Bell, Nynex suspend TV plan 2 phone companies bow out of alliance in 'wireless cable'

December 14, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Continuing to back away from once highly publicized plans to enter the television business, Bell Atlantic Corp. and Nynex Corp. said yesterday that they are suspending their partnership with an upstate New York firm to develop "wireless cable" TV systems.

The two phone companies invested $100 million last year in CAI Wireless Systems Inc., which has the rights to operate wireless cable systems that can carry more than 120 channels, in selected areas, including Baltimore.

The two Bells also had entered a highly publicized venture with Pacific Telesis Group to fund Tele-TV, a company to devise programming for the system. Tele-TV chief executive Howard Stringer, a former president of CBS, vowed that the coming video system would be flexible, interactive and allow for almost unlimited viewer choices.

But yesterday, Bell Atlantic and Nynex said they are giving CAI the option to buy back the phone companies' stake. And CAI's chief financial officer said he expects the announced one-year suspension of joint efforts to last. "It's very likely to become permanent," CAI finance chief James P. Ashman said. "Frankly, things weren't going as quickly as we had hoped."

The hope was that the wireless cable technology, formally known as Multichannel Multipoint Distribution Service (MMDS), would let the phone companies get into the video business during the years it would take them to build a fiber-optic-based system capable of delivering video -- and especially highly coveted video-on-demand service -- to millions of households.

In March 1995, Bell Atlantic had said it hoped the CAI partnership would allow wireless cable to reach the market in Baltimore within a year. But the ride across that bridge to the 21st century was rudely interrupted by competition, said Peter Krasilovsky, senior analyst at the Bethesda-based new media firm Arlen Communications Inc.

The biggest was satellite TV, which delivered digital-quality wireless video to the market faster, coupled with reliability in bad weather that the phone companies' microwave-based technology couldn't match, he said.

"Bell Atlantic wasn't counting on being a discount provider," Krasilovsky said, adding that satellite TV's technical advantages left the Bells little to compete with other than price.

Bell Atlantic spokesman Larry Plumb said the company will evaluate other short-term technologies to enter the video delivery business. The company has already installed a fiber-optic, full-service video network in Toms River, N.J., and plans to expand service into the Philadelphia area.

Last week, Bell Atlantic and Nynex said they are evaluating investments in satellite TV as an alternative to wireless cable. They also have suspended plans for wireless cable next year in Hampton Roads, Va., and Boston.

Ashman said CAI will use some of its broadcast spectrum for Internet data transmissions, but what will happen to the rest will not be known until the company lines up new financial backers.

The collapse of the Bell Atlantic-Nynex-CAI alliance, however, is only the latest of many signs that the wireless cable business is having trouble getting off the ground. Within the past month, the three Tele-TV partners have denied a rash of public reports that the programming venture is about to close its doors.

Krasilovsky said Pacific Telesis also has backed out of developing wireless cable in California.

Pub Date: 12/14/96

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