WASHINGTON -- Tele-Communications Inc., the nation's largest cable television company, announced yesterday it plans to spend almost $2 billion to accelerate the installation of fiber optic cable networks to 90 percent of its customers, the first step in what the company said will become the information superhighway of the future.
Denver-based TCI, which operates United Artists Cable of Baltimore City, said that by 1996 the new system will reach 90 percent of thecompany's 9.5 million customers. They will receive up to 500 channels, clearer and more reliable reception, and features that could allow easier home shopping, working at home, medical consulting, interactive game-playing and TV shows and movies on demand.
Although Baltimore is not one of the locations included in the first phase of the project, which begins this year, the city will fully participate by 1996, TCI officials said.
The new system will take advantage of recent price reductions in two technologies: fiber optic cable, which allows more information, in the form of pulses of light, to be sent far more reliably than the current copper coaxial cables; and data compression, which squeezes even more information into each fiber optic line.
"As Vice President Gore has pointed out, this is the age of information, and no technology is more central to the age of information than this broadband" cable delivery system, said TCI President and Chief Executive Officer John C. Malone, who participated in a video press conference from Denver yesterday.
In the initial $750 million phase of what TCI is calling "The Infostructure Network," the company plans to install 7,000 miles of fiber to about 150 cities starting this year. By the end of 1996, most of the rest of TCI's locations, including Baltimore, should be fully wired.
TCI will be competing with other cable companies, long distance phone companies and the regional Bell operating companies to get fiber optic cable close to the nation's homes. "TCI is basically just expanding and maybe speeding up a little bit what they were doing anyway," said John D. Field, an analyst at Hanefin, Imhoff Inc. in Denver.
Although the new programming options would cost consumers more, the exact pricing formulas haven't been worked out yet but probably would be based on the number and kinds of channels selected. The company said the project will be unaffected by the Federal Communications Commission's ruling April 1 that basic cable rates be lowered by 10 percent. The FCC has estimated the rollback could mean $1 billion in savings for cable TV customers.
Mr. Malone denied, in response to a question, that TCI is moving aheadwith its fiber system as a defense against the expected incursion of the other telecommunications companies. "The acceleration of this is really more the advance of technology and what we see as near term business opportunities . . . than any defensive measure," he said.
The fiber cable won't actually be extended into customers' homes, but instead will reach a central "node" in each neighborhood. The "last mile" from the node to a customer's home -- actually no more than two-thirds of a mile -- will remain coaxial cable, which has the capacity to carry the enormous amounts of data to individual homes, but only for short distances before the signal begins to deteriorate. The hair-thin glass fibers are able to carry pulses of light farther and more reliably than coaxial wire carries its electronic signals.
Customers who choose to access the expanded offerings would have to rent a compression box for "a couple dollars above" the current equipment charges, Mr. Malone said. The box would expand the squeezed signals that come through the cable. It also would include yet-to-be-developed software to help customersnavigate through the vastly expanded selection of channels. The navigation software would allow customers to choose among various networks, or limit their selections by topic.
"We'll see channels for the gourmet, channels for the pet lover, and channels for Mr. Perot -- maybe three or four." The extent to which customers support those channels, by paying a monthly premium, will determine which ones will survive, he explained.