Testing times for cable's visionaries

Today, ripped-up streets; tomorrow, a dazzling array of interactive services. But nobody is sure what consumers want, or how best to provide it. Laurence Blackall reports
Has the pavement outside your home just been ripped up? Has your home been "released to marketing"? Or are you already cabled up? Unless you live in the remotest of regions, you can expect to be hearing from your local cable franchise soon.

This year, the cable companies plan to "pass" another 2.5 million homes, and a further 3 million in 1996. So unless you are among the 10 to 15 per cent of the population who live somewhere too remote to be interesting to the cable companies, your turn will come. But before long, cable TV will be only one of a growing portfolio of services with which the franchisees can tempt you.

The cable companies have mostly built their networks using optical fibre, which has a capacity vastly higher than traditional copper cable. This increased "bandwidth" is at the heart of what is referred to as broadband communications, the technology underlying the so-called Information Superhighway. The cable companies are building, piecemeal, a basic broadband infrastructure; this will one day provide the sophisticated range of services that we associate with the "infobahn": genuinely interactive television, videotelephony, and high-speed access to the Internet and other information networks.

Common to all of these services is interactivity. The extra bandwidth will make it possible for the subscriber to interact, via a set-top box on the television, a computer, or even remote control with the provider of the services, using the "return path".

A number of cable companies are examining the ways in which they can deploy broadband and build interactivity into their services. Mostly, they are carrying out small-scale consumer trials, which follow on from even smaller-scale technical trials. It is hard to find a cable company without some broadband experiment - though the emphasis is on the word "experiment", for the costs of offering a full service are formidable.

Some companies, such as the Canadian Videotron, which has the cable franchises in much of south-east and west London, claims that its Videoway service is "Europe's most advanced interactive TV delivery service". But, as Videotron admits, its interactive television system is not as sophisticated as it sounds, and is designed mainly to test the market. Interactive television to Videotron means that viewers can select the camera angle or get instant replays of sporting action. It does this simply by providing extra channels: the replay is another channel that broadcasts the same match with a lag of a few seconds.

"It's not the fanciest technology, but it will start to build the type of customer relationships we are trying to develop," says Nick Pellew, Videotron's telecoms marketing director.

Cambridge Cable is also taking advantage of the bandwidth provided by its fibre network to develop a range of services that includes interactive television. But the chairman, Hugo Davenport, is under no illusions that it will be easy. Nor is he sure what the consumer wants from interactive television. He sees the company's well-publicised trial primarily as an experiment, both in terms of the technology and the content. With some prestigious partners, including Anglia Television, Tesco and National Westminster Bank, Cambridge Cable's "Service Nursery" is testing the way in which consumers react to the technology, the content and the billing mechanisms. Currently the experiment is on a very small scale, only eight homes, but the company is in the process of scaling up the trials.

Yet another interactive trial was announced by Bell Cablemedia, which is collaborating with Norwich and Peterborough, East Anglia's largest building society, to test a home banking service in October. Electronic banking is hardly new - corporate customers of banks have been able to do this for years with even the most basic PC and a modem. But this experiment sidesteps the complexities of modems and communications software and confronts its users with nothing more threatening than a set-top box, a keypad and a telly.

Last week, the BT subsidiary Westminster Cable joined the ranks with its announcement of a video-on-demand trial to start in November.

For all these companies, the technical and financial obstacles are the same. Although the cable companies are bringing optical fibre to within a few hundred yards of the houses they want to serve, the last leap - from a box on the pavement into the sitting-room - is the expensive bit, because each house has to be physically connected. BT reckons it would cost $15bn to establish a complete broadband network in the UK.

BT's last leap is made on "twisted pair" copper wires - the standard telephone line. Cable companies offering telephony also usually use twisted pairs, fed in alongside the thick "coaxial" copper cable that imports the television signal.

As an access road to the superhighway, twisted pair technology offers the capacity of a rope ladder, and while there are ways around this bottleneck, they are expensive.

Most cable companies use a "tree and branch" topology in their networks. This involves a signal being transmitted from a central switch along the "trunk" of the tree, the fibre backbone of the network. From there it goes into coaxial cable "branches" which, boosted by local amplifiers, carry all the channels into the set-top box, where they are decoded. This abundance of channels is fine for the subscriber, but its consumption of bandwidth effectively rules out interactivity.

Westminster Cable is adopting a different approach, with its "switched star" network. In telecommunications parlance, a switch means anything from a public telephone exchange to an office PABX. With Westminster's system, these switches sit under the pavement, each controlling some 300 households. When subscribers punch numbers into their remote controls, they are communicating directly with the local switch, which then sends the one requested channel back to the television set. This economical use of bandwidth means there is adequate capacity to send such signals to the local switch. From that switch back to the "head-end", where the main computer controlling the whole process is located, there is adequate bandwidth to accommodate the signals from the subscriber. That gives real interactivity.

Cost has generally proved a greater obstacle than technology in implementing broadband networks. The key to driving cost down is scale, and so far even the Americans have failed to achieve the scale where mass broadband provision becomes economical.

When the American telephone company Bell Atlantic proposed a $33bn merger with the cable company TCI last year, it looked at last as if that scale would be achieved. But the collapse of the deal means that while the trials may continue, a technically viable and affordable solution seems a long way off.

Last week Bell Atlantic delayed its application to provide broadband "video dialtone" services because it wanted more time to identify the best technological solution for building new video networks. Its original plans to base its networks on a hybrid fibre optic-coaxial cable system have been rejected for both technical and financial reasons. Bell Atlantic may opt for a switched digital video network similar to that planned by Westminster Cable - a technology that has been around for a dozen years.

If the technical solution seems more elegant, the financial implications are also compelling. While the cost of hybrid solutions has more than doubled since 1992, to about $800 a household, the cost of a switched- digital video network has fallen to about $800 per household, down from more than $1,200 in 1992. And it seems highly likely that when Bell Atlantic makes its decision, the regional telephone companies will follow suit.

Information technology companies could also emerge aswinners in the race to find an affordable solution. Apple and Oracle are closely involved in BT's interactive television project, ICL with Cambridge Cable, and Digital with the Westminster Cable trials. With this much talent pitching in, we should not have too long to wait to get some real action on the TV.