Interactive television: How soon?

June 11, 1995|By Michael Dresser | Michael Dresser,Sun Staff Writer

Raymond W. Smith says the age of interactive television is nearly upon us.

Before you know it, according to the chief executive of Bell Atlantic Corp., viewers will be able to change camera angles on the Super Bowl, play "Wheel of Fortune" along with Vanna White or call up movies on demand through a "full-service network" brought to them by their reliable local phone company.

"It will be here faster than any of us can imagine . . ." Mr. Smith told the Advertising Women of New York in February. "It will gain momentum and gain customers in 1995. It will really pick up steam and become a mass-market phenomenon in 1996-1997."

But Mr. Smith's vision of 21st century technology might just have to wait for the 21st century.

In the wake of Bell Atlantic's decision last month to withdraw its application with the Federal Communications Commission to build an extensive video network, doubts about the company's timetable are increasing.

The Philadelphia-based telephone company continues to insist it will begin a large-scale commercial rollout of interactive services by 1997, but many telecommunications professionals say the company's schedule is based on wildly optimistic assumptions.

"It ain't going to happen," said Thomas M. Oser, director of the Advanced Telecommunications Institute at the Stevens Institute of Technology in Hoboken, N.J. "With all the money in the world, the way the technology develops doesn't lend credence to that idea."

According to Dr. Oser, a professor of electronic engineering and computer science, a more realistic target date for a broad rollout in large metropolitan areas is 2000 to 2005.

Few experts doubt that someday, somehow the regional Bell operating companies will find a way to deliver interactive video services in competition with a vulnerable cable TV industry. When they do, the aggressive and technologically sophisticated Bell Atlantic is expected to be in the vanguard.

Nevertheless, telecommunications analysts say Bell Atlantic's credibility has suffered as a result of a series of optimistic projections that have since had to be pushed back.

There was the December 1993 statement by Mr. Smith that "by the end of 1998, we will have wired the top 20 markets in our mid-Atlantic service region." That goal is now unattainable.

There was the May 1994 press conference at which jubilant company executives announced they hoped to begin deploying a video network to Baltimore and five other major markets by mid-1995. That was already being pushed back into 1996 when the company withdrew its application to build that network.

That withdrawal was particularly damaging because it came after months of criticism by Bell Atlantic executives of FCC delays. Then, just as the FCC was apparently on the verge of approving the application, Bell Atlantic said, in effect, "Never mind."

The company's explanation was that the original technology it proposed, a hybrid of fiber-optic and coaxial cable similar to cable television, had increased in price while a more advanced rival technology called "switched digital video" had become cheaper. It said any delay caused by the switch would be "nominal" -- no more than six to eight months.

Bell Atlantic is hardly alone in its technological fits and starts. Another regional Bell company, U S West, put its video network construction application on hold last month.

But several stock market analysts who follow telecommunications said that investors who believed such statements two years ago have become skeptical.

"Nobody takes these deadlines seriously," said Craig Ellis of securities brokerage Wheat First Butcher Singer in Richmond, Va. "Are we frustrated? Are we tired of it? Yes. Do we care? No."

Tedd Alexander, telecommunications analyst at Legg Mason, said investors are reluctant to put their money into Bell Atlantic, whose stock has lost more than $12 since the heady days after it announced its later-aborted merger with Tele-Communications Inc. Its stock fell 37.5 cents Friday to close at $53.50.

"There seems to be a lack of strategic direction," he said.

Like Mr. Ellis, Mr. Alexander said he doesn't expect a significant rollout of an interactive network until after 2000.

The deployment timetable for a video network is no small matter.

"The longer Bell Atlantic delays, the longer the cable companies have to improve their service," said Mark Heckendorn, managing director of Versus Strategy Group in Washington.

Bell Atlantic's critics in the cable industry were quick to respond to Bell Atlantic's withdrawn application with I-told-you-so's.

"They're blowing so much smoke it's ridiculous," said Steve Effros, president of the Cable Telecommunications Association in Fairfax, Va.

In Mr. Effros' view, Bell Atlantic's turnabout has less to do with technology than with economics. He maintains that the costs of building video networks far outstrip what Bell Atlantic can reasonably expect to earn unless it is allowed to finance them with ratepayers' dollars.

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