Bell Atlantic gets OK for video-by-phone service

January 13, 1995|By Michael Dresser | Michael Dresser,Sun Staff Writer

Bell Atlantic Corp.'s ambitions of becoming an entertainment powerhouse cleared a stubborn obstacle yesterday as the Federal Communications Commission approved the company's plan to launch a market trial of its video-by-phone in Northern Virginia.

The trial is an important step in the Philadelphia-based company's strategy of providing video services in six of its biggest markets, including Baltimore. The FCC took no action on another Bell Atlantic petition to allow that larger plan.

The commission's long-awaited ruling was significant because it allows Bell Atlantic Video Services, the company's separate programming subsidiary, to offer its own menu of shows over some of the network's channels. It was the first time the FCC has given a phone company the authority to compete directly with cable television, rather than act as the carrier of another company's shows.

The ruling will allow Bell Atlantic to offer "video dial tone" services to about 2,000 homes in Fairfax County, an affluent Washington suburb.

Shannon Fioravanti, a spokeswoman for Bell Atlantic, said the trial could begin by late spring.

Frankie Russell, a spokeswoman for Bell Atlantic Video Services, said the company's proprietary Stargazer video platform would include movies on demand, reruns of old television shows and a form of catalog shopping that is not yet fully interactive.

The FCC's approval came with some important caveats and conditions. The commission said it would impose safeguards to ensure that the company does not finance the project out of ratepayers' funds. It also ordered the company to provide "video dial tone" services to competing programmers, at the same rates that it charges its own subsidiary.

The commission also said it has not reached a decision whether telephone companies that offer cable-like services will have to pay local cable television franchise fee. Essentially it told Bell Atlantic that it was free to go ahead but that it would run the risk of being sued by a local government claiming a fee.

Ms. Fioravanti said Bell Atlantic has already been in contact with Fairfax County and other local jurisdictions to work out agreements that would forestall litigation.

The various conditions did little to assuage the cable industry, which has fought phone companies through the entire FCC process.

Stephen Effros, president of the Cable Telecommunications Association, said the cable industry would ask the courts to block Bell Atlantic's plans.

Mr. Effros contended that by offering its own programming, Bell Atlantic would fit the definition of a cable television provider and should be required a secure a local franchise and pay franchise fees. Instead, he said, the FCC was permitting Bell Atlantic to compete with cable companies without having to conform to the rules the cable industry has to observe -- including price regulation and mandates to carry certain programming and to have offices open on Saturdays.

"There's a one-way preoccupation with getting the telephone companies into video," he said.

Susan Lewis Sallet, a spokeswoman for the FCC, said the FCC approved the trial because "we do not want to hold up everything while we move forward on a rule-making."

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