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PacBell to Join Fray of Fiber Optics : Technology: Phone company wants to team up with cable TV, its longtime rival, to build an 'electronic superhighway.'

April 08, 1993|CARLA LAZZARESCHI and JOHN LIPPMAN | TIMES STAFF WRITERS

Pacific Bell said Wednesday that it wants to team up with California cable TV companies to build the electronic pipeline that will carry the next generation of information and entertainment services into homes and businesses throughout the state.

The state's largest phone company said it expects an "electronic superhighway," capable of carrying such services as dial-up movies, paperless bill paying and at-home shopping, to reach half the homes in California within a decade and the rest of the state by 2015.

Pacific Bell officials estimated the cost of the project at between $10 billion and $15 billion and said they are already speaking with several unidentified cable companies about possible alliances.

The commitment from Pacific Bell is the first indication from the phone company that serves 11 million Californians that it plans to join the growing movement among the nation's communications companies to install fiber-optic electronic networks to every business and home it serves.

In the past, Pacific Bell and other phone companies have complained that federal regulations barring them from providing cable television services made it impossible for them to recoup the sort of investment they would have to make to install a fiber-optic network. However, Pacific Bell said Wednesday that sharing the costs with cable operators would make it easier for the phone company to make the necessary investment.

"We think collaborative arrangements with cable companies will turn out to be one of the more economic paths to follow in providing for the broad-band needs of our customers," Pacific Bell President Phil Quigley said.

An announcement of an alliance, a company spokeswoman said, could come within weeks.

Pacific Bell's announcement is also the latest and clearest indication yet of the growing interest among telephone and cable operators in sharing the cost of installing the new networks. In the past, the two industries have viewed themselves as bitter rivals locked in a winner-take-all battle.

However, within the last several months, analysts say, an increasing interest in cooperation--driven in large part by economics--has emerged.

"Just even last year the thinking was that whoever got their pipeline to the home first was the winner," said John Eger, director of the International Center for Communications at San Diego State University.

There are about 5.5 million cable TV subscribers in California and more than 200 cable TV operators. Pacific Bell would probably deal with the larger operators in the state, since these companies control the majority of systems.

The companies include Cox Communications, Viacom, Tele-Communications Inc., Continental Cablevision, Comcast Corp., Falcon Cable TV and Dimension Cable, owned by Times Mirror Co., publisher of the Los Angeles Times.

Cox, Viacom and Tele-Communications have been especially active in developing new cable technologies such as interactive TV and "video-on-demand," which one day will allow viewers to call up any movie or show whenever they want to watch it.

Quigley's announcement came just a week before the state Public Utilities Commission is scheduled to begin an investigation into how the state can promote deployment of new telecommunications technology. Analysts say Quigley's announcement is a way of showing the regulators that private industry can handle the job without extensive government involvement.

A similar scenario is playing out nationally as the Clinton Administration pushes to build a nationwide electronic superhighway and is being met with opposition from telephone and cable companies worried that the government will take a large chunk of what promises to be the biggest new business opportunity of the coming decade.

Pacific Bell's announcement is also the most dramatic of several it has made this year about its plans to improve the state's telephone networks.

In January, the company said it planned to spend $1 billion to bring all of its switching systems up to current digital standards. And late last month, the company said it will create an experimental fiber-optic network linking many universities, research labs, major hospitals and high-tech companies in the San Francisco and Los Angeles areas. The system is scheduled to start operation later this year in the Bay Area.

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