The San Fernando Valley's largest cable television operator will invest $20 million during the next four years in new fiber-optic technology that will give it the ability to greatly expand its services.
Under the direction of newly installed vice president and general manager Tom Schaeffer, Chatsworth-based CVI, West Valley, plans to start replacing its infrastructure of coaxial cable with the more powerful technology at the first of the year.
The upgrade will initially allow CVI to expand the number of channels it offers its 95,000 subscribers from 60 to 77. But CVI's management is preparing for the time when it may dispense services on the so-called information highway, such as video on demand, home shopping, security services, home banking and--if legislative hurdles eventually fall, as expected--telephone service.
If all this talk of delivering new information and interactive services has a familiar ring, it should. CVI's fiber-optic upgrade comes after Pacific Bell announced plans last November to invest $16 billion over seven years to resurface its network in California. One of Pacific Bell's first goals, if it gets the go-ahead from the federal government, is to deliver cable TV services. And one of the first areas it will target is the west San Fernando Valley--smack-dab in CVI's territory.
Schaeffer insists that CVI's upgrade was in the works long before Pac Bell made its plans public. CVI's 17-year-old system has run out of space to add channels, and customers are clamoring for new programming services, he said. This is happening as an array of new competitors--including the phone company and satellite services such as DirecTV--are eagerly eyeing cable's turf, threatening the monopolies most cable operators enjoy in their franchise areas.
So CVI is fighting back. The fiber-optic technology will give the cable system far greater capacity and the ability to run cable, data and voice signals over super-fast wires. In addition, Schaeffer is giving the system's marketing and customer-service practices the once-over. "We've got to become competitive against the phone company or any other outside company," he said.
To be sure, all this preparation for cable's entry into the phone business is based on a future that might not come to pass. Most states, including California, prohibit cable companies from competing directly with local phone companies. But change is bearing down. The federal government is considering legislation that would preempt state regulations and allow cable companies to enter the telephone business and vice versa.
Pac Bell, too, is making plans to deliver video before it has the authority to do so. The Federal Communications Commission has yet to approve its request to provide these services throughout its phone service franchise. But the FCC has made it clear that it supports the principle of phone companies entering the video-delivery business. Pac Bell expects to receive approval soon.
National Cable Television Assn. spokesman Rich D'Amato said CVI's technology program is part of a national trend. "Cable operators around the country are upgrading their systems with fiber optics in anticipation of providing increased services" and eventually competing with phone companies.
CVI's neighbor, Ventura County Cablevision, for example, is in the third year of a six-year program installing fiber optics in the communities it serves. The upgrade has allowed that system to increase channel capacity. Eventually it will enable VCC to deliver advanced telecommunications services, said Christopher Lammers, president of Ventura County Cablevision's parent, Western Communications in San Francisco.
Before CVI starts installing its new network, it must get city approval. Within two weeks, Schaeffer will submit a description of CVI's rebuild plan to the Los Angeles Department of Telecommunications for review, and possible scrutiny by the City Council. If the city has no objections, it will take about 60 to 90 days to receive the green light.
CVI will tackle the upgrades in 15 phases. Plans call for Chatsworth to be the first community to get rewired by April 1, followed by Reseda, Northridge, Canoga Park and Encino. That means Chatsworth subscribers in designated areas will be able to receive 17 additional cable channels beginning April 1.
CVI is also considering investing several million dollars in digital compression. This is a computer-based technology that allows a cable operator to cram more capacity into its pipeline, and it would enable CVI to provide hundreds of channels. Schaeffer said officials at CVI's parent company, privately held Cablevision Industries of Liberty, N.Y., are weighing whether the investment makes financial sense.
Cablevision Industries is the eighth-largest multi-system cable operator in the United States, with 1.32 million subscribers. CVI, West Valley, is the largest system it operates.
It's not clear how quickly CVI will recoup its investment in fiber-optic technology.