Interview Date: Thursday September 30, 1999
Interview Location: San Francisco, CA USA
Interviewer: Rex Porter
Collection: Hauser Collection
PORTER: I'm Rex Porter and we are at the AT&T media facilities to interview cable pioneer Jim Chiddix for The Barco Library at The National Cable Television Center and Museum. Good morning, Jim.
CHIDDIX: Morning, Rex.
PORTER: Why don't you start us of a little bit first this morning and talk about Jim Chiddix growing up before you ever heard of cable television.
CHIDDIX: Okay, I was born in Easton, Pennsylvania in 1945, and grew up in that town until I went away to college. My dad was a research chemist at a laboratory there and so he was always bringing home interesting toys, microscopes and pieces of chemistry sets and so forth. When I was seven I got my first electric train, and I think the real significance of that – I've had a love of model trains ever since – but the real significance was that I learned how to wire it and how to solder, and that was sort of my introduction to electricity on a practical basis. A little later I got interested in ham radio, and through high school was very active and the part of the hobby I liked most was building equipment, getting it to work and learning to understand why it worked, how it worked, understanding electronics and that was really a major step in the direction my career turned out to take. I went to Cornell University to study electrical engineering beginning in 1963 and loved college, but for some of the wrong reasons, and took a few detours. I took off a semester and worked construction building sewers in Allentown, Pennsylvania and finally, I guess Cornell and I both came to the realization that I wasn't really focused on my studies sufficiently, so took a trip into the U.S. Army for three years. The Army was a very good experience for me. It was during Vietnam, but I wound up going to school for electronics, specifically the electronics of the Nike-Hercules Missile system, the radars and the computers that operated these anti-aircraft missiles. Given my background, it really fit right in. I enjoyed it, I enjoyed the school, and when I was through with the school – this was in El Paso, Texas in 1967 – they asked me to stay and to teach. I discovered several things: one was that I really enjoyed teaching. The second was that you had to understand things far, far better to teach them than you do to simply have an average knowledge.
PORTER: Were you teaching in the Army?
CHIDDIX: This was teaching in the Army. This was the Air Defense Command School in El Paso, Texas, and so I taught courses in these electronics systems – computers and radars that were behind the missile system. The computers were analog computers, which were kind of interesting; did very complex, arithmetic and ballistic calculations using servos and potentiometers. This was before digital computers were nearly as advanced as they are today, but you had to calculate the trajectory of the incoming aircraft and of the missile, and then send guidance signals to the missile, so, a very complex system and very interesting. And then I wound up teaching a class in maintenance of the electronic systems for mission simulation. The Nike-Hercules missile systems themselves were largely tube based; it was a fairly old system at the time, but the mission simulator was a trailer that they could pull up to a Nike-Hercules site and plug into the Nike-Hercules control system and simulate all aspects of a mission. So to the radar operators in the Nike-Hercules trailers it would look like there were incoming aircraft and they were dropping chaff and sending out jamming signals for the radar, and to the guys in the missile control areas it would look like they were arming real missiles and launching real missiles, and they could either intercept or not intercept, and the trailer for all the simulation actually had electronics that were much more sophisticated than the electronics in the control systems themselves, and they were in a solid state with lots of discreet transistors. So that was very interesting as well. So in a practical sense, the Army gave me a great education in electronics, and I also had to learn how to explain things clearly to folks. It was very rewarding. The students who went through the missile school were highly motivated. These were mostly non-commissioned officers who had been to Vietnam and were looking forward to getting out of the Army, retiring in the next five or ten years, and they realized – they must have had families – they'd realized they really didn't have any marketable skills. Being able to field-strip a 50 caliber machine gun wasn't going to do them much good on the outside. So even though some of them weren't the smartest people on earth, they were among the most motivated. They really wanted to learn electronics so that they could get a good job on the outside after they got discharged, and so trying to explain complex technical things to that audience was personally rewarding, and it was also very good training for what I wound up doing later in life, trying to explain complex technical issues to business folks and to Wall Street folks and so forth. But after three years I got discharged from the Army. I was a sergeant when I was discharged and went back to Cornell electrical engineering school, and was a bit more serious about my studies. I got involved with a co-op program that helped... it was kind of a scholarship thing, where basically you earned money and worked summers in the engineering field. I was interested in power engineering and power systems, so I hooked up with American Electric Power, which is a big power utility. It's got systems, or plants and transmission lines, all over the Midwest, but the engineering offices were down near Battery Park in Manhattan. So I spent a summer living in New York and commuting on the subway, pre-air-conditioning. This would have been '69 or '70, perhaps, and working as an engineering trainee for this big power utility, and one of the tasks they gave me was the task of writing a program in Fortran using a timeshare computer – so sitting at a Teletype terminal hooked to some computer somewhere in New Jersey, and writing a program to help them optimize the design of, or the sizing of, transformers, secondary transformers in residential markets. In hindsight that program, the structure of that program and what was going on in that program, is very much like a tap design program, because in cable you're dealing with power as well, it's just RF power.
PORTER: It's still distribution.
CHIDDIX: There are losses with distance, due to coaxial losses, just like there are I2R losses through electrical wires, and you had to pick the right value of transformer to serve the homes that were going to be fed off that pole. So, that was kind of an interesting introduction to computers. I'd had computer courses, the usual things at the time in college with punch cards and big stacks of computer printout, solving, oh, kind of abstract problems, but this was a very real problem and it was a real application of a computer program, and that was interesting and it turned out, very useful as well. But the other thing that really struck me about that internship – this was a huge company, and it was a very mature industry – I left the job at the end of the summer, with the power company, swearing that I was never going to work for a big corporation, and of course events have proven otherwise, but my path was at least a little different. So, I determined that I wasn't just going to go through college and then join a giant engineering department somewhere.
PORTER: And be lost in the shuffle.
CHIDDIX: Be lost in the shuffle and wait for somebody to retire in order to move into a more interesting job. So that really stuck with me. So I went back to school, but I really began to lose interest in school because I no longer was on the... mentally I was no longer on the track to get a degree and join a company and so forth. I was a bit adrift in terms of what I wanted to do. Of course this was, Woodstock had just happened and it was pretty interesting times on the campus. The idea of getting a degree didn't seem all that critical to me. My parents had a different opinion. But the upshot was... well, along the way I had another interesting job. On campus I worked for a semester or so at a couple of jobs. One was in a TV production studio, like the one we're in, running cameras and doing odd jobs and the other was working as a projectionist in the campus theater at Cornell, and it was different than a commercial theater where you run a film for a week or a month. We had a film a day, maybe a couple of films a day. So we'd get lots of prints in, you had to inspect the prints. We had these old projectors with carbon arc lamps and you had to switch back and forth between them, a movie might have five, six, seven reels, and it was an introduction to film and to recorded images, in a sense. But the final upshot was I got a letter from a friend who hadn't gone in the Army. He'd graduated from college, gone in the Navy, gone to Vietnam in underwater demolition, gotten discharged in Hawaii, and was working as skipper on a charter sailboat, and he told me that he had a job for me working on this charter sailboat on the leeward coast of Oahu. So this was the second semester my senior year, I packed up and left college and went to Hawaii. I bummed a ride with someone I knew across country and wound up on Oahu, not in Honolulu, actually, out in a small town out on the western side of the mountains, a very rural area, an area with lots of native Hawaiians and Samoans and other cultures I'd never been exposed to before, staying with this friend and his family and working as mate on this big charter Trimaran, sailing between the islands with the charters. I'm sure my parents were distraught that I had dumped this promising engineering career and was now kind of a boat bum, but I thought it was terrific. I loved Hawaii, I loved the people, I loved the climate, and I loved the water, I loved sailing. I spent a few months doing that until abruptly the sailboat went bankrupt and my friend decided to move back to the mainland and his wife was going to get her nursing degree, but I didn't want to move back to the mainland. I wanted to stay in Hawaii, and somebody who was living on the boat next door at the little boat basin out there in this little town of Waianae, Hawaii, told me that their brother was working for this cable television company there. They had a little production company to make local programs, and they needed somebody to fix electronics, you know, cameras and so forth. And so that sounded to me like a way to keep on living there and to make a living, and so I went and inquired about his job with the manager of the place. He was an interesting man. His name was Gene Piatti and he had built this cable company, it was a leaseback, but he had gotten it going and gotten the phone company to build him leaseback facilities in this area of Hawaii. In, oh, probably the early '60s, maybe '63, there was absolutely no television reception...
PORTER: That's what I was wondering. What would you pick up for channels?
CHIDDIX: Well, there was no television reception for the people who lived there. There was this big, knife-edged mountain ridge that was two or three thousand feet high. It was only 20 miles to Honolulu where all the towers were, but the towers were down in Honolulu on top of hotels and things, and out in this part of Hawaii there was no television reception. So he'd gotten a little money together and he'd done a deal with Hawaiian telephone, which was bought by GTE somewhere along the way, to build a leaseback coaxial cable facility, and he found a piece of property down at one end of this mountain range down toward the end of this coastal area where you could get reception from Honolulu, and had put up a little tower and had gotten some Jerrold Channel Commander Ones, signal processors. So he was responsible for the headend, and for getting the drop into the home, and for dealing with the customers and he paid lease to Hawaiian Tel to actually operate the coaxial plant. So he had an installer who ran the drops and did trouble calls, and he had a couple of women working in the office to send out the billing coupon books. It was eight dollars a month. This was a very impoverished part of Hawaii and a lot of customers couldn't afford televisions, so he would rent people televisions. For another eight dollars a month you could get a TV and he would make sure the TV worked. These were all black and white TVs, mostly Admirals, if memory serves.
PORTER: Did he own a repair shop?
