Bell Atlantic picks technology for video venture

May 20, 1994|By Michael Dresser | Michael Dresser,Sun Staff Correspondent

WASHINGTON -- AT&T Corp. and General Instrument Corp. were the big winners yesterday as Bell Atlantic Corp. announced its long-awaited choice of contractors for a multibillion-dollar telephone network that would bring video service to Baltimore and five other large regional markets next year.

Resisting the urge to splurge on the "Cadillac" of network technologies, the regional telephone company decided to emphasize an approach that brings fiber-optic cable to the neighborhood level, over a more advanced -- and expensive -- extension to the "curbside" level.

Yesterday's news had none of the drama of Bell Atlantic's announcement last October that it would acquire Telecommunications Inc. (nor of the announcement in February that the merger was off), but the company likely has more riding on this decision. Its entire strategy centers around the creation of a "full-service network," and its choice of the right network architecture could make the difference between success and failure.

Unlike Pacific Telesis Corp., the regional Bell company serving California, Bell Atlantic declined to bet all on the fiber-to-the-neighborhood technology. Under this approach, which will be used in most parts of the Baltimore area, fiber-optic cable will be extended to a neighborhood "node," which will serve 300-500 homes via coaxial cable, the same kind used for cable TV service.

The Philadelphia-based company said it would use a "flexible" mix of technologies, including the more expensive but also more versatile digital fiber-to-the-curb approach championed by Broadband Technologies Inc. of Research Triangle, N.C.

The stock of Broadband, which sought a leading role but had to settle for being cast as a sidekick to AT&T, lost 12.5 cents yesterday, to close at $17.125.

Broadband will continue to provide equipment for Bell Atlantic's network in northern New Jersey, where service will be brought to nodes serving an estimated eight to 24 homes each through copper wire, for a total of about 50,000 homes.

Bell Atlantic officials said a third technology called ADSL (for asymmetric digital subscriber line), which uses existing phone lines, will be used in more limited circumstances -- for market trials or in areas where fiber will not be immediately available.

For consumers, the results of the decision will likely be invisible for at least several years after video service is instituted. But at some time in the future, when more complicated interactive services will presumably become available, the limitations of hybrid fiber-coaxial service and ADSL might begin to show up in the form of busy signals and fewer choices.

Bell Atlantic's new chief operating officer, Larry Babbio, said it would be relatively easy to extend fiber closer to the home if demand for advanced services justifies the investment.

In its initial phase, Bell Atlantic will be rolling out video services in six markets: Baltimore, Washington, Philadelphia, Pittsburgh, northern New Jersey and Virginia Beach, Va.

Those services will include video on demand, which will compete with video rental stores, and television programming, which will compete with cable television operators.

Frederick d'Alessio, president of Bell Atlantic-Maryland, said Montgomery County and Prince George's County will receive the service early next year -- assuming that the Federal Communications Commission doesn't delay the necessary approvals.

Baltimore and close-in parts of Baltimore County will see the first deployment of the service in mid-1995, Mr. d'Alessio said. The service would be extended to other parts of the metropolitan area within five years, he said.

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