Desire for Greater Program Diversity Fuels Growth of Mini-Cable Systems

Of the approximately 12,000 operating cable systems in the United States today, it is estimated that over one-half are minicable systems. Mini-cable systems have experienced tremendous growth during the past three years, fueled by the growing desire of consumers to avail themselves of the wide variety of entertainment programming delivered via satellites.

Mini-cable systems are contrasted from major franchised cable systems in that they generally have very little coaxial cable plant and do not cross public streets. The FCC definition of cable television systems specifically states that the term shall not include any such facility that serves fewer than 50 subscribers or any such facility that serves or will serve only subscribers in one or more multiple-unit dwellings under common ownership, control or management. The implication of the FCC definition is that mini-cable systems do not necessarily fall under the rules and regulations governing cable systems.

Although mini-cable systems can be installed in almost any kind of business enterprise, the main applications that have developed are in multiple-unit dwellings and lodging establishments.

Multiple-unit dwellings generally include apartments, condominiums and trailer parks. There are currently over 100,000 establishments in this category, of which approximately 3,000 have installed private cable systems. Mini-cable systems are generally installed in multiple-unit dwellings in order to provide premium entertainment programming to residents. This programming (movies, sports, news, ethnic programming) is viewed by many as a necessary amenity for maintaining or increasing their occupancy rate.

Owners or managers of multiple-unit dwellings often choose to install a mini-cable system instead of hooking up to a franchised cable system for one or more of the following reasons: a desire to provide satellite programming to their residents prior to the time cable is scheduled to pass their location; an interest in the additional income associated with owning and operating a private system; or development of poor relations with the local cable company.

Multiple-unit dwelling owners must examine each situation to determine if a mini-cable installation is the approppriate vehicle for satisfying their business needs. Growing Lodging Use

Of the 40,000 hotel/motels in the United States today, approximately 3,000 have installed a private cable system. The first cable systems were installed in lodging properties in 1979. Since then, studies have shown that premium television has guest appeal and, in fact, is an amenity that many travelers have come to expect.

In addition to providing satelite programming to their guests, lodging owners are also able to participate in teleconferencing networks. As business travel becomes more expensive, meeting planners are turning in growing numbers to the satellite teleconference. Property owners with a satellite receiving system are able to offer their facility as a site for participation in a satellite teleconference, thus bringing in meeting room, overnight guest and food service dollars that might otherwise pass them by.

In addition to multiple-unit dwellings and lodging, other applications for mini-cable systems are universities, prisons, hospitals and private networks. Although applications may vary, system components are essentially the same.

The system diagram (Figure 1) of a mini-cable system is very similar to that of a major CATV system in everything but siza. Both systems strive to provide a viewer at the extremities of the distribution system with the highest quality signal for the maximum possible time. However, in considering the individual components of the mini-cable system and their contribution to the overall network, some important differences become apparent.

In a CATV system the subscriber may be receiving one of up to approximately 108 available channels delivered through many miles of coaxial cable and several dozen amplifiers. With the potential for system degradation and equipment faults, a CATV operator must introduce a very high-quality signal into the system to be certain of satisfying his paying customer. In a mini-cable system, the complexity of the network supplying a dozen or so channels tailored to the specific needs of 100 households without the burden of franchise demands is much reduced. Cable lengths are measured in hundreds of yards, and amplifier cascades are rarely necessary. The potential for complaints should a problem arise is also reduced, and service can be speedily restored without extensive troubleshooting.

The selection of the equipment to feed these mini-cable systems can thus take advantage of the reduced requirement for system margin while still maintaining satisfactory subscriber performance.

The most visible result of this reduced requirement is a reduction in antenna size. Instead of seeking a minimum video signal-to-noise (S/N) ratio of 50 dB in order to provide the household with 46 dB or better, we can think in terms of a typical 48 dB, which may deteriorate to 46 dB under unfavorable weather conditions and yet still please a critical end user. In terms of satellite carrier-to-noise ratio (C/N), the corresponding reduction is from 12.3 dB (50dB S/N) minimum to 10.3 dB (48dB S/N) typical. This relates to a reduction in antenna size from 4.6 meters to 2.8 meters or 3.2 meters; with the appropriate low-noise device, antennas of this size would give satisfactory service over most of the contiguous US with current satellites.

Additional requirements of an antenna suited for a mini-cable application are that it should be easy to install. A choice of surface or in-ground mount with minimal concrete requirements would suit most situations and could be easily adapted for rooftop configurations. Watch Mount Geometry

The mount geometry is important too. If the unit is to be installed by personnel unfamiliar with cable television earth station installations, the mount should be independent of the foundation orientation to eliminate errors. For application where reception from a single known satellite is required, an elevation-over-azimuth mount geometry provides the lowest cost and is the easiest to orient toward the satellite.