CHIDDIX: He had a TV repair shop, and he was also a ham radio operator, and he was also a junk collector. He had an office with a big room out back that was full of surplus stuff. Once a week he'd drive down to this Quonset Hut down in Honolulu where this guy ran an electronic surplus operation and he'd come back with all kinds of things, most of it powered by 400 cycle AC, and he'd stack it back there. He'd find some gems and he had lots of non-gems, but he'd started off in Honolulu in the electronics importing business and he'd studied electrical engineering and was kind of a crusty old character, but lots of common sense. When I first went to his office he had this huge pile of broken television sets, from his rental TV business, and he wanted to know, first of all, could I fix TV sets, and I'd messed with TV sets a little bit and I couldn't say I was an expert, but I told him I was sure I could fix his TV sets. Then he also – at that time, this was 1971, the FCC was talking about mandating cable operators over 3,500 subscribers, I think, to get into the local origination business. The rationale I don't remember, but for that reason this guy and his partners, his partners were a couple of businessmen from Honolulu, they had decided that they needed to have a little production company. So they'd hired a guy who had some TV production experience and gave him a tiny budget, and he'd set up a little production company. He staffed it with high school kids; he ran a TV production class at the local high school and those kids worked at minimum wage as his crew. The guy who was doing this production company – it was called Cable Casting, Hawaii – he'd found a Quonset Hut, an old surplus Quonset Hut, down by the headend and had fixed it up as a studio. He'd bought some used lights and some old beat up mikes and a couple of black and white cameras and a couple of AMPEX one-inch helical scan tape machines, and he bought an old bread truck from the local bakery that was sort of a rusted out, '50s era step van, and painted it and fixed it up and rebuilt the engine himself, and set it up as a mobile production control room. It had an old generator, so he could either pull the truck up next to the Quonset hut, and we had scheduled shows that we would run through the truck and then run up the hill to the headend and plug into the system on one of the channels. So we had a schedule of live shows every evening. Then we could also go out and do mobile production using the generator or picking up power somewhere. So we would tape things; we'd tape the local karate class where the kids would study with this local master, and tape high school things of all kinds. We did a lot of production.
PORTER: You're already on the return path.
CHIDDIX: Yeah, the feed from the studio went up to the headend and the headend was way down at one end of this coast, so there was a sub low trunk using channels T7 through T13. We only had a total of, I guess five channels. We didn't use adjacent channels. But we'd ship it up the coast to a couple of drop-off points where there were up converters using this sub low system from the headend.
PORTER: Were all five channels from Honolulu?
CHIDDIX: Oh, yes.
PORTER: So you had all networks?
CHIDDIX: Yes, there were... I guess there were six channels. There was our local origination channel, there were the three network affiliates, there was one independent that was mostly Japanese language – there was a big Japanese population, of course – and there was a PBS station. So it was a six channel system using non-adjacent channels. But there was no TV from the mainland, no live TV at all. If you went down to the airport late at night, if you had a flight that got in at 11 or 12 at night, coming off the luggage carousel would be a couple of big cases with two-inch quad tape in them, with the evening news from Los Angeles that had been taped and then put on a plane and shipped over to Hawaii. They would play it back the next morning. At 6:00 AM you could get up early and watch the previous evenings Huntley Brinkley show, but there was no satellite feed to Hawaii. So the cable company had nothing to offer except reception, and we had long amplifier cascades, so it was kind of fuzzy reception, of the local Honolulu stations, and this channel that we originated, and of course, the channel we originated was only on the air during primetime, either with local programs we produced in the Quonset Hut – we had a talent show and local kids would come in and dance hula and stuff, and sing, and some other things like that – and then these taped things that we had in the can, and the rest of the day we filled it up with advertising. The advertising was hand inked onto 3 x 5 cards that were on this carousel that went around.
PORTER: Sort of like the old weather channels?
CHIDDIX: It was sort of like a weather wheel except that we couldn't afford one of those, so we found a jewelry display case, the kind that used to go around to show jewelry, and rigged it up so it would advance one step at a time and then hold there for 30 seconds, and then advance another step, and on each of these little shelves we'd put a 3 x 5 card and shine a camera on it, and that was in a little shed out by the headend. Now Hawaii has a wonderful climate, but there's a lot of insect life in Hawaii, and other kinds of local wildlife, and you just learn to live with cockroaches running around and little lizards and stuff. Well, part of the entertainment – you know, we had bright lights shining on these 3 x 5 cards as they came around – and part of the entertainment if you watched it for awhile, especially in the evening, moths would come and they'd sort of light on these cards because of the lights, and once in a while, if you were lucky you'd see a big lizard dart out and nail a moth and drag it off. So a little blood sport there, on cable. But we would charge people, I think five dollars a week or something, to put classified ads on the 3 x 5 cards as they went around.
PORTER: Who sold the ads?
CHIDDIX: Oh, gee. I think...
PORTER: Was there a special crew to do that?
CHIDDIX: No, nobody went out and sold the ads. I think one of the cards said you call us and send us five bucks, and we'll put one of your cards up, tell us what you want in the ad. It was not a very fancy ad operation, but we did have ad revenue.
PORTER: I believe this is about the time that I first met you because I came over and you were having problems with the salt spray and the headend, and you were having to change your cables.
CHIDDIX: Well, that came actually a couple years later because we still had this leaseback. Now a couple things happened. For a year and a half, or two years, maybe, we had the leaseback and we had the local origination operation, but we only had 3,500 subscribers so we didn't have much revenue, and the local origination operation, even though it was run on a real shoestring, first of all, the FCC changed its mind about requiring local origination, and second of all, the owners decided that they'd rather have the money to pay back the debt, to add to the cash flow, instead of supporting this thing. So they announced that they were going to close down the local origination facility. In the meantime, I'd been spending more and more time at the cable office. In the origination I maintained the cameras and the tape machines; I also had my own show. I had a beat up old Volkswagen, so every week I would fix my Volkswagen on TV, and the kids would come and they'd tape me. My show was called "Debuggin' da Bug" and my Volkswagen needed service every week.
PORTER: I've got a new trivia question now.
CHIDDIX: But I'd pull the engine out of my Volkswagen on the show, or I'd fix a broken speedometer cable, I'd do something every week on this show, and then I'd fix the tape machines and cameras and the audio mixers and go out on remote shoots and run wire and all that stuff. But I also spent a lot of time at the cable office fixing TV sets. Now TV sets that had been rented in a climate like Hawaii's are interesting because first of all, cockroaches are immortal in Hawaii, there's never any frost to kill them off, and rental TV sets people don't give a lot of respect to. So people would spill baby food into them and stuff, and there was a whole fumigation part of this process. But I learned a lot about fixing TV sets, I learned a lot about rejuvenating picture tubes by zapping them with this little high voltage gadget. I developed a huge collection of tubes, replacement tubes, mostly army surplus. But I also began... I had to fix the channel commanders, and the channel commanders would break periodically. I had an old 704 field strength meter, and I had an ancient Jerrold sweep system with a klystron sweep generator, and the channel commanders – bad things would happen to them. They were up in this headend and once in a while the air-conditioning in the headend would fail and they would all fry, and the little capacitors, they had a solar regulating transformer with a capacitor full of PCBs that would blow up if they got too hot, and so I had to totally rebuild them, whenever the air-conditioning failed I had to rebuild the channel commanders, and then I had to sweep them as well, and I had to replace tubes when the tubes went bad. It was my first real introduction to real cable equipment, and I had a manual that showed this nice, neat AFC curve that you were supposed to get. I never could make my curve look like that. And I also would do installs, I'd go out and run drops and I would do trouble calls, go to people's houses, and a lot of the trouble calls wound up with these big confrontations with the Hawaiian Tel guys about whose fault it was that the signals looked bad.
PORTER: Since it was their leaseback?
CHIDDIX: Since it was their leaseback. Now the Hawaiian Tel guys only had one catalog, and that was the Jerrold catalog. They didn't have anything that you couldn't buy from Jerrold, so the pressure taps were Jerrold, the strip braid cable was from Jerrold, the amplifiers – some were tube type and some were Starline Ones. The guy who sold them all that was a very nice man, who left Hawaii not long after I got there, named Al Micheli, and he was a Jerrold salesman forever. In fact, I still talk to him once in a while, he's retired.
PORTER: Still out in Redwood City, isn't he?
CHIDDIX: Still retired on the West Coast, but he was a wonderful guy and he was also a formidable salesman, I guess, because he got GTE to buy all the Jerrold stuff. But around '73 the FCC or the Supreme Court decided that leasebacks had to be divested. The phone companies could no longer own cable TV systems. So a big change came when we were able to and really mandated to acquire the leaseback from the phone company and become a real cable TV company.
PORTER: And they were mandated to sell it.
