Page 74 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

62 Communication, Commerce and Power

both the cable television and VCR industries with the time required to
become established forces in the US market. In 1976, 33.2 per cent of
US television households were passed by cable television lines, and
just over half of these homes subscribed. By 1980, 45.7 per cent were
passed and 55 per cent of these subscribed. By 1985, cable television
lines passed 76.2 per cent of all American homes and, of these, 56.7
per cent subscribed. 96 The use of videotape recorders grew even more
rapidly. In 1975, the in-home use of VCRs was virtually non-existent.
By 1980, 1.1 per cent of US homes had a videotape machine. In 1985,
this total had increased to 20.8 per cent. 97 When the FCC received its
first DBS license application from Comsat subsidiary Satellite Televi-
sion Corporation (STC) in late 1980, ITU geostationary orbit alloca-
tions for DBS systems thus had not yet been negotiated. The NAB
immediately filed its opposition to the STC proposal. Its official
argument was that because GSO allocations would not be made
until 1983, FCC approval of any DBS system was premature and
would constitute an unfair head-start in relation to other prospective
direct broadcasters. 98 In response, the FCC invited other DBS
applications, and by the end of 1981 it had accepted both the STC
plan and eight others. 99
In light of the STC proposal, RCA and Western Union executives
believed that they were compelled to file for DBS licenses in order to
protect aspects of their telesatellite businesses in case the new distribu-
tion technology was successful. The CBS plan, while also in large part
a risk-aversion investment (involving the protection of its television
network), was also promoted by its executives as a vehicle through
which the network could develop high definition television (HDTV)
services. 100 On the whole, most of these plans were driven by the
conviction that because of the telesatellite resources and expertise
held by Comsat, its initiation of a North American DBS system in
itself necessitated a response. Control over the scarce GSO and fre-
quency allocations available for direct broadcasting - requiring a
degree of ongoing capital investment in order to maintain a FCC
license - thus made strategic sense at the time in anticipation that
the STC gamble could one day pay off.
A relatively small company called United Satellite Communications
Incorporated (USCI), leasing transponders on the medium power
Canadian Anik C-2 satellite, surprised the original license holders
by establishing the first North American DBS-type service just four
months after the 1983 W ARC regional allocations. 101 Within six
months, USCI was unable to secure a $40 million bank loan and