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When
Cable
Went Qubist
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by Ken
Freed.
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The
Qube network in the Seventies set the mark for
interactive TV, but the business case was a bust.
The
idea of two-way TV is not new. The interactive TV
ventures of today can trace their roots back to an Ohio
college town.
On 1 December 1977,
the world's first commercial interactive TV service
opened for business in Columbus, Ohio. Initially operated
out of a remodeled appliance store, Qube offered an
unprecedented 30 channels of television divided equally
between ten broadcast TV channels, ten premium or
pay-per-view channels, and ten channels with original
interactive programming. Earning revenues a quarter
century ago with mostly analogue technology, Qube became
the kind of interactive television network that digital
cable operators still dream about today. The problems
with Qube was fiscal.
Built by Warner
Communications, an aspect of the Warner Bros. motion
picture company, the Qube system was generated by the
"franchise wars" in the late Seventies. Having seen early
the limits of rural markets, having compared the expense
of rural cable plant construction to the number of
potential customers, cable operators by then had begun
penetrating the densely populated cities. As the first
round of government-granted franchises came up for
renewal in the late Seventies, multiple system operators
(MSOs) competed fiercely to control America's urban
markets. Anything that gave an MSO some edge over its
rivals was worth exploring. Why not try two-way
television?
The idea for Qube
came from Steve Ross, president of Warner, recalled Paul
Dempsey, chief engineer for Qube in Columbus, who today
is the executive vp of Pioneer New Media Technologies in
Long Beach, Ca., in charge of DVD optical storage devices
for industrial applications. "Ross was staying at the
Otani hotel in Tokyo in 1975", Dempsey said, "and he'd
been impressed by the hotel's closed-circuit TV system,
which was somewhat interactive. That hotel system had
been built by Pioneer Electronics in Japan, so he asked
Pioneer to develop a similar system for cable in the
United States." Gus Hauser was the chair and CEO of
Warner Cable, and he signed off on it, so Pioneer's
response to Ross was deployed in Columbus two years later
as the first Qube system."
Dempsey was
responsible for turning Ross' vision of interactive
television into a technical reality. Appreciate the
simple power of that concept and its timing in American
cable development.
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Qube
Technology
By the mid
Seventies, the average 12-channel or 24 channel cable
system was great for the 10 to 12 terrestrial broadcast
TV stations in most major markets. Broadcast signals were
cleaner than ever, especially the stronger UHF stations,
but cable clearly presented better pictures than off-air.
Cable offered different content than the national
broadcast TV networks, some would assert better content.
Local cable systems were starting to retransmit satellite
feeds from a growing list of programming services, like
the Home Box Office movie channel and the ESPN sports
channel. Each annual meeting of the National Cable
Television Association features booths from new cable
channels seeking carriage, price negotiable. For any
cable system to carry the full range of programming
choices available, it needed 30 to 40 channels. With
technologies emerging to expand cable's channel capacity
up to 300 MHz of the spectrum and more Ross could imagine
using this added bandwidth to take advantage of cable's
two-way capabilities. His vision still holds true to
today.
Warner already
operated a 20-channel cable system in Columbus, an
upscale college town, and the MSO was rebuilding the
system for 30 channels, which was a fairly large plant
for its time, recalled Dempsey. "I'd been working at the
Warner system in Florida, and I was brought to Columbus
to be involved in the plant rebuild, like a new headend
and its interface with the local origination studios, and
then the cable network itself out to the curb. Installing
Qube meant all these systems had to be modified, and that
was a huge project."
Dempsey described
the two-way network architecture, Seven trunk lines
branched out from the headend, and this structure split
into seven levels like a branching tree. Hanging off each
trunk amplifier was a network monitoring device, reducing
upstream noise being a major concern. What's the point if
two-way if the circle does not complete? For a clear "go
or no-go status" throughout the cable plant, Qube
installed Data General "Eclipse" systems, running network
databases, setting the cable parameters for each trunk
amplifier through its "BCU" (bi-directional communication
unit), a signal monitoring device in the headend computer
that managed all the interactions with the set-top boxes
connecting into that trunk. A BCU could alert plant
engineers if anything went down within the 200 to 400
miles of cable under its control.