CHIDDIX: They were mandated to sell it. So as I said, 1973 several things happened. One was that we had the opportunity – or not "we", the guys who owned the cable system – had the opportunity to buy the plant from the phone company along with pole attachment agreements and all the rest. A second was that we closed down the local origination operation. And the third – where I'd been spending half of my time – the third was that Gene Piati's two partners in Honolulu, the primary partner was a guy named Kenneth Brown, a local businessman from a family that had been there for generations and we'll get back to Kenneth Brown later because he was one of the founders of the Honolulu cable company, but I guess they had a buy/sell agreement, a put/call agreement, with Gene Piati, and they decided to exercise that. Gene was unable to come up with the money to buy, so he had to sell. I'd really grown fond of him, and in fact he remained a friend for the rest of his life, and he'd been kind of a mentor and he'd taught me a lot about cable, but he left the company at that point. A fellow by the name of Frank Jekell came out to be the general manager, and I was the chief engineer, and suddenly we owned this cable system. Another thing that happened, and I guess I'm not clear on all the details, there'd been the cable freeze at that period when major markets... cable wasn't being built in major markets, and what's more, Hawaiian Tel wouldn't build, for that reason or whatever, maybe because they knew they were going to have to divest, they wouldn't build any new subdivisions. There were a bunch of subdivisions out there that had no cable at all, had no TV, had been clamoring for cable for a couple of years, so our first order of business was to take over operation of the cable amplifiers and the cable plant itself, the power supplies, the sub low up converters, the CDX 713s – they had tubes in them and they were nasty beasts. The second order of business was to build these subdivisions because it was revenue waiting to be generated. So, very quickly we got a local contractor to come and run wire and splice up taps, but I had to do the design. Gene Piati had already bought the amplifiers and they were Delta Benco cascade amplifiers, a bunch of little modules, and sort of a complicated system of configuration. The first few subdivisions we built with the Delta Benco cascade amplifiers, and they were at least better than the Starline Ones. One of my other immediate tasks was to take every Starline Ones – we had a bunch of spares – to pull every amplifier module out of the field and rebuild it. So you had terrible suck outs, terrible problems, and they fundamentally had some design problems. The grounding wasn't very good and they would develop parasitic oscillations. So I ran them all through the bench and stayed up late re-tinning all the ground planes and everything, and sweeping them and all the rest. At least we bought some decent, I think, Wave Tech sweep gear at this point, so it was better than that old Jerrold stuff. We fired up some of these subdivisions and began getting customers, and we had a lot more to do. But the DBC stuff wasn't very good, and I was looking for a different kind of amplifier, something a little more straightforward, and had proposals from Jerrold and from Anaconda and from Sylvania, and the guy from Sylvania was Richard Covell, and Richard Covell came out and called on me there in this very primitive little cable office, right across the road from the beach, and he presented the Sylvania amplifier, which had a very flexible, straightforward architecture, the way the modules could be configured for terminating trunk bridgers, and intermediate trunk bridgers, and all the rest. So I decided to use Sylvania equipment for all further extensions of the system. The stuff was a joy to work with by comparison with the Starline One Jerrold stuff. So we then, in rapid order, we built out the rest of the cable system and along the way I hired a couple of guys to be technicians, one of whom still works for Time Warner in Orlando, Florida now, and really got the operation of the system under control. I wanted to rebuild the whole thing we Sylvania amplifiers, but the investors weren't clear how that was going to improve their cash flow, so we didn't do that right away. So something interesting was going on. Right around 1975, HBO was beginning to come to the forefront and I was tuned in to all this; I'd begun going to cable shows. In '73, Gene Piati's last words of advice to me were to go to the cable shows and learn about all the equipment and really get plugged into the industry, so I went to the Western Show in Las Vegas in 1973, met a ton of people. I learned how to go from one booth to another and compare one vendors lies with another's, and then go back to the first guy and challenge him. It was a good education. Of course I had seen some of the first satellite dishes that came along, and was certainly aware that HBO had gone up on the satellite. About '73, on totally parallel track, some local businessmen and some mainland partners had gotten together and had gotten the franchise for the city of Honolulu, and it included a couple of other little cable systems that were up in valleys that had no reception, but it also included areas that had perfectly good reception. So Oahu began to go from an island that had four or five different cable systems in little pockets like the one where I was working, to one that had three or four cable systems. In Hawaii Kai, Henry J. Kaiser and the TelePrompTer folks had built a cable system in his community of the future, Hawaii Kai – Henry Kaiser's community of the future. There was a system on the windward side of the island, I was on the leeward side of the island, and then Honolulu was this new franchise. Honolulu was a franchise that had good off-air reception in lots of areas. The result was nobody bought cable because they could get decent TV from the high rises in Honolulu, from the towers on top of the high rises on Waikiki Beach. So Oceanic was losing money like crazy. They spent a lot of capital and their investors were all complaining, and they had very low penetration, and they were looking for things to put on in addition to the off-air channels and local origination. So, for example, they put on a system, I think it was called Metro Data. It was 16 channels of character generation – classified ads, information, all kinds of stuff – because they had built a 30 channel cable system. They also began experimenting with pay television. Now, there was no pay television available by satellite in Hawaii. I think they began even before HBO went up on the bird, but even when it did HBO was on a transponder you couldn't receive in Hawaii, so it was all stuff that they'd booked themselves with the studios, and they had a playback center with Sony ¾ inch machines, and they had people who stood there and rolled one machine at the end of the reel from the previous machine, and they had a pay TV service.
PORTER: So you're actually studio-ing for the pay TV people?
CHIDDIX: Right, and they charged extra. They weren't affiliated with anybody, it was just their pay service and they had contracts with Hollywood to get movies. That was probably... it began maybe at the end of '74, beginning of '75. Well, the chairman of the board and one of the investors in Oceanic Cable in Honolulu was Ken Brown, who also owned, by this point, outright owned, Cable Vision of Waianae, which was where I worked, and they began to get some subscription revenue from this. So he came out and said, "Gee, we need to put a pay TV channel on, and I know how to do it, you can call these guys and make deals with studios." There was actually a company that was a broker called Telemation Program Services that would broker contracts for a fee with studios, they knew all the studio people. So, we began figuring out how to do that. Now, I went down and visited Oceanic's playback center, and it struck me, as an old projectionist, as pretty primitive to have people sitting there listening to queue tones, then pre-rolling tape machines, and trying to do a smooth switch from one tape to the next because these ¾ inch tapes would only hold an hour, so movies obviously took two or even three tapes, and it was very labor intensive and often you got a bad switch between reels, and that offended me as a projectionist. Projectionists knew about, you know, you put a mark on the film and pre-roll the next projector, and if you were a good projectionist you got a pretty clean switch, but with videotape it wasn't working that well. So that bothered me. Also, it became clear that the coupons and postcards we'd been using for our billing system were going to... that system was going to come unraveled as we got into the pay television business because some customers were going to have pay service and some weren't. So, we began talking to Cable Data about converting to a Cable Data billing system with microfiches and Cable Data would mail out the bills, all the rest. So that was a big change in how we ran the business. I began putting together a playback facility to playback these pay TV movies, and our plan was we were going to call it Waianae Home Theater, Waianae was the name of the town and we were on the Waianae coast, was our area. So Waianae Home Theater was going to book eight movies a month and charge eight bucks a month, so for cable you'd pay eight bucks, and for Waianae Home Theater you'd pay eight more bucks, get eight movies a month, and we'd run them... I guess we didn't run them 24 hours a day, but we ran from late afternoon until late, late at night, and I hired a couple of the high school girls who used to work at the production operation running cameras to come staff this playback center.
PORTER: But this was still at Waianae?
CHIDDIX: This is still in Waianae, this little tiny rural cable system. But I really got to thinking about the problem of changing from one tape machine to another, and decided that it needed to be automated, and through a friend – I ran into a guy from Maui named Steve Rose, who'd built automated tape playback systems for hotels, not for movies so much at that time, but as ways to play back promotional tapes in the rooms on the in-house system, and he'd actually sort of soldered together these jerry-rigged systems and figured out ways to wire it in to the control harness of a Sony 1000 playback cassette deck. We knew this could be done better. In Waikiki there was a hotel movie operation, Spectra Dine, and they had a big playback center at the Sheraton Waikiki and a bunch of tape machines, and they had their own automation gear, and they had operators as well, but they had some very primitive stuff that could actually pick up a queue tone from one machine and roll another machine. So Steve Rose and I began working on the idea of how we could do this. Sony had just come out with a new tape machine, the 2000 series, and instead of having a big lever to load the tape, it actually had a little elevator that would take the tape down. Most importantly, it had a jack in the back, a control plug in the back so you could get to the control circuitry of the machine. So Steve and I decided that we were going to figure out how to make a piece of equipment to automate a bunch of these tape machines so that you could flexibly playback tapes, and have it do it smoothly you'd put on queue tones on one track of the tape, and we would sense the queue tone and then we would do the appropriate thing to the next machine, and so we cobbled together a gadget. I'd always enjoyed building electronics so we had little thumb wheels on it to set the time when it was going to start the process, and a little digital clock, and then cables that would go to these control ports on the tape machines, and it worked real well. We installed it at the cable company. This was sort of a thing we did on weekends. Steve would fly over from Maui and we'd kind of solder up this stuff. But it worked well enough that we decided that we were going to start a little business manufacturing this tape automation stuff and try to sell it to some of the cable operators. End of '75, we launched Waianae Home Theater and that was going along smoothly. Tapes were coming in each month and the girls would put queue tones on one of the audio tracks, and then they would load the machines each evening and sit there and monitor it, try to salvage things if anything went wrong, a tape jammed or something. But in early '76, Steve and I took a prototype of this equipment, I think, to the National Show in Chicago, in the basement of the Conrad Hilton Hotel. We got a 10 x 10 booth, and we really couldn't afford much of a booth so we went down to a local Sears and got some of that shelving you can buy and bolted it together in our booth, and put three tape machines on the shelving that we had shipped over, and our automation equipment. Now the automation equipment had something interesting, it had a test mode so you could see if it was all working right, and the test mode... well, I'm getting ahead of myself I guess, that came a little bit later, but we were showing movies in our booth so all kinds of people would wonder by – Bob Bilodeau and Sruki Switzer, and all these folks would wander into the booth and chat with us. A few of them actually bought our systems. Our first big sale was to the system in Honolulu because they came out and saw it and saw it worked a lot better than what they were doing. So we sold them a playback system.
PORTER: That was Oceanic?
CHIDDIX: That was Oceanic Cable, for their pay TV operation. We also made a big sale, a BIG sale, our biggest sale ever, was to Qube in Columbus, and Qube at this time was really starting up, and Qube had lots of channels and lots of things to play back.
PORTER: And Warner owned it?
