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THE CUTTING EDGE: FOCUS ON TECHNOLOGY

Telecom Breaks Into Show Biz

Phone companies are promoting high-bandwidth networks that could make the transport of digitized entertainment almost as easy as e-mail.

July 12, 1999

Hollywood is full of video producers, turning out everything from commercials and "X-Files" episodes to the dazzling special effects in feature films. But once their wizardry is complete, their work often reaches its destination via low-tech transport: messengers on motorcycles.

Now the state's largest phone companies are touting new high-bandwidth networks they say will enable studios and post-production firms to transmit digitized video across town--or across the country--almost as easily as electronic mail traverses the Internet.

Armed with the new services, Pacific Bell and GTE are squaring off in an attempt to capture new business with the entertainment industry just as it makes the pivotal shift to digital technologies from the analog equipment that still dominates parts of the broadcast and Hollywood businesses.

The entertainment industry--spurred on by improved technology and looming federal mandates for digital broadcast signals--is stepping up its shift to digital in nearly all phases of the business.

There is also a push to move to digital distribution, which could enable the nation's movie theaters to receive films over a network, eliminating the mass shipment of prints.

On the production and broadcasting side, where the phone companies are focusing their sales efforts for now, the graphics, filming and other work is often spread out across town, across the country and sometimes overseas. Linking up those locations with ease, and at a reasonable cost, could make remote video editing and review immediate and commonplace, saving both time and money.

Bent on becoming players in the new fully digital Hollywood, both phone companies have been digging up streets and laying fiber right through each other's home territories--boundaries that have prevented GTE and PacBell from competing against each other for more than a decade.

With the deregulation of telecommunications, the old phone boundaries are crumbling. And while the companies downplay the competition, it's clear the Southern California entertainment industry has become the focal point of an aggressive, rare head-to-head battle between the two firms.

GTE, for example, has spent more than $10 million on equipment and a new fiber-optic network that stretches well into PacBell regions such as downtown Los Angeles, