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Information Superhighway Revs Up in New Jersey : Technology: State Bell company plans to bring fiber-optic wonders to every resident and business. Project is the result of a deal that deregulates part of the phone company.

September 05, 1993|LINDA A. JOHNSON | ASSOCIATED PRESS

TRENTON, N.J. — The state where the television set was born is on track to be the first with a fiber-optic network giving every resident and business access to information-age wonders with the click of the TV remote.

New Jersey Bell plans to bring fiber-optic cable--the high-speed lanes of the information superhighway--to the curb outside every home and office by the year 2010.

Its ambitious plan will phase in new technologies as glass fiber replaces 56.6 million miles of copper wires.

"We're on the cutting edge," Alfred C. Koeppe, president and chief executive officer, said. "There is no one else with so bold a plan."

The project, dubbed Opportunity New Jersey, is the result of a deal struck last year between the state and New Jersey Bell, the Bell Atlantic subsidiary that provides telephone service to 96% of the state.

The state agreed to deregulate the competitive parts of New Jersey Bell's business in return for its pledge to accelerate the technological overhaul.

Eventually, every New Jersey phone customer will be able to use a TV remote control to call up information from databases and libraries, gain access to sprawling computer networks, shop for virtually anything, play interactive games with someone miles away or order entertainment from current network fare, classic TV archives and thousands of movies.

But little of that will be free, and no one can predict how high the typical bill will run. Even utility executives concede that poor people won't be able to afford much interaction with their televisions.

Right now, New Jersey Bell is building the nation's first two commercial interactive networks, in Morris and Ocean counties, and awaiting federal approval to put them in operation.

Others across the nation won't be far behind.

Utilities have taken tentative steps in Pennsylvania, North Carolina, Virginia and Maryland, and cable, entertainment and computer giants have been cooperating on trials and plans for local, entertainment-oriented networks. But New Jersey Bell officials say no one will have an entire state on-line earlier.

New Jersey Bell, which is now running optical fiber into four communities, needs federal approval to install the switching technology to provide "video dial tone" service that allows customers to call up what they want, when they want it.

The company is anxiously awaiting permits from the Federal Communications Commission. A July, 1992, FCC ruling allowed telephone companies to operate video dial tone networks, but attorney Donna Lampert of the FCC's common carrier bureau said the permits are not guaranteed.

The FCC will not allow phone companies to provide programming, a restriction phone companies call unfair. Action by Congress or the courts this year could remove that restriction. That would intensify elbowing among giants in the computer, cable, communications, entertainment and home electronics industries for dominance in a market expected to be worth billions.

New Jersey Bell could get a respectable chunk of that, given its head start. Koeppe attributes that advantage to the company's historically technological bent. Over the years it has swapped talent with Bell Labs and has benefited from the many research institutions in the state.

It was at Westinghouse Electric Corp. laboratories in Princeton that Vladimir Zworykin, in the early 1920s, invented the first practical television transmission tube and a television receiver. The first U.S.-made television receiving sets were manufactured in Newark and sold for $75 in 1928.

On its way to creating the first statewide fiber-optic network, New Jersey Bell expects to spend $1.5 billion by 1999, and much more later as the system is completed.

The money New Jersey Bell will spend ultimately comes from customers of its telephone and other services.

The utility persuaded the Legislature and regulators to allow it to charge market-rate prices for competitive services in pay phones, classified pages and switching and data services. It will use those revenues, retained earnings from basic rates, debt and other sources to fund the fiber-optic network.

As part of the agreement with the state, New Jersey Bell froze its basic phone rate through 1999 at $8.19 per month (plus federal and state charges), the rate since 1985. Last year, it made $444 million profit on $3.5 billion in revenues.

The state Department of the Public Advocate opposed the rate structure and filed an appeal in a state court, but no action is likely before fall.

Other phone companies have been clamoring for similar deregulation deals with their states, according to Mark Cooper of the Consumer Federation of America in Silver Spring, Md.

Cooper, the Electronic Frontier Foundation and other industry watchdogs say freezing telephone rates is no bargain. They say America's phone companies have overcharged customers more than $30 billion by keeping basic rates the same since the mid-1980s, when costs began tumbling with technology improvements and staff cuts.

In lobbying for Opportunity New Jersey, New Jersey Bell argued that cutting basic rates while standing still technologically would cost the state's economy much more.

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