Cable-Phone Warfare

February 19, 1993

Turnabout is fair play, especially in the turbulent business of transmitting voices, pictures and all sorts of useful information into the home electronically.

Until now the principal concern of cable TV operators was that the local phone company would poach on their franchise by using existing residential lines to compete directly with them. The cable companies were looking to retaliate by carrying telephone messages on their lines. But now a major telephone company -- one of the former Bell System subsidiaries -- has fTC agreed to buy two cable companies in the Washington suburbs.

The lines between the various electronic methods of transmitting entertainment, news, communications and interactive services have blurred considerably. Although there have been technical barriers to cable companies' usurping the core business of the telephone companies and vice versa, those barriers are crumbling fast. It is no longer far-fetched to imagine a single operator providing enhanced telephone services as well as movies on demand to residential customers. A decade or so ago attempts to sell interactive information services for the home fell flat. It was a technology in search of a market. A lot has happened since.

Further roiling competition in the information transmission business is the identity of the Baby Bell that bought the cable systems in Montgomery County and in Arlington County across the Potomac. It is Southwestern Bell, an aggressive competitor that could poach on Bell Atlantic's franchise in the

Baltimore-Washington region. It already owns a cellular phone service in this region. Some cable companies have been investigating a rival service to the increasingly popular wireless phones.

Research and product improvement have long been a characteristic of the telephone companies. Barred by an anti-trust decree from some forms of service, the Baby Bells still work together on research. Some may elect to jump into the cable industry as Southwestern and a West Coast cousin have. Others may choose to rely on technological breakthroughs that will enable them to carry competition into the cable operators' core business. Both may survive, even thrive.

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