CHIDDIX: And Warner owned Qube, and Qube was this interactive TV system, but it also was a 30 or 40 channel system. They produced a lot of their own video, whatever came before Nickelodeon was originated in Columbus, and there were a bunch of other services there, movie services. So they needed playback automation and there were only a couple of companies... Channel Matic had come out with something, but we thought ours was better and Qube decided to buy ours. So they bought a whole bunch of it, like 20 channels worth, and I remember flying to Qube and helping install it and all that stuff. We also sold it to Showtime. I met, oh, I guess Joe Van Lohn and Frank Byas, but the engineer for Showtime, which was a Viacom subsidiary, was a guy named Jim Vaughn, who is still around the industry, and they decided... they were not yet on the satellite and their story was that tape bicycle was the way to go, but their affiliates needed playback automation to make it work smoothly. So they bought a bunch of equipment from us as well. We found a little job shop in Los Angeles that would make the PC boards, and the PC boards would be shipped to us, and Steve would fly over from Maui and we'd work all weekend. This was a second job for me. I was chief engineer, and then I became the manager of the cable company, all week and then weekends we ran this little manufacturing operation. So we'd bold them together and test them, and had to do a fair amount of soldering, and then ship them off as we sold them. It was a lot of fun; I was working a hundred hours a week, but I was having a lot of fun, both operating the cable company and also running this little manufacturing outfit. What happened next was that we began to get... I guess we began to get satellite feeds... well, in 1978 we decided that we – "we", the cable operators of Oahu – desperately needed to get more programming, especially Oceanic, which had off-air, but we all wanted more programming.
PORTER: Now that's the only island that had cable television at that time?
CHIDDIX: No, all the islands had cable because of reception problems, but again, they were pretty primitive reception systems. Hilo had put in microwave across the channel from Maui to get their television channels. There's a lot of cable activity in Hawaii because the geography was so rough for television reception. But in Oahu we decided we really needed to get some satellite feeds. We didn't need pay TV, we didn't need HBO because we had perfectly good... by that time we had all put in pay TV operations with movies booked from the studios, but we found out about Ted Turner's Superstation, and that was kind of a revolutionary idea because in Hawaii, remember they were still bringing in the evening news on these quad tape things and showing them the next day. So the idea of being able to get a live TV station from the mainland sounded pretty sexy, something we could really use to sell cable. So we went together in sort of a co-op, because dishes were horribly expensive and we were sort of at the very edge of the footprint, but at least Ted Turner's Superstation was on one of the transponders we could receive in Hawaii. The geostationary satellites had been put up for telephone traffic primarily. Hawaii only had a million people in it, so diverting a bunch of power from the transponders to illuminate Hawaii with a spot beam was marginal at best. Now politically they had to provide some service to Hawaii or Senator Inouye was going to give them a hard time, but they plumbed the wave gut on the satellite so that only half the transponders illuminated Hawaii, and this is SatCom One or SatCom Two, something. Again, HBO was on the wrong transponder, we couldn't even get it, plus it was actually a lot cheaper to book movies from the studio instead of paying HBO, so we weren't eager for that, but the Superstation we wanted. So we decided to build a receive dish. Now at that time you had to get a license for a receive dish and you had to do frequency coordination showing that you would not have interference from microwave, and Oahu was full of microwave going between the islands and across the island. Hawaiian Telephone has lots of microwave links. So we needed to find a place that had good shielding from terrestrial interference, and we found a little valley up above Honolulu called Colihi Valley with very steep sides, but we found a site in the parking lot of a laundry mat that had a look angle that could see the right satellite. So we had gotten to know the SA folks, Sid Topol and all the rest, so we ordered a big 10-meter Scientific Atlanta dish as part of this co-op, and the people in the co-op decided that I ought to be sort of the engineering guy for the co-op, even though I was the general manager of the Waianae Cable Company, but I was kind of an engineering guy at heart.
PORTER: So now you've got three jobs.
CHIDDIX: So I had three jobs. So the dish arrived, and of course we had to build this huge foundation for it to anchor it down in high winds. We'd gotten the foundation poured, and we'd gotten the permits from the city, and all that stuff. So this 40-foot container shows up on a ship and gets put on a truck and get brought up to our site. It's basically a big erector set kit, and a guy shows up from Scientific Atlanta – I'm sorry to say I don't remember his name – but he was sort of the construction field engineer, and so we all showed up with a bunch of our technicians and the guys from the various cable companies, and we were going to be the labor and this guy was going to show us how to make the erector set work. We had a little pre-fab building for the equipment and we began bolting things into place, girders and... After a few days we had the stand up and then we began assembling the pie-shaped sections of the dish pointing straight up. Eventually we got that put together and got the jack in place and lifted the dish up, and ran the wave guide and everything was ready to go. It was evening, and now it was time to get this to work, to actually bring in the Superstation. We had compasses and so forth. We knew, obviously, the elevation and asmath of look angle for this satellite from our location. So we got out there, we turned on the satellite receiver and we began cranking the antenna back and forth. Now the ten-meter dish is a very narrow beam width, of a degree or less, so it only can see a very small spot in the sky and even though you know generally where you're looking actually getting it on the satellite is no mean feat. We began panning back and forth and we'd raise it half a degree in elevation and pan back and forth in asmath, and raise it and pan it back and forth, and we got nothing. Now at this point, you're on an island that's one of the most remote spots on earth; you're in the middle of the Pacific Ocean. You're supposed to be able to point this big piece of metal up in the sky and get television signals, and intellectually I knew how this all was supposed to work, but it was hard not to begin to have doubts. We weren't getting anything at all. The hours went on, and we went back through the whole pattern again, and still nothing, and again and again.
PORTER: And you had no way of knowing whether his station was really off the air.
CHIDDIX: We had no way of knowing much of anything. And of course there was also the polarization, you had to turn the feed horn to change the polarization. We weren't sure we had the polarization right, because we were looking from the other direction from everybody else in the country. Everybody else was looking west at this thing, we were looking east. Finally, we began picking up a signal and we tuned it in on the receiver and it was a basketball game, but it wasn't what was supposed to be on the Superstation, and in fact it wasn't anything that was supposed to be on anything that was on the satellite we were looking for. It turned out we were picking up a feed from the mainland to a big earth station – there was a 100-foot dish on the north coast of Oahu owned by ComSat that was used for Intel Sat relay, and this was a basketball game they were relaying to the Armed Forces Network. But we knew... somehow or other I guess I'd gotten to know the guys up at the station on the north shore. I'd visited this big earth station a couple of times, and I called them up in the middle of the night, but of course they were there, and they were watching the basketball game, but the important thing was they knew what satellite it was coming in on, some Westar satellite, and they knew what the elevation and asmath were to that satellite, so that gave us a reference and then we were able to...
PORTER: Sort of work back.
CHIDDIX: We were off a little, so we were able to then work backwards, and within the next hour, by George, we had the Superstation and suddenly we're watching used car commercials from Atlanta, and ads for Underground Atlanta, whatever that was, we had no clue, and within a couple of weeks we fired it up on all of our able systems, and we had microwave, by this time, between our cable systems. We were getting microwave feeds from Honolulu of the off-airs instead of having to get the off-airs from our little old headend, and it was all FM microwave from mountaintop to mountaintop.
PORTER: Was it well-received? Did it make that much difference having that channel?
CHIDDIX: It made a huge difference. First of all, people in Hawaii never had seen live major league sports. Satellite links were just too expensive, the lease links were too expensive. The broadcasters typically brought them in by satellite delay. Now you could hear live sports on the radio, but if you went to work and told people who had won the game that was going to be delayed broadcast that evening on television, you were looking for a fight because people would sort of pretend it hadn't happened yet. So live sports were a big deal and we suddenly had the Braves, and Ted had a basketball team, and I guess there was maybe some hockey. There were a lot of sports on the Superstation.
PORTER: You had baseball, football, and basketball.
CHIDDIX: Plus you had programming that was just different. At that time the Superstation was an Atlanta TV station so it had all these Atlanta ads that fascinated people in Hawaii because they were just totally different then anything that they'd seen before. We were used to ads with guys in aloha shirts and so forth, and this was difference.
PORTER: Now they've got the Braves and the Hawks.
CHIDDIX: Right, right. And for the launch of this Ted Turner came out himself, and we had a big launch party for the press down at the Waikiki yacht club and we wanted Ted to talk to the press but there was a basketball game on, and Ted wanted to watch the basketball game because it was his team. So we had this little flap where Ted sort of refused to talk to the reporters until a break in the basketball game, but he eventually did and he was his own charming self and we got a lot of press coverage and fired it up. That was really a turning point for Oceanic. Oceanic at that point was headed for bankruptcy. They'd borrowed a ton of money to build cable plant, they had very low penetration, no real reason to buy unless you wanted the pay TV service, which had helped some. The Metro Data – 16 channels of character generated stuff I don't think interested much of anybody. This was probably in November or December of 1978. Now, as I said, Oceanic was on the verge of bankruptcy, penetration was way low and so forth, and I'd gotten to know Don Carroll, who was the president of Oceanic at that time, and still is, for that matter...
PORTER: He just retired.
CHIDDIX: He hasn't retired yet.
PORTER: Oh, is that right. Okay.
CHIDDIX: But he is going to retire in the next year or so. In any event, I'd gotten to know him pretty well, and some of his people, and he asked me to come to work for Oceanic as the chief engineer. So I went to his boss, the chairman of his board, Ken Brown, and my boss, the guy who owned Waianae Cable Vision and told him I really did want to do that, it sounded pretty interesting. Things were getting a bit sleepy at this point, out in Waianae, and even though CRC Electronics, this little manufacturing company was keeping things kind of interesting, Oceanic looked very interesting. Ken agreed that that sounded fine, and of course he had a big investment in Oceanic and he wanted to see it get well and hopefully I could help some. So in December of '78 I left my job as general manager at Cable Vision in Waianae where we had 3,500 subscribers – hadn't grown much – and joined Oceanic Cable where they maybe had 20,000 or so subscribers, but that was a very low penetration of their passings, and became chief engineer, or engineering VP, or some such title, and was suddenly up to my elbows in all kinds of new problems, a lot more management issues. Waianae Cable had maybe six employees, and it was a very friendly little place, close-knit. There were certainly some management issues, there always are, but it was pretty simple. Oceanic Cable had scores and scores of employees, maybe a couple hundred, including a lot of field employees who all now worked for me, so that had a bunch of interesting new challenges, and it was a union shop. Hawaii's very heavily union oriented. Waianae Cable had been unionized as well. Unions are pervasive there for a bunch of historical reasons tying back to plantations and so forth, but the Oceanic relationship with the union was fairly rocky, and it was IBEW and it was headed up by a very colorful guy named Blackie Fujikawa, an old union boss who was rumored to play rough sometimes, you know, people's trucks would catch on fire and stuff if all wasn't going well. So it was just a very different environment and I had a bunch of supervisors now working for me, and a bunch of challenges, both at making the cable system work better, finding ways to add more services now that we had this satellite dish that we had built cooperatively among the operators, and finding new sources of revenue. Once the dish was in we ran super trunk, FM super trunk, from the dish location back to the cable headend for Oceanic, and then from there they would use FM microwave to send it to distant parts of their system. They operated all the way up to the north shore of Oahu and also to the Waianae Cable and to the cable company on the windward side of the island, TV Systems.
