Cable operators ally against telephone giants

December 02, 1993|By New York Times News Service

AHAHEIM, CALIF — ANAHEIM, Calif. -- Leading members of the cable television industry, voicing fears of being swallowed by the country's telephone companies, yesterday announced a joint venture that would enable the cable companies to compete directly with the phone companies for a variety of local telecommunications services.

"If we feel a little like Jonah, are they the whale?" said Spencer R. Kaitz, president of the California Cable Television Association, referring to the telephone companies, which have been on a multibillion-dollar buying spree recently, either investing in or acquiring some of the biggest cable operators in the country.

"The anxiety among cable telephone executives is palpable," Mr. Kaitz said at the Western Cable Show in Anaheim, an industry trade exhibition that opened yesterday.

Five of the largest cable companies in the United States -- Tele-Communications Inc., Time Warner Entertainment, Continental Cablevision, Cox Cable Communications and Comcast -- said yesterday that they would develop a variety of new local telecommunications services with the help of the Teleport Communications Group.

Teleport is a fiber-optics company based in Staten Island, N.Y., that provides local service in competition with phone companies in many large metropolitan markets.

Time Warner said it would join the other cable operators as a partner in Teleport by acquiring a 16.67 percent stake in the company for anundisclosed amount.

The cable partners said they did not intend to compete with the phone companies for conventional telephone service, but would pursue advanced digital services including video teleconferencing, data communications and the emerging field of wireless Personal Communications Services, or PCS, for which the Federal Communications Commission will begin assigning licenses next year.

"This is about real competition," said Bruce Ravenel, vice president of Tele-Communications Technologies, a unit of Tele-Communications Inc. "We have to pull everyone together."

But the matter of who will be competing with whom remains murky. Yesterday's agreement places Tele-Communications, the biggest cable company, in a particularly odd position, because it is in the process of being acquired by a big regional telephone company, Bell Atlantic Corp.

Most of the other cable companies involved also have ties to a Bell company. Time Warner earlier this year formed a $2.5 billion joint venture with US West Inc.

At the cable trade show, many people expressed concern about whether the deal between Bell Atlantic and Tele-Communications was simply the first in a wave of telephone company acquisitions of cable system operators.

John C. Malone, president of Tele-Communications, has been one of the phone industry's most vocal opponents. But he said yesterday that finding strategic partners was essential for cable companies facing the rapidly changing technology. "You better pick a team," he said. "You don't want to be a Bosnia in this war or both sides will kill you."

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