Analogue Terestrial TV (ATT) - The Beginning
In the beginning, there was no pay TV. Broadcasters would telecast TV signals which were un-encrypted and free.

Television signals were broadcast via satellites whose signals were relatively weak. Reception required huge dish antennae. To facilitate viewing, the broadcaster maintained large dishes in multiple locations through which signals were 'downloaded' and beamed on a terrestrial transmission system (via a system of transmitters).

Every household invested in an (inexpensive) "wire" antenna which intercepted these terrestrial signals and converted to moving pictures on television.

The sole revenue for this ATT (Analogue Terrestrial TV in acknowledgement of the major role played by the terrestrial transmitters) was by selling advertising time. And given the huge investments, it is not surprising that most ATT networks were Government funded.

Satellite & Cable TV
Then came a new set of Satellite TV channels. These new channels did not invest in terrestrial transmission systems. Instead, they ensured that their signals were extra powerful, yielding higher clarity using relatively smaller dish antennae.

Since the price of dish antennae were still well beyond the budget of average households, this led to the terrestrial cable revolution. Cable operators invested in Dish Antennae which would intercept TV signals. And further laid out (often illegally) cables which would carry these signals to households. All for a monthly subscription.

In the beginning, the majority of operators belonged to the "un-organized" sector. But steady advance in technology & corresponding investments ensured that the cable operator business consolidated and was ultimately controlled by a few large players. All revenues went into the kitty of the cable operators.

Digital Terrestrial TV (DTT)
Simultaneously, a few countries implemented free-to-air Digital Terrestrial TV - a logical advancement of the analogue terrestrial TV. Of these countries, thanks to its early initiative, the U.K. by far, is the most advanced, having 'converted' nearly 90% of its Analogue Terrestrial TV to Digital Terrestrial TV. And well in reach of the 2004 deadline for cutting off analogue feed.

As far as the viewer was concerned, the technology 'rode' on the existing analogue TV. The same inexpensive antenna was used, for recieving the digital signals. With a one-time investment of approximately 50 Euro for a set-top box. And no recurring cost.

Today, free-to-air terrestrial TV channels have significant (if not the widest) coverage in most countries. These include analogue (ATT) as well as digital (DTT). And while some nations seemed to have missed the DTT bus, others like the U.K. are on the way to implementing e-governance to the masses through DTT.

Pay TV, CAS, DTH
Next, was the era of paid TV channels. These channels demanded a fee for their content. Since the distribution system was through cable operators, they had to collect their fee from this segment. Not being used to sharing their fees, cable operators naturally put up strong resistance! At the channels' insistence, they were forced to share their revenue based on number of subscribers. This was followed by channels' accusations that cable operators under-declarated their number of subscribers (a situation which persists till date in most countries which have not enforced CAS).

This was followed by Conditional Access Systems (CAS) through which cable operators could restrict viewers to selected channels. With CAS, subscriber management databases become shared, leading to transperency between channels & cable operators. Digital CAS makes it feasible to select / un-select channels for short durations with I.P. based set-top boxes, online payments & smart cards, leading to pay-per-program, pay-per-movie and finally, download & pay program. Not to mention broadband internet services, online gaming, VOIP, the works !

Simultaneously, technology was unveiled for Direct-to-Home Satellite TV (DTH). Broadcaster's satellite beams very strong digital signals (Ku band) which are picked up by small dish antennae which are connected directly to TV sets via a "box". Thus, eliminating the role of the cable operator. With a direct connection to the TV household, broadcasters can build online digital platforms through which they can offer their clients the world in their homes & offices.

Today, personal digital video recorders are already available which wipe out commercials while recording content from TV feeds. And with Sony as well as Disney announcing technology which can restrict the usage of of downloadable video files, the future is clear.

The Bottom Line
Some countries have restricted pay channels from broadcasting paid content. Other governments have defined ceilings which restrict broadcasting of commercials by pay channels.

Broadcaster-side revenues have shown significant increase from subscription fees, with contributions from subscription fees rivalling that from advertising. (And this is just the beginning.)

The viewer-side logic seems clear enough : should the viewer pay for content as well as 'suffer' intrusions in the content (for which he has been charged) ? Or should there be a mechanism , (like the recently implemented 'Opt-in Register' for U.S. Direct Marketers) by which the viewer can choose when / whether he wants the 'intrusions' ?
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