PORTER: Was it all microwave? Did you have the AML also?
CHIDDIX: At that time there was no AML yet. It was all FM links using microwave associates, CARS band FM gear. So the Superstation was being distributed in that way. But more and more cable services became available on this same satellite, and we began picking them up and adding them to our channel lineup, and penetration began to go up. So I was in the enviable position of having joined the company at just the right time as things began to get a bit better, but some of the services – I don't remember which one was the first – some of the services were kind of awkward in that they were really out of time sync with Hawaii. Hawaii during part of the year is three hours, three time zones, west of the west coast, so it's six hours from the east coast, and this time gap was a problem. Now part of my deal with Don Carroll was I still had this little manufacturing company, CRC Electronics – Chiddix, Rose (Steve Rose), and then I had this cousin, Dave Caldwell, who operated a Sony dealership in town, and he was one of the partners in this little firm – but we decided that what the industry needed, or at least what Hawaii needed was automated tape delay, a way to automate ¾ inch tape machines so that you could bring a satellite feed into a bank of tape machines and have it automatically recorded and then have it automatically played back two or three hours later, so that conceptually, if you locked these tape machines in a closet with this controller that we wanted to build, you'd have a three hour delay line, totally unmanned, totally automated, video goes in one side, comes out three hours later, and your time zone problem is fixed. And so we were able to use a lot of the same ideas in circuitry we used in our playback automation equipment, but we changed it somewhat for this record playback application, and we built into this controller. Again, it had thumb wheels to set delay time and start times and so forth, but we also built a test mode into it, so instead of waiting for four hours to see if your system was working right. Instead of recording one hour segments on each tape it would record one minute segments. So you could do a three minute delay and put video into it and have it come out three minutes later, and the machines would rewind and queue up and all that stuff in the meantime, lots of clicking and whirring going on. That was a good test mode for diagnostics. It was also a great demo mode. So we took it to a cable show – this would have been in probably '79 – and had our little CRC Electronics booth at a cable show, and had a bank of tape machines, but now instead of showing playback, we had a playback system on one side of the booth on shelving we'd bought from Sears, and then a bank of tape machines for delay on the other side. We had a camera in the booth and a couple of monitors, and one was the input and one was the output of this bank of tape machines, so if you walked into our booth, on one monitor you saw – they were both the same scene – on one monitor you saw yourself walk into the booth and Steve Rose would come over and greet you and talk to you, three minutes later he'd point up and you'd see yourself walk into the booth three minutes previously. It's hard to describe, but it was kind of cute.
PORTER: It seems like I remember it.
CHIDDIX: And it made an impression, except the problem was almost nobody needed this kind of delay system.
PORTER: That's what I was going to ask. Other than your need in Hawaii...
CHIDDIX: Well, we sold these systems to virtually every cable operator in Hawaii and Alaska, so we got to go to Fairbanks and Anchorage and so forth. We sold a few in the mainland, for what purpose we never quite understood, but we sold a few to some mainland cable operators. I remember there was a guy at, oh, it was a big planned community north of San Francisco, Sea Ranch, and the cable operator from Sea Ranch for some reason bought one of these. His name was Joe Ray, and that's all I remember about him, but for some reason he had to have one. Just to continue and maybe complete the CRC story, shortly after that an interesting service appeared in '79 called UPI Newstime. This was a slow scan news service from United Press International, and it had the day's stories and it had slow scan video, so a frame of video would come up along with audio, and it was sort of interesting, and it was current news, it wasn't reel video, but it's most interesting characteristic from a cable operators' standpoint was that they made provision for commercials for local operators. If you were willing to become an affiliate of this service, you could insert your own local commercials into it.
PORTER: On the scroll, where the news was?
CHIDDIX: No, you could insert a video commercial, and there were queue tones that told you when you were allowed to insert your commercial, and to my knowledge – remember, the Superstation was a broadcast station and HBO was a pay service – this was the first service that made provisions for affiliates to put in local commercials. So at Oceanic Cable, we were desperate for cash flow, like everybody else, we began immediately to put in local commercials, and we found a guy who was willing to actually buy local commercials, the guy who ran the local Wendy's chain, and we later went and hired him. His name was Tim Evard, he became our marketing vice-president. We figured that he either had enough forethought or was naïve enough to believe that advertising insertions on this cable service could do his business some good. But it got Steve Rose and me thinking about a way to do this automatically, to automatically insert a commercial, and our friend Bill Killian, our friendly rival Bill Killian, at Channel Matic was making the same thing and he came up with a device that could insert commercials. You'd put together a reel of commercials in order and then those commercials would get played back in order during these opportunities at UPI News Time. But we wanted more flexibility and the people who were selling ads for us wanted more flexibility. So we decided to come up with a random access system, and instead of using the discreet C Mos Logic we'd use on our playback system and on our automated delay system, we got a Z80 Microprocessor and programmed it to do commercial insertions, and built a whole new kind of box with a big mother board and still we could sense the queue tones and then roll tapes, but we could have a catalog of tapes and we could find a given commercial on the commercial reel, so that we could set up a schedule of which commercials were supposed to play when...
PORTER: Throughout the day.
CHIDDIX: ...without having to edit the commercial reel up in advance. It was a random access commercial insertions system, and we got it to the point where it worked. Steve Rose had been one of the very early microprocessor, or microcomputer guys. He's gotten the Mits Alter, and he'd gotten the Crememco, and all those other early mid-70s microcomputers and was really into programming them. We'd even came up with a scrolling TV guide channel for Waianae Cable Vision that ran on an ImCy 8080 microcomputer. You'd load the software with toggle switches and then with an audio cassette. But anyhow, we got this thing working, and it really was for me a watershed moment in my career because this company... I thought commercial insertions had real potential and that making equipment to do this kind of automated insertion, random access automated insertion, had real potential. At the same time, my job at Oceanic was really becoming all consuming. Oceanic had huge challenges, huge opportunities, and I really had to decide – was I going to stop what I was doing and move to the mainland, because running a manufacturing company in Hawaii is crazy. Labor's high, shipping's high, it's not where you want to be if you're in that business. You want to be in California somewhere where they make the PC boards and where you can get people who can do microcode, all that stuff. So that was one career choice, was to move the company and really try to build it up and get some investment in it and so forth and to leave the company, or to focus on the cable company and sell off CRC. So I decided I really wanted to stay in Hawaii and Steve wanted to stay in Hawaii, so we sold CRC. We sold it to a company called CompuVid that made character generators in Salt Lake City run by a guy named Bruce Robertson and he was looking to expand his product line. And so we sold it to CompuVid and right after we closed the sale – I mean we sold him the whole company, lock, stock, and barrel – as soon as we closed the sale he turned around and sold CompuVid to Tech Scan. So our device became the basis for Tech Scan's commercial insertion equipment, and they went on to carve out a big part of the commercial insertion market, still competing with Channel Matic and one or two others, until they all got wiped out by the server based commercial insertion systems, which came much later. So we felt good that our product wound up in a lot of headends inserting lots of commercials, and of course Tech Scan kept evolving it. But then I really began focusing on things at Oceanic. We added more and more satellite channels, we added more satellite dishes and we finally, in 1980, and we got acquired by ATC. The original investors at Oceanic had decided that they had all this money that they'd put up and they weren't getting any return. All the proceeds had to be plowed back in – those were the days when you couldn't really get good bank financing, they had been able to borrow some money from insurance companies, but a pretty risky venture. Their original investment had appreciated and the biggest stockholder, or one of the big ones, was Children's Television Workshop, who owned Sesame Street, and they decided they really needed to cash out to put their money back into their core programming things. Another big investor was Sid Welsh and his partners out of the cable company in Vancouver, Canada, and they were sort of interested in acquiring it but didn't really want to come up with all the money. There was a guy who owned a bunch of theaters on the West Coast, and then a bunch of local shareholders, like Ken Brown, and none of them were really willing to come up with the money, to risk the money, to buy the others out at current market value, so they went to a broker and the broker brought in the ATC guys, brought in John Malone. John Malone and J.C. came over and we had a nice lunch with them. We got a little lesson on how to structure things financially to avoid paying income tax. And those two companies wound up bidding against each other, and ATC won. Now John Malone claims to this day that when push came to shove if he'd been able to fly over he could have closed the deal for TCI, but he had to be in court somewhere. So whoever he sent over was not able to close the deal. Of course ATC was part of Time, Inc. at the time, so the local shareholders...
PORTER: Monty had already sold?
