Interactive Television

Prospects for Two-Way Services on Cable

by Walter S. Baer


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A study of five- to ten-year trends for two-way cable television development. Providing two-way capacity, as proposed by the FCC, will add 15 to 30 percent to the capital cost of a one-way distribution plant. Providing two-way services will require considerably greater expense in subscriber terminal equipment. Eventually, programming and other software costs will be greater than hardware expenditures if two-way services prove successful. Four groups of interactive services were studied for costs and technical requirements. Of these, subscriber-response services with shared voice-return channels seem the most feasible. Subscriber-initiated services seem too costly for 1970-1980 home audiences and also face difficult computer-software development problems. Several policy issues raised by the development of interactive services on cable are discussed. Allowing two-way services to develop in the marketplace under FCC's proposed rules, with cable systems relatively free to experiment with different service offerings and customer charges, appears the best way to gauge the potential public benefits from two-way cable technology.

This report is part of the RAND Corporation Report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

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