the law of unintended consequences. The second conclusion is that politics is about words and science is about facts. Politics is about compromise, science is about immutable laws. When politics mixes with science or technology, unintended consequences are virtually guaranteed. Lastly, how do you now get the UK re-wired? Easy! Change Building Regulations and make a minimum of 50 mbps broadband mandatory for new build homes. Then sit back and wait another 20 years.

Michael Aldrich, June 2011