CHIDDIX: Monty had already sold, so getting Time, Inc. stock sounded like a very good thing instead of this real risky looking TCI stock that John Malone would have given the owners. In hindsight that was not the right decision, but that's neither here nor there. ATC bought the system and suddenly we all were working for ATC and we didn't know what was going to happen. ATC at that point was very centralized and Larry Jaynes, the chief engineer signed every P.O. We had a management group, Tim Evard – this marketing guy who'd come in from Wendy's, a named Carl Rossettie was a financial guy, myself on the engineering side, and Don Carroll, and then a woman named Ann Burr who ran the office operations. We had a nice management team and we were used to running our own business and reporting to our stockholders. All of a sudden, there were all these guys, these bureaucrats back at ATC who were thinking they should tell us how to do things and that didn't sound good. But somebody I knew overheard Trygve at a show right at this time – Trygve Myhren was the chairman of ATC – tell somebody that they had just bought this cable company in Hawaii that seemed to run reasonably well and for a change they were going to try not fixing it, and what was really going on was that Joe Collins had just left to go to HBO, left ATC to go to HBO, and he and Trygve and others in the company had decided they were getting too big to run it all from Denver and they really needed to decentralize their management and we arrived at just the right time. They never centralized us. We became, if not a model, at least a first example of the way that they wanted to run the cable company, with strong local management dealing with local problems, making local decisions, and then a small corporate group providing strategic guidance and some other functions. So we were, as a result, really just left alone, and we got a whole bunch of new capital, which I eagerly used to buy Sylvania amplifiers and build more plant, and buy AML and put more channels on the remote parts of the system. I put a big AML hub on top of a mountain, and we also had become interested in addressable converters. I'd become interested technically and we'd become intrigued as a management group with the potential for automating that part of the business, so we had just made a deal with the Oak folks to buy TC 35 addressable converters and Monty told us he thought it was a terrible mistake. It turns out he hated the Oak folks because they were competing with him on subscription TV over the air, and they weren't very good converters, they weren't very reliable, but they worked. What they let us do is begin offering multi-pay, and we were one of the first cable companies to offer multiple pay services. It also helped that we had inherited our own billing system. When Gill Management Services went out of the billing business, we got the source code in Hawaii and we had our own programmers and began doing our own billing.
PORTER: This is Gill out of San Jose?
CHIDDIX: Gill out of San Jose. And that meant that we didn't have to wait for Cable Data to figure out how to do multi-pay, we could do it ourselves with our own programmers. So we launched multi-pay using addressable converter technology and not too long after that we began expanding our pay TV service to offer pay-per-view, and again, we could bill it and we had the addressable converters to control it. We were one of the first systems in the country to offer pay-per-view movies. It made it a great place to work. We were far enough away from corporate even after the acquisition to be able to kind of do things that we thought were interesting, and as long as we generated the right cash flow it was sort of okay with the folks in Denver.
PORTER: Everybody's happy.
CHIDDIX: So we wound up growing a pretty massive commercial insertion operation, a pretty significant pay-per-view outfit, multi-pay, and having a lot of fun. Along the way, I guess within a year or two after we were acquired, Carl Rossettie went off to run the Portland, Maine system for ATC, and Tim Evard went off to Indianapolis, so the old team began to fall apart a bit. I became very interested in fiber optics. I think the thing that really triggered it – Oceanic, using ATC's money, we acquired the system on the windward side of Oahu and my old system in Waianae, but we needed a way to tie them together, and microwave, especially to the windward side, was very challenging – a very rugged mountain ridge, no good sites. And AML, while useful, was pretty limited. It was a noisy transmission system, it had reliability problems, it was very expensive to operate, and I began looking into the use of optical fiber, and developed a scheme to run a cable of optical fiber from our headend up this valley, past the earth station, so we could then use optical fiber instead of the FM super trunk to get signals back from the earth station, then continue up the valley, and there was a tunnel through the mountains up there and we could lease a duct from Hawaiian Tel and run fiber through that, and then down the other side to this company we were acquiring, TV Systems, and basically collapse their headend back into our headend using this long haul fiber. The fiber we were fired up – I think we had six fibers going to the earth station and then four continuing across the mountains – and we used synchronous FM, wide deviation FM transmission, but I'd stumbled across the fact that there were two windows in fiber. There was a 1,300 nanometer window and the 1,550 nanometer window, and you could use both of them using what were even then perfectly available diplex filters or wavelength division multiplexers, I guess you'd call them, and so I got some digital FM gear from Com Locks, or what became Com Locks, that used PCM, eight-bit PCM digital video, so it was not compressing of course, but it would digitize video using seven-bit encoding and you could send a few channels of that on a fiber. So on each fiber we had maybe four channels of digital and maybe six, or eight, or ten channels of FM that we would send up across the mountains to TV Systems headend, or hub, and along the way we would ship back some video on some of the fibers from the earth station. This was in '85, I think, when we fired this up. Now, as I was planning to do this, I had a visit from Larry Jaynes, the chief engineer from ATC, a wonderful guy, but a conservative man.
PORTER: That's his old Wisconsin background.
CHIDDIX: Well, he was credited with having kept ATC from doing things that were too stupid during the franchise war by being conservative and he probably saved the company a lot of money by doing that, but this fiber stuff sort of made Larry nervous, and he bounced it off Shorty Coryell, who was his right hand guy, and Shorty said, "Well, really you ought to probably do microwave." So word came back we really probably ought to do microwave, and I went to Don Carroll and said, "Microwave is the wrong answer here." And Don to his credit said, "Look, you're my engineer, you figure out what the right answer is and we'll just do it." So we ran the fiber and just sort of ignored corporate, and the fiber worked and it worked very well. We got terrific signal quality across the mountains, and it really made an impression on me that this was a very useful tool for cable television compared to sub low transmission and FM super trunks and AML microwave, and even FM microwave that had rain fades, this seemed like a much better idea. Around that time, Larry retired and went to Steamboat Springs and opened a Radio Shack store. But I got a phone call inviting me to come and talk to somebody at ATC about taking Larry's job. Now, I missed a whole chapter here. Along the way, a round about story, at a cable show I had run into a woman who had the same last name as my friend Tim Evard, who was our marketing VP. It turned out they were cousins, among fifty first cousins that they shared and they hadn't been very close, but they were cousins. But I got to talking to her and I thought she was very interesting and she wound up moving from San Francisco where she was going to school to Honolulu. We had just decided to get married when this phone call came from corporate about the possibility of moving to Denver. Mentally I thought I would always live in Hawaii. I loved Hawaii, still do, and Oceanic Cable Vision had become like a family. For a variety of reasons I think companies in Hawaii tend to be more tightly knit. People don't come and go much, and there's a real camaraderie that develops. So I loved Oceanic, the only job I could imagine ever wanting was Don Carroll's job, but he wasn't leaving anytime soon, and I loved living in Hawaii. But this Larry Jayne's job at ATC sounded awfully interesting. So I flew to the mainland... no, actually, the guy who was doing the hiring, Gary Bryson, flew to Kuai, he was on vacation in Kauai. I flew over with Trudy, my girlfriend and fiancée, and I spent a day talking with Gary about this job, and he managed to convince me to come at least look at Denver. So Trudy and I flew to Denver – we already had set a date for our wedding in Hawaii, it was out a little ways – so we flew to Denver and Trudy went and looked at houses, and I went to the office and talked to people.
PORTER: Was it still in Cherry Creek?
CHIDDIX: No, this was '86, so the office had moved down to Inverness, down south of the Tech Center. Well, no offense to anybody who lives there, but Trudy was taken out and shown things like Highlands Ranch. We lived in a little Japanese style house with sliding paper doors in a bamboo forest above Honolulu. Highlands Ranch wasn't going to cut it. She came back to the hotel in tears. She wasn't going to move to Highlands Ranch from Hawaii. I went to the office and I started talking to people, people who were going to work for me if I took this job, so I talked to some of the engineers and the staff, including Shorty Coryell, and the conversation with Shorty Coryell, for those who know Shorty, was sort of odd because I kept sort of questioning Shorty about things, and he kept asking me questions. At the end of the interview it became clear that I thought I was interviewing Shorty, but Shorty thought that he was interviewing me, and in fact Shorty was right because if Shorty didn't decide that I was okay I wasn't going to get this job, the respect that people had for Shorty was so great. So I wasn't interviewing him at all, I was being inspected, and I guess I passed because they indeed offered me the job. By the same token, I have an uncle who's retired, he used to teach at DU, who lives in Denver and I think we had dinner with him that night and they told us we ought to look in Evergreen, that Evergreen was more the kind of place we might like, knowing what we like in Hawaii. So we went and saw homes in Evergreen and we fell in love with Evergreen and decided that that's how Colorado was supposed to look, and we could indeed leave Hawaii for that, and I decided the job sounded fascinating. So we decided to leave Oceanic, and it was hard to leave Oceanic because I had this real bond with so many people there. They had a wonderful going away party for me. Let's see, they gave me a bag of rock salt to throw at my car when I got to Colorado; they figured I'd need that. They somehow had managed to get me a snow blower as a going away present, which is not a small feat if you're in Hawaii. So we moved to Evergreen and I moved to the Denver office. We flew back a few months later to Hawaii to get married as planned, and got really involved with what was going on at ATC. ATC had had an R&D operation that Walt Ciccora and Bob Rast oversaw that had worked on a number of innovative ideas, but unfortunately hadn't born fruit. They had an off-premises converter project, for example, and they worked very early on digital audio services, a bit ahead of its time, and so one of the difficult things I had to was kind of dismantle this R&D operation when I got there and kind of re-focus things on things that would have more immediate impact on the operation of the cable company, but the thing that I really put a lot of resources into was fiber optics because I thought that that was something that could really... you know, cable was getting to the point where we were running out of steam. It was getting harder and harder to add channels, reducing cascades with microwave was part of how we did that but that was reaching its limits.
PORTER: And up to this point fiber had been used primarily for super trunk?
