Word: coaxial
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What makes the marriage of the two industries so compelling is that each has something the other needs. The TV operators have built extensive networks of coaxial cable with enough information-carrying capacity (or bandwidth) to broadcast hundreds of TV channels simultaneously. The phone companies badly need that cable to replace their narrow copper wires, which can barely carry a single TV station. At the same time, phone companies have sophisticated switching and billing systems that the cable companies would otherwise have to build from scratch...
...operations into a single system. There's one problem with that: it's illegal. The Cable Act, for example, forbids telephone companies to own more than 5% of a cable-TV programmer in their territory. The cable companies, meanwhile, are not allowed to provide basic telephone services through their coaxial lines...
...Baby Bells) are trying to create their own interactive networks, either by themselves or in partnership with cable companies. Bell Atlantic is scheduled to begin offering video on demand to 300 homes in northern Virginia this summer. U.S. West has announced plans to deploy enough fiber-optic lines and coaxial cable (the pencil-thick wire used by cable systems) across 14 states to deliver "video dial tones" to 13 million households starting next year...
This is the vision that has the best minds from Madison Avenue to Silicon Valley scrambling for position at the starting gate. The telephone companies, with their switching networks already in place, want to build the superhighway and control what travels over it. The cable-TV companies, with their coaxial systems, think they should own the right-of-way. Computer companies such as IBM, Hewlett-Packard and Sun want to build the huge file servers that will act as video and information libraries. Such software companies as Microsoft and Apple want to build the operating systems that will serve...
...cable-TV companies, the key insight came in the fall of 1987, when $ cable engineers demonstrated that coaxial wire could carry information quite effectively over short distances; in fact, for a quarter-mile or so, it has almost as much bandwidth as fiber. They pointed out that by using fiber to bring the signal to within a few blocks of each home and coaxial cable to carry it the rest of the way, the cable companies could get a "twofer": they could throw away those cranky amplifiers (giving them a system that has more capacity and is easier to maintain...