D.C. suburbs to get test of TV-by-phone service

December 17, 1993|By Michael Dresser | Michael Dresser,Staff Writer

Taking a leap into the new world of unlimited-channel television, Bell Atlantic announced plans yesterday to offer TV programs over its phone lines in the Maryland and Virginia suburbs of Washington as early as next September.

Besides being the first commercial offering of television programs over existing phone lines, Bell Atlantic's move will bring about the first head-to-head clash of Baby Bell companies in the arena of video services.

Its rival will be Southwestern Bell, the San Antonio-based telephone company that announced last February that it would buy two cable companies in Montgomery County and Northern Virginia -- both within Bell Atlantic's local exchange territory.

"This is what competition is going to look like in the communications area," said Dave Pacholczyk, a spokesman for Bell Atlantic's Chesapeake & Potomac Telephone Co. of Maryland.

The announcement indicates that Bell Atlantic intends to roll out such service more quickly than previously expected, likely bringing closer the day when Baltimore viewers can dial up their favorite shows. The rollout next fall will make the service available in 200,000 to 250,000 households in heavily populated areas of Montgomery County in Maryland and Fairfax and Arlington counties in Virginia.

Mr. Pacholczyk said the company intends to offer the service in Baltimore, but could not specify when. He said the decision to do the initial roll out in the Washington suburbs was influenced by Southwestern Bell's competitive challenge.

The technology Bell Atlantic will employ allows for an unlimited number of programs to be offered, said Mr. Pacholczyk.

"The concept of channels will disappear," he said, echoing public predictions by Bell Atlantic Chairman Raymond W. Smith. In effect, that means any would-be Wayne and Garth will be able to send out their home-made programs as long as they pay for use of the phone lines.

Bell Atlantic said it has already signed up "about a half-dozen" providers of programming for the service, including USA Video Corp., Custom Video Productions and the phone company's Bell Atlantic Video Services affiliate.

The parent company said Bell Atlantic Video will have to purchase "video dial tone," or connection to TV sets through phones lines, on the same basis as other programmers. Much of the content will be pay-per-view movies, Mr. Pacholczyk said.

The phone company's plan requires approval from the Federal Communications Commission, but there is little reason to expect the commission to object, since it already has endorsed the concept of local exchange carriers offering video dial tone services.

Earlier, the Philadelphia-based regional phone company had filed with the FCC to conduct a market trial of the video dial tone service in Northern Virginia in March. Mr. Pacholczyk said Bell Atlantic's announcement yesterday meant the company would not wait for the results of the market trial before forging ahead with plans to offer the service commercially.

Price not set yet

"We fully anticipate this will be successful," he said, adding that the price of the service will be determined by the market trial. "It'll be cost-competitive."

The new TV-by-phone service will employ a technology called ADSL (asymmetric digital subscriber line), which compresses signals so video, voice and data can be sent over an existing copper telephone line simultaneously. The technology will not support live broadcasts now, but further advances in compression technology could allow that within a few years, Mr. Pacholczyk said.

The wire would run into a converter box that would send audio signals to the telephone and video signals to the television set. Initially the quality of the image would be roughly equivalent to that of a movie played through a videocassette recorder, Mr. Pacholczyk said. The price of the box also will be set by the market trial.

The service is similar but not identical to the video-on-demand service Bell Atlantic plans to offer next year in Alexandria, Va. That trial will be based on the use of fiber-optic cable, which is not required for ADSL.

David Martin, a spokesman for Southwestern Bell, said Bell Atlantic's announcement would have no effect on its plans for the two cable systems it has agreed to buy from Hauser Communications Inc. for $650 million. While it is technically feasible to offer telephone service over coaxial cable lines, he said, Southwestern has no plans to do so.

While this is the first clash between Southwestern and Bell Atlantic in the video field, the two companies are developing a rivalry that is making them the Washington Redskins and Dallas Cowboys of the regional Bells. Bell Atlantic prevailed in one early struggle when Southwestern abandoned an effort to capture a share of the Yellow Pages market in the Baltimore-Washington area. The two are still competing in the cellular telephone business, where Southwestern Bell's Cellular One is splitting the Baltimore-Washington market with Bell Atlantic Mobile.

Rushing to market

Mark Plakias, managing director of Strategic Telemedia in New York, said Bell Atlantic's announcement wasn't a surprise but represented a speedup in its timetable for rolling out video services.

Mr. Plakias said Bell Atlantic's decision to announce the introduction of the video service yesterday was likely influenced by its desire to "grease the skids" for its proposed merger with Tele-Communications Inc., the nation's largest cable TV company. That deal still requires approval from antitrust officials.

"Bell Atlantic wants everyone to be aware that this is a very competitive market," Mr. Plakias said. The video offering "makes zTC it easier for people to believe its mega-deal with TCI is going to result in increased competition."

Mr. Plakias said he has seen some of the early trials of the system and concluded that it still needs to be made easier to use.

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