CHIDDIX: Super trunks, right. But I had some ideas about how to use it further into the cable system and I ran across one of the engineers for ATC, a guy named Dave Pengress, who was our chief engineer in Kansas City, who'd also been playing with fiber super trunks and had some ideas, brought him into the office, and then I had a guy named Lewis Williamson who had been there previously and kind of re-directed his focus on fiber, and oh, there was a consultant we used, I talked to a bunch of people from the industry, a consultant named Herzel Laore was a physicist who was really into optics, electro-optics, and put a lot of energy into how to use fiber as a more fundamental part of our cable systems. I arrive in late '86, by mid '87, Lewis on the bench, in the lab, had a fiber link up and going that was running, I think, 40 channels through maybe ten kilometers of fiber. And of course this was totally different... well, it had some similarities to the way that FM super trunk worked on fiber where you took a bunch a modulators and combined them into modulated fiber, but we took a bunch of regular AMVSB modulators, standard six megahertz modulators, combined them and modulated a laser. And then at the other end you had a photo detector and coming out of the photo detector you got the whole spectrum, the coaxial spectrum back, amplified it, and off you went, which implied you could put that on a pole and drive fiber much deeper into the cable system and overcome a lot of the problems that we were getting from long amplifier cascades. So we thought that the first application of this would be a dramatic reduction of amplifier cascades using an architecture we called fiber backbone, where you ran out to an area and then you fed a handful of coaxial amplifiers from that node, as we called it. In I think November of '87 we demonstrated this in the lab to the NCTA engineering committee – Wendall Bailey brought his gang through on a field trip, and we showed them this operating system. The signal to noise ration wasn't what it needed to be and the CTB wasn't either, but it was getting there and it worked. After that demonstration I remember Sruki Switzer commented to me that now he could build a one gigahertz system in Hong Kong, that was the job he was working on at the time, because he saw that with this kind of cascade reduction you could get to a gigahertz. There were other reactions from other people; some were more skeptical than others. Some of the folks who were maybe vocally skeptical have later came to us like gentlemen and said, gee, they were wrong, and this actually was going to pan out. By '88, I guess, we'd been giving a bunch of speeches to the electro-optics industry and talking to a lot of vendors trying to get real products made because we thought, we knew that we needed volume if this was ever going to be affordable. We were using very expensive hand picked lasers that had the linearity and the noise characteristics we needed to actually work in this way, and by the mid-80s we got AT&T really interested through John Egan, who was their distributor for the cable industry at ANTEC, and they brought us a laser transmitter that really met the kind of specs we needed for a cable system. We installed it first in Orlando, Florida as a backup for their AML system that always had rain fade problems. Well, it worked so well that within a couple of weeks the AML system was the backup system and this was the real system, and that really was the start of some momentum around use of broadband fiber. The SCTE had a fiber conference focused on this. Dave Pengress and I gave a lot of speeches and did a lot of proselytizing around this, and as we did it, it began really occurring to us that this did more than reduce amplifier cascades. It also segmented the cable system into much more manageable pieces and if you were ever going to do things like telephone service over cable or data service over cable, or the ultimate dream, deliver an individual video channel to an individual home, that this began to open that door, it began to change the architecture or the topology of cable in a way that could open that door. That really began to pick up steam. Along the way, well, I'd moved to Denver and in 1988 Trygve left the company and Joe Collins became the chairman of ATC and they announced we were moving back to Stamford, Connecticut, which my wife thought was sort of bait and switch after she'd found this beautiful home in Evergreen, but we indeed sold our home in Evergreen and moved back to Stamford, Connecticut, and the decentralization of the management structure was complete by then. We had a very small corporate staff, maybe 40 people in Stamford running ATC with very strong division management, and then we heard some very interesting news – we were going to merge with Warner Bros., or Warner Communications. So we went through that whole process. That's a well known story and Steve Ross wound up being the chairman of the combined companies, but we had a huge amount of debt because there'd been a takeover attempt by Paramount we had to buy... Time, Inc. bought Warner and took on billions of dollars in debt, and so Steve Ross was very eager to find people to invest in the merged company and we began doing dog and pony shows to potential investors. So, some big Japanese companies, and IBM and Xerox, lots of big companies, and part of the dog and pony show was a story about the wonderful cable technology and how it could serve, this wonderful synergy we'd have with these companies we would partner with. So for the Japanese we'd talk about set top boxes and consumer electronics, and IBM we'd talk about ways to use some of their technologies. So I was part of the dog and pony show. I was the guy who got up and sort of gave the technology story, and we were rehearsing for one of these big pitches up in the board room at the Time Warner building, the old Warner Bros. boardroom, and Steve Ross was there, and Joe Collins was there, and Jerry Levin was there, and a bunch of other people were there. We were doing a dry run of how we were going to pitch someone, maybe it was Toshiba or somebody. So I did my little dry run; my dry run was the story of how fiber was going to transform, was transforming, cable into something very different, a communications network with the potential for interactivity and the ability to – as Sruki had said – transmit 1,000 megahertz of spectrum to our customers, and it was a wonderful story and I had slides and all kinds of things. Well, Steve Ross – now Steve was the same guy who'd launched Qube, he loved new technologies – and he began really paying attention to what I was saying and then he stopped me and said, "Now, let me get this straight. You mean this technology exists today? This fiber stuff? You could really do this and deliver a gigahertz of services?" And I said, "Well, the technologies exist." He said, "Well, by George, we're going to do this. You go out and build this in one of our cable systems." And then he said the fateful words, "Don't worry about the money." I could see Joe Collins next to me sort of turning pale because he knew that giving a blank check to an engineer was a very bad idea potentially, a very expensive idea, but this was the chairman of the company and he wasn't going to have any argument about this. This was something that was important for us to do strategically. And Jerry Levin got very much involved in this, and Jerry Levin really wanted it in New York so we could show it to Wall Street. So we finally decided that we would do it in a portion of our Queens cable system, and in a period of less than a year, maybe nine months, we announced this and we got a bunch of vendors in and sorted through which ones we thought we could work with, Pioneer was going to build the set top boxes that could tune up to a gigahertz. It was going to be all analog channels, digital wasn't ready yet, all analog channels, but 150 analog channels, which would let us do sixty channels of pay-per-view, which meant near video on demand. We could have start times every fifteen minutes, every half hour, and then every cable service known to man. We'd have short cascades, we'd have great quality pictures, and so we just did it. I asked the Queens guys what it would cost to build a little tape playback facility for all these channels we were going to add, all this pay-per-view stuff. The remodeling costs were going to be a few million bucks. This was New York City so it was union...
PORTER: High profile.
CHIDDIX: ...union folks doing remodeling, the whole construction process in New York is a little alien to the rest of the country, but we did it. It was a fairly Cadillac operation. I think we announced it in March and we had it done in December. We hooked up our first customer, we had cameras out there, the first residential customer for the quantum service, and then we started offering all this pay-per-view stuff, and we learned a lot about pay-per-view and we learned a lot about... this was the first time we'd ever really put fiber backbone deep into a system, what today we would call a hybrid fiber coax. We'd really deployed it in a really serious way, and of course we had to buy gigahertz amplifiers to do all this, but our vendors came through and we got it up and running and it worked quite well.
PORTER: And you won an Emmy for this, right?
CHIDDIX: Well, later on, in '94 – this was '91 – in '94, we got an Emmy, Time Warner's engineering group got an Emmy for this fiber work and the quantum thing was part of it, but for the breakthrough of applying fiber in this way that led to HFC, and that was gratifying for all involved. It was a little odd, we got this Emmy award at a hotel, the Marriot Marquis in Times Square – this is not broadcast nationally, this is a bunch of engineers giving each other awards, mostly broadcasters – but afterwards I'm walking out of the hotel carrying this Emmy, since I was the one who actually made the acceptance speech and so forth on behalf of the group, and I'm walking through Times Square carrying an Emmy statues and people began coming over and asking which soap opera I was on. But we still have that Emmy by our board room out there at our cable system.
PORTER: I'm sure there were some times you probably could have said "almost a soap opera."
CHIDDIX: Almost a soap opera. So that was a very... the quantum thing was very good, very gratifying, and indeed we got Toshiba and Otachu became our partners, and US West, and part of the plan was we were going to upgrade all of our plant with this architecture, and indeed we have. In fact, right now we're about done doing all that although it's been a huge job, it's taken six or eight years. But the next step – along about this time Steve Ross became ill and Jerry Levin eventually became chairman and Jerry was a very strong supporter of all this and really understood the long-term implications of this change in cable architecture. There was a desire on the part of a lot of folks to show where this really could lead. So we decided to do something beyond quantum using digital technology and HFC, and that led to the full service network and the full service network was from the outset going to be a prototype system that showed where the technology could take us, but the nature of Time Warner being what it was – I mean everybody at Time Warner wanted to sort of get in on this, and I'm afraid that the hype ramped up quite a bit. Anybody could see that if you could deliver two-way interactive television that there'd be neat stuff you could do. So the press loved it. They embraced it and it was in every publication in the country – "Interactive TV is coming". We made an unfortunate decision was we announced, before we had even begun the design, the launch date for the full service network in Orlando. That had worked in Queens, but that was much more available technology. This was going to be a big ATM packet switched, MPEG compressed video network with two-way and set top boxes with graphics generation, and it was really going to be something dramatically different.
PORTER: Didn't Silicon Graphics get involved with this?
CHIDDIX: Well, we went around and talked to companies to partner with and we Microsoft gave us a huge pitch and Bill Gates was most putout when we didn't decide to work with Microsoft. He was positively grumpy about it. We picked Silicon Graphics because we believed that they could assemble quickly a group of really sharp software people from the Silicon Valley area, Silicon Graphics could, and Silicon Graphics was a company that brought a new product out every 18 months obsoleting their old products. We thought they could move quickly, and indeed I think it was a good choice. The other big candidate was Sun, and Sun had an interesting thing, they had a very efficient computer language that they thought would work well for this. We didn't pick them so they went off and it became Java. Scott McNealy has said that if they had done the Orlando project with us that Java might have been greatly delayed. Nevertheless, the full service network became a huge project with lots of people and we built a big staff down in Orlando, brought a leader in from the company named Tom Figey to run it day to day, but my engineers and I were the architects of this system and we oversaw the various parts of it. One twist on it that gets forgotten sometimes is we decided to build a system that would be 50 to 750 forward and then we decided to use the high end of the spectrum, from 900 megahertz to a gigahertz or a little higher for the return, because there is a lot more spectrum up there than there is down low and it's a lot better spectrum, much less noisy. Indeed we did that and that worked fine. So SA made amplifiers that had high end return amplifiers in them and SA and Silicon Graphics worked together to make this giant box that was very expensive...