Some applications require that the antenna be moved occasionally (or frequently) to gain access to other satellites. For such situations, a declination-corrected polar geometry is most suited, particularly if it can be easily and simply oriented and aligned and can be motorized at very low cost with a programmable controller while still maintaining commercial specifications. Added benefit might be gained in the future if the antenna had a surface good enough to support high-efficient Ku-band operation upon the addition of a suitable feed. Keep Options Open

When installing n earth station, the location must be very carefully considered. The antenna must naturally have a clear line-of-sight to the satellite of interest, but the look angles to all other satellites must also be considered. With the changing state of the communications industry, it is a wise precaution to keep all available options open. The ideal location for an antenna is on the ground, where protection from terrestrial microwave interference is maximized. While interference from the telephone company microwave routes can be minimized with filters, the protection of trees and buildings may be essential in downtown locations. Rooftop installations are often more complex than those on the ground because of the significant uplift forces on the antenna due to even moderate wind forces. The majority of roof structures are designed to support downward forces of a few hundred pounds, not upward forces of several thousand.

Moving back from the antenna, we encounter the receive electronics, a combination of amplifier and receiver. Already field-proven in the CATV industry, block conversion is also the preferred choice of the mini-cable operator. By converting the received satellite signals in a block from 4 GHz to UHF at the antenna, significant savings may be realized. Low-cost coaxial cable now feeds a series of UHF video receivers. No microwave components need to be used in the headend, and automatic assembly of the receivers, which yields lowest costs, can be maximized. All of this must be accomplished without sacrificing performance or flexibility as CATV and mini-cable systems alike demand the best from the receiver. For this reason the product selected by both operators is likely to be the same.

A low-noise converter (LNC) amplifies the microwave signals at 4 GHz with minimal noise contribution. A phase-locked oscillator and mixer generates a band of frequencies from 270 to 770 MHz, corresponding exactly to the 3.7 to 4.2 GHz input frequencies. The signals are carried via low-cost 75-ohm cable to conventional UHF splitters to feed the tunable receivers. A power inserter enables DC power to be transmitted from the receiver to the LNC for power protection from atmospherically induced surges and eliminating the need for separate cabling. In a dual-polarized configuration, two cables and LNCs are necessary as the signals from the two polarizations must be kept separate.

One further advantage of the block conversion to low frequencies is the ability to separate the antenna from the receive electronics by a greater distance than is possible at 4 GHz. If the distance to be run is a few hundred feet, then CATV distribution or trunk cable may be used. For longer distances, an equalizer may be sufficient to handle the loss before requiring an inexpensive post amplifier.

Baseband video and audio from each receiver is introduced into a television modulator. This piece of equipment generates first a 4.5-MHz subcarrier containing the program audio, and then an RF signal on a recognized TV channel in conventioned format. Traditional CATV products have been extremely modular to be flexible enough to be of use in the many diverse system configurations in use today. Such flexibility is seldom required in a mini-cable system.

The satellite portion of the mini-cable system is just a part of the whole. It must be combined with off-air signals from conventional UHF and VHF antennas. These signals are filtered and amplified, the UHF channels being translated to a lower frequency.

Off-air signals are combined with the satellite signals and possibly signals from a character generator or video-tape player through a combining network or combining amplifier and, once on a single coaxial cable, distributed throughout the system. Further amplification may be provided by CATV line extenders or other low-cost broadband amplifiers.

The distribution system may take many forms. The older variety of daisy chain provides no security and may not always be capable of handling more than the VHF channels. A simple form of security can be provided by using "home-run" cabling. In this scheme, the household may be turned off simply by disconnection, although the cable costs are higher. Economics of Mini-Cable

The economic parameters for mini-cable systems are of three categories: system design/cost considerations; revenue projections; and financial parameters. Each is discussed in detail below.

* System Design/Cost Considerations. Mini-cable systems generally consist of a single satellite antenna, a downsized headend (four to 12 channels) and a distribution system. For the purpose of this analysis, a distribution system is assumed to already be in place in the form of a master antenna system.

The system configuration utilized to develop the economic models in this article consists of one Series 9000 Antenna, two Model 360-1 Low-Noise Converters and five each Model 6330 Modulators and Model 6650 Receivers.

* Revenue Projections. Revenue projections for this model were based on the assumptions that appear listed in Figure 2. This five-channel system consists of two pay channels and three other satellite-delivered channels.

* Financial Parameters. The financial parameters used in the mini-cable economic model are as follows: tax rate equals 46 percent; investment tax credit (first year only) equals 10 percent; and depreciation of plant and equipment was determined using the same scale allowed for cable operations.

The output of the mini-cable economic model provides for our analysis of net income, cash flow and return on investment (see charts above).

* Net Income. Monthly net income after the first year of operation for the mini-cable system outlined earlier ranges from $66 for a 150-unit service area to $1,785 for an 800-unit service area. The chart on left shows the relationship of monthly net income to size of area serviced in units. Breakeven after the first year of operation in terms of potential units serviced was 70 units.

* Cash Flow Analysis. The center chart illustrates the number of months to positive cash flow relative to the number of potential units being serviced. This graph indicates that all mini-cable systems of 475 potential subscribers or more reach a positive cash flow for the system owner in less than one year.

* Return on Investment. Net cash return on total investment for the first year of operation is graphically illustrated on the right. Of particular significance here is the fact that even small service areas have a high return on investment (ROI) the first year, and larger systems (500+) are capable of regenerating the total investment in one year or less.

COPYRIGHT 1984 Nelson Publishing
COPYRIGHT 2004 Gale Group