In 1976, a new sort of cable system debuted. This system used fiber-optic cable for the trunk cables that carry signals from the CATV head-end to neighborhoods. The head-end is where the cable system receives programming from various sources, assigns the programming to channels and retransmits it onto cables. By the late 1970s, fiber optics had progressed considerably and so were a cost-effective means of carrying CATV signals over long distances. The great advantage of fiber-optic cable is that it doesn't suffer the same signal losses as coaxial cable, which eliminated the need for so many amplifiers. In the early fiber-optic cable systems, the number of amplifiers between head-end and customer was reduced from 30 or 40 down to around six. In systems implemented since 1988, the number of amplifiers has been further reduced, to the point that only one or two amplifiers are required for most customers. Decreasing the number of amplifiers made dramatic improvements in signal quality and system reliability.
Another benefit that came from the move to fiber-optic cable was greater customization. Since a single fiber-optic cable might serve 500 households, it became possible to target individual neighborhoods for messages and services. In the 1990s, cable providers found this same neighborhood grouping to be ideal for creating a local-area network and providing Internet access through cable modems.
In 1989, General Instruments demonstrated that it was possible to convert an analog cable signal to digital and transmit it in a standard 6-MHz television channel. Using MPEG compression, CATV systems installed today can transmit up to 10 channels of video in the 6-MHz bandwidth of a single analog channel. When combined with a 550-MHz overall bandwidth, this allows the possibility of nearly 1,000 channels of video on a system. In addition, digital technology allows for error correction to ensure the quality of the received signal.
The move to digital technology also changed the quality of one of cable television's most visible features: the scrambled channel.
The first system to "scramble" a channel on a cable system was demonstrated in 1971. In the first scrambling system, one of the signals used to synchronize the television picture was removed when the signal was transmitted, then reinserted by a small device at the customer's home. Later scrambling systems inserted a signal slightly offset from the channel's frequency to interfere with the picture, then filtered the interfering signal out of the mix at the customer's television. In both cases, the scrambled channel could generally be seen as a jagged, jumbled set of video images.
In a digital system, the signal isn't scrambled, but encrypted. The encrypted signal must be decoded with the proper key. Without the key, the digital-to-analog converter can't turn the stream of bits into anything usable by the television's tuner. When a "non-signal" is received, the cable system substitutes an advertisement or the familiar blue screen.
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