PORTER: To go in the home?
CHIDDIX: To go in the home. Silicon Graphics provided the video servers for the interactive services and AT&T provided this giant ATM switch to make the packets go to the right place, or actually a series of switches. We announced it was going to be launch in, I think it was March or April of '94, and we announced that in March of '93, so we gave ourselves a year. Well, a year wasn't enough. We finally did launch it in December of '94. The software – it was a huge body of new software – it took a long time to get it stable. So we launched it in Orlando in '94, the big dog and pony show in the press and all that stuff. We actually launched it to 4,000 homes, and we learned a great deal. Video on demand was a huge hit, people loved video on demand with individual control of individual movies, and the e-commerce stuff – it was hard to get very far with it because it was all custom software, it cost a million dollars to have somebody write a new application to sell stamps or pizzas or whatever. We did some of that, but...
PORTER: Don't you think that maybe the newness of the whole idea was a little... for the customer...
CHIDDIX: Well, sure. The interactivity part of it was new. Video on demand was very familiar because that's how VCRs worked. It was just like having a VCR except there was no VCR, it was somewhere else, but it had hundreds of movies and you had VCR type control. So that was easy for people to get. The interactive stuff, you're right, I think was much more difficult. But we experimented with gaming and with various kinds of e-commerce, and we learned a great deal, but the hardware was all prototype stuff and it was much too expensive to deploy. You never could make money. I mean we had good revenue but we had huge expense, especially capital. So the press quickly turned on us, when the project was going to be late and then when it was obviously real expensive and not going to happen next year all over the country, the press turned ugly and has ever since called it Time Warner's failed interactive trial in Orlando. Well, in fact it didn't fail, and there were a number of trials that did fail. A number of companies announced these things and were unable to make them work. We made this work, we got it to real customers, they spent real money on it, and we really explored a new business and along the way we stumbled around the edges of what became the web and a bunch of people who were involved in the Orlando project, starting with Jim Clark, the chairman of Silicon Graphics, went off into Netscape and a bunch of other Silicon Valley start-ups and the dot.com world – there are lots of people who worked on the full service network, including the guy who now runs AOL, Barry Schuler, who's the head of AOL now that this merger is happening. He had a little software company that wrote some of the software for the full service network and he eventually sold his company to AOL. So if there were ever a reunion with everybody involved in any way with the full service network, it would be a very interesting reunion. Nevertheless, from a PR standpoint it was kind of a disaster and even though I truly believe it had great value, we did not handle it well. We did not manage expectations, so the perception is not that positive, but in reality what is now being deployed in the industry in the year 2000 is very much like that system. It's just that the set top boxes now cost 250 bucks instead of these prototype things.
PORTER: But one can say from an engineering standpoint it was a total success; from how it was perceived by other entities other than engineers that they might not perceive it as a success.
CHIDDIX: That's right. But as that project moved into its operational phase, and it operated from the end of '94 until the end of '97, so we gathered a huge amount of data and learned a lot, my engineering group then began during that period shifting its attention on how we make this deployable and we called our project the deployable full service network, or the DFSN, but we needed a snappier name, so Mike Hiyashi and his engineers came up with the name the Pegasus Project, where we would put set top boxes in the home that would be digital set top boxes, but have the capability to do interactivity. Or, I'm sorry, originally it was the Trojan Horse Project. We'd put the set top boxes in and they'd just be digital video boxes, just tune more channels, and then one day we'd throw this big switch in the head end to a server and it would become something very different. So the boxes were this Trojan Horse. Now the term Trojan Horse sounds a little anti-consumer, so I insisted they change it, so they found a different horse in mythology, they found the horse Pegasus, and that became the code name for the architecture that built on the full service network. We stopped using ATM as how we were going to do VOD, it was just too expensive, and we went to routed MPEG transport. We incorporated a lot of other lessons from the full service network. We tucked away the trick about using the high end spectrum and someday I think we may need to use that for very high speed modem services since we proved that it works technically, but the boxes that we're now buying at Time Warner from Scientific Atlanta and Pioneer, and soon from Pace, really their antecedents have their roots in the full service network. The video on demand that we're launching certainly has its roots there. The e-commerce we're beginning to experiment with has its roots there as well. It's gratifying to see that begin to really bear fruit. But interesting lessons in terms of how many years it takes to actually change massive infrastructure like rolling HFC into our 20% of the country, rolling set top boxes out massively are easy to talk about, easy to think about, but take a long time to do. The other business, though, that's emerging besides digital video that takes advantage of the hybrid fiber coax architecture that really is compelling is the cable modem business, and of course it's a business that people have talked about for 20 years, ever since the franchising wars people were talking about how they were going to bring data to the home, but it now is happening in a massive way, and it is enabled by the fact we've got these fiber trunks to various small neighborhoods, but tremendous potential there, and certainly a lot of it not foreseen. The growth of the web has been a whole unseen phenomenon with enormous power, and of course telephony is also enabled by this fiber architecture. But I think in looking back, I've got to say that the thing that I'm proudest of having been involved in – I've enjoyed it all and it's all been very stimulating and I've worked with lots of very interesting and very good people – the thing I'm proudest about because I think it's made the most difference is this use of fiber to transform cable systems from big chains of amplifiers delivering a few dozen channels of video into a very powerful communications medium that's capable of supporting a number of networks simultaneously – a broadcast analog video network, a broadcast digital video network, a routed video network for video on demand and interactive video services, and a big IP network for Internet services – I think that's going to serve us very well for years to come. Lots of the details aren't clear, but I think that platform is an excellent platform, and in fact we're being flattered by having people copy us. There are overbuilders now who have a choice of technologies; they could put copper in and do DSL, they could put in fiber to the home, fiber to the curb – what they're putting in is HFC, and that's because it's the cost effective, evolutionary way to get a lot of bandwidth to residential and small business America. The interesting question looking forward is not whether this is going to be a great business or a great network, as much as anything it's the regulatory details. The question is have we built a platform that is going to be so central and important to people in this country that they're going to want it regulated heavily, or is it just going to be another competitive player, and well, I think we'd all like to see it left as a free competitive environment. It is a compelling platform and I think that some level of regulation is in our future, and if we're really successful and it becomes THE way to do things in the future we'll probably be turned into a common carrier, which is the ultimate vote of confidence, I guess. If it's decided that we're a natural monopoly because our technology is so good, that's an interesting thing. If that happens it will change the culture of our companies, and that's already happening.
PORTER: It won't be the first time that we'll have reached that spoke, though, in history.
CHIDDIX: That's right. So I guess, in trying to put it all in perspective – I've always loved railroads, whether model railroads or real railroads, but I think, railroad history is interesting. I think there are a lot of parallels between the history of the development of railroads in this country to the history of the development of cable. Cable is on a faster time track, everything's going faster, but railroads had a period of incredible entrepreneurial growth and there were thousands of railroads, and then a period of tremendous consolidation into a much smaller number of big powerful successful railroads; the Pennsylvania Railroad and the New York Central and so forth. But as they got more successful they became more and more heavily regulated because they were more important to the country. But I think we're entering what was really in lots of ways the golden age of railroading where they really entered their prime in perhaps the teens or '20s and had a great ride where they were the fundamental backbone of transportation in this country until after the war when the highways that had been built during the Depression and trucking and so forth really began to change things, and the automobile and then the jet plane. So I think we've had a great run in terms of innovation and business success. I think we've got a bunch more coming.
PORTER: Could you just give the younger engineers, or newer engineers, and technicians kind of a view on the future of what they ought to really be looking toward as opportunities?
CHIDDIX: Well, it's hard to predict the future and it's hard to give people advice about what to do in the future. The best advice about what to do is to find something you love and throw yourself at it and enjoy it. But in terms of technology, the Internet's been an interesting lesson in terms of the surprise this technology can bring, and I think that that phenomenon, the digital communications phenomenon that the Internet represents is going to have a tremendous amount of influence on the future of our industry. I think we're enormously well positioned to deal with it. Today there's no application that we know about that consumers have actually demonstrated a desire for which cannot be handled easily by our 750 HFC upgraded systems. However, as we give the innovative engine of the Internet more and more bandwidth, people are going to find ways to use that bandwidth more and more creatively, and one of our big advantages is that we can gradually evolve our bandwidth by further gradual investment almost without limit, by subdividing nodes, by shifting how we use the spectrum, gradually from analog to digital services, and as we subdivide nodes eventually pushing fiber deeper we can get to tremendous bandwidths per user on a pay as you go kind of basis, and that's a very powerful idea and one that's not available to our competitors, except for the HFC overbuilders, and I think there's a fundamental economic challenge there. I think if we run our businesses well we're almost assured of a great future regardless of the details. But as these surprises come along, and new applications that need more bandwidth, we need to embrace them. The trap we need to avoid most is not trying to defend our old business and thereby miss new opportunities, and the obvious thing is to worry about video delivery over the Internet and try to fight that because we want to save our video delivery business on our traditional MPEG network and our analog network. That would be a terrible mistake. If people want that kind of service we need to embrace it, we need to do it well. We can do it better than anybody else. And we need to be willing, if necessary, to cannibalize our old business to open up new business opportunities. But I see no limit to what we can do. If there is a world where people want a gigabit of connectivity in the home we can eventually get there. That means running fiber to very few homes, so it would be HFC to tiny nodes, but we can go there a step at a time spending money gradually. The financial lesson of our industry is that spending capital later is much better than spending it sooner, because when you get to the future you know a lot more about it. I think we've got just a tremendous future. What's going to happen in Washington will have an impact on it but it certainly is not ever going to kill it. It may shape it. I think that it's a great business to be in. I think there are tremendous opportunities yet to come.
PORTER: Jim, I want to thank you for participating in the interview. It's been interesting, and I'm sure it's going to be treasured at The Cable Center.
CHIDDIX: Well, thanks Rex, I've enjoyed our chats for almost 30 years.