The Eclipse system
assigned a digital address (like a modern IP address) to
each set-top box, controlled through its "BGC" (bridge
gate controller). These field status monitors were
controlled from the headend, again drawing on databases
for direction, performing such actions as routinely
polling the boxes on its section of the cable plant to
retrieve any pay-per-view selections, for proper billing
on the next account statement. By polling periodically
instead of constantly, the upstream return path carried
limited traffic. This simplified the job of the BGC as a
plant gatekeeper, enabling the headend to open one
distribution amplifier at a time to communication with
any tendril of the cable plant, further reducing upstream
noise, helping Qube cut signal errors, perhaps averting a
subscriber having complaints about mistakes on the
bill.
Qube data traffic
on the 8-bit system traveled downstream and upstream
between the headend and each set-top box at 256 Kilobits
per second (Kbps) , five times faster than today's 56
Kbps modems. The Downstream bandwidth at 250 MHz (within
the EM spectrum from 50 to 300 MHz) featured a single 6
MHz data carrier channel centered at 121 MHz, like the
core thread in a rope. The remaining 244 MHz of
downstream bandwidth transported 30 video channels and 30
audio channels, including 10 Columbus FM radio stations
(regenerated from off-air reception of tower broadcasts).
Upstream responses from the polled set-tops were returned
to the headend at 256 Kbps within a 24-MHz carrier signal
(5 to 30 MHz on the spectrum), further assuring
subscriber data was reliably received and billed. "Keep
the customers satisfied" was a guiding design element for
MSOs during the franchise wars.
"The beauty of the
design is that we only had to open the data distribution
system when the network was polled", said Dempsey, "and
each set-top would answer briefly, if only to say 'I'm
here.' or perhaps send back tokens from any transactions.
The network used bandwidth very efficiently. The entire
system of 50,000 subscribers in Columbus could be polled
in six second. All the information we needed could be
collected from the set-top boxes in six seconds."
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Qube
Content
The viewer accessed
cube programming with a proprietary Qube remote control,
a small box with 18 buttons connected by wire to the
set-top box. On the face of the remote were a vertical
row of ten white numeric key on the left, five larger
black buttons along the right side, and three large white
buttons at the bottom.
Start with the
three big buttons, which chose the type of channels. The
first big button selected ten local TV channels. The
second button selected the ten community programming
channels, both Qube-produced programs and
character-generated information channels (weather, school
lunch menus, public events). The third button selected
ten premium channels, including the pay-per-view
programs, which could be previewed a few minutes before
the visit registered as a sale at $3 for a PPV movie. The
row of ten buttons were used for selecting among the ten
channels in each category, for a total of 30 channels on
the Qube system
The row of five
buttons were reserved for responses to Qube's original
interactive programming. Each of the five buttons could
be assigned a meaning at the headend, allowing up to five
answers to a question -- at least 'yes, no or undecided'.
The headend could poll all the boxes, collect all the
responses, and immediately report to viewers the
percentages for each of the possible answers.
Dempsey recalled a
variety of interactive programming, marked with the logo
of a cube unfolding at the seams. "Qube was the first to
offer first-run movies on a pay-per-view basis, other
than a few hotels. PPV sports events were popular, too,
especially Ohio State University football games. We did
the first pay-per-view boxing match, for instance, but I
can't say who won. That PPV service outlived Qube, by the
way, and became the satellite PPV service, Viewer's
Choice [now called On-Demand].
"We also produced a
nighttime talk show and a morning show, 'Good Day,
Columbus'. The studio set for the morning show was in
front of this big plate-glass window facing the street,
like CBS has today in New York for their morning show,
and people would stand outside watching the show go out
live. The viewing audience would be asked all sorts of
questions, like an opinion poll on some public issue,
which was really great when we had local politicians as
guests. Another show was 'Qube Consumer', where a
reporter would go out and find fraud in the markets
around Columbus and then take live phone calls in the
studio, asking viewers to respond to questions with their
remotes.
"And we had
interactive games, like a card game where the five
buttons were used to play the hands. We had community
auctions, too, where items were sold live by an
auctioneer in the studio, each incremental bid made
through the remote. The bids were locked in by constantly
polling the network. An our subscribers also could
interact with us directly through special programs
called, "Qube at Your Service", which combined phone
calls with questions that viewers would answer on their
remotes. We always tried to be as responsive to our
subscribers as possible."
Columbus being a
college town, Qube had a youth orientation, which
generated a lasting legacy. Innovating what today is
called "distance learning", Qube viewers could use the
PPV function key to register for assorted community
education programs, such as guitar lessons taught by an
instructor in the Qube studio. Another program targeting
children, "Pinwheel," let young viewers use the five
response buttons for both educational and fun activities.
The "Sight on Sound" show invited teen viewers to select
among sets of five rock-and-roll artist, their
performances coming from concert footage, promotional
pieces from record labels, movie film clips, and
broadcast TV appearances.
"We kept attempting
new things", said Dempsey, "trying to get a feel for
interactive programming. Seemed like everything we did
had never been done before, so we did a lot of
experimenting. About 100 percent of Qube's interactive
content was produced locally in our studios, some of it
very elaborate, all of it live. We always had projects
ongoing, and the daily schedule was packed."
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Qube
Business
With Qube up and
running, Warner used the marketing strategy invented by
cable industry founder Milton Jerrold Shap, bringing
officials from distant cities to see the new
demonstration system in Columbus. One look was all it
took. Warner Qube franchise bids earned contracts to
build similar 30-channel systems in Houston, Milwaukee,
Chicago suburbs, and St. Louis suburbs. Warner also won
the franchises for a 60-channel Qube systems in
Cincinnati, Dallas and Pittsburgh, accomplished by
building duel 30-channel systems, doubling up on
everything, from dual line amplifiers to a specially
designed dual set top box. The 30-channel systems were
large for their day, but 60-channel Qube systems were the
largest cable plants ever seen before.
Every local Qube
system was interconnected to other local Qube systems,
and programming was shared nationally. If a national talk
show asked a question, the entire Qube network could be
polled in seconds, and the poll results were instantly
bounced off a satellite to all the local systems, which
would superimpose an opaque text "overlay" atop the
video. Two programs originating in Columbus went national
and still flourish today. Pinwheel grew into a new cable
channel, Nickelodeon. Sight on Sound evolved into Music
Television, known worldwide as MTV.
Despite technical
success and subscriber popularity, Qube was not
sustainable as a business proposition. "The franchise
wars made Qube more capital intensive than it needed to
be", said Dempsey.
Bringing in a
competitive bid for Qube was not easy, and the price of
system operations made profitability problematic. The
interactive technology added to the costs of plant
construction, plus building a critical "local
origination" studio for producing the live interactive
programming, Warner also faced franchise requirements,
like any MSO back then, to build and sustain auxiliary
"community access" studios where local "community
producers" could create their own TV programming -- talk
shows, variety shows, documentaries -- all cablecast on
the local community access channels. Qube also had high
marketing costs from advertising and maintaining a
positive public profile, let alone educating the public
to the new concept of interactive TV. Another expense was
staffing. Qube Columbus, for instance, had 300 employees
in such areas as system operations, studio production,
sales & marketing, customer service, and business
administration. Qube was not cheap.
"The build, by
itself, was enormously expensive", Dempsey said. "The
Cincinnati and Dallas Qube systems were built from
scratch because there was no cable there before, and
building dual cable systems for 60 channels cost twice as
much. On top of that large capital drain, a cable system
could not see any revenues until it began delivering
services. Therefore, to be honest about it, Warner Cable
would not have been able to keep on going past 1980 if we
had not received an infusion of capital from American
Express."
To strengthen the
business, Warner-Amex Cable brought in Drew Lewis, later
U.S. Secretary of Transportation under Pres. Ronald
Reagan. He split the cable company in half. The "metro"
division managed the cities freshly wired or rewired with
new technologies, including Qube. A national division,
headquartered then and now in Denver, managed the older
"classic" cable systems. To bolster the company's cash
position, Lewis sold MTV and Nickelodeon to Viacom in a
deal valued at $685m, then he sold the 60-channel
Pittsburgh and Dallas systems to TCI (now AT&T
Broadband, becoming AT&T Comcast).
Amex cash kept Qube
alive as the only two-way cable system in America. After
Amex withdrew from Warner in 1984, the Qube systems
closed one by one over a decade. The last Qube boxes in
Cincinnati were phased out in 1994. Curious timing.
Warner was then developing the Full Service Network in
Orlando, Florida, speaking of the FSN as something brand
new under the sun.
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Qube
Lessons
Why did Qube end?
Why didn't other MSOs emulate its example? Despite strong
evidence of consumer popularity, fundamentally, the cable
industry decided that interactive TV was not affordable,
not yet, anyway. A better business case in the Eighties
could be made for one-way addressability, which ruled
until digital cable at last made two-way services
affordable almost two decades later.
Qube illustrates
how economics rule technology. By 1983, the cable
industry had committed itself to replacing its standard
converters with "addressable" set-top boxes, which could
be controlled from the headend without a feedback
channel. A few keystrokes at the headend authorization
center would tell a set-top box to display a scrambled
premium channel or a pay-per-view program. Subscribers
placed an order with a telephone call to a customer
service representative (CSR) sitting in a boiler room.
Addressability meant foregoing genuine interactivity, but
it did open new revenues stream, and it could be deployed
affordably. That was enough to squelch more expensive
two-way proposals. "Given Qube's financials," said
Dempsey, "two way cable was not seen as a viable capital
investment.
This perspective is
shared by John Carey at Columbia University. "Qube has
been described as a great failure because it did not
endure, but it was not a failure at all. Half the
households in Columbus paid to get Qube usage, and they
created a lot of innovative programming, inventing the
pay-per-view business. Despite the high subscription
rates, however, actual usage was generally low, with
exceptions. Some game programs achieved strong
interactive participation. Major sports events attracted
large audience participation, or when Qube subscribers
could choose the next play in a live amateur football
game. Qube demonstrated that pay-per-view was viable, if
the cost of promoting and processing pay-per-view orders
could be reduced. In this sense, Qube was an important
media laboratory.
"It may be argued
that the principal lesson of the Qube experiment is not
that interactive media can't compete with traditional
one-way mass media," said Carey, "but that interactive
media really must be developed in a viable economic and
technical context. Producers must learn to be creative
with the new medium. And audiences should not be expected
to change their media habits overnight."
Carey said the
central problem was money. "It was the same old story for
interactive TV. The service cost a fortune to deliver.
The Qube set-top box alone cost $200 at a time when cable
converters cost $40. Qube equipment at the Columbus
headend added about $23 million in construction costs.
Economies of scale were not there. Further, there were
reliability problems with the equipment, especially in
the data transmission upstream from homes to the cable
headend. Budgets for Qube programs were very low compared
to broadcast networks, and interactivity with low
production values really could not compete with network
programming. So, looking at Qube in the context of the
franchise wars, Warner-Amex used Qube as a marketing tool
to help win cable franchises in a number of cities, and
once it had those franchises, it let Qube die a slow
death."
Dempsey vigorously
disputes any claim that Qube was only a Warner sales
gambit. "Qube was never a mere marketing ploy to win
franchises. It was a serious attempt by a group of very
creative people to provide a new kind of TV service. We
were doing things back in 1977 that only now are being
attempted again with digital services. Qube worked, and
it did what it was supposed to do. For instance, we once
helped the police track down a house burglar by polling
the network for the digital address of the set-top box he
had stolen. I think he was arrested while watching TV.
And besides, if Qube was not a serious venture, MTV or
Nickelodeon or Viewer's Choice would not have grown out
of there. There would not have been so many media leaders
today who came out of there.
"If it was a
failure," he argued, "we would not still be talking about
Qube today. Our only problem was that the costs were
prohibitive. In every other sense, Qube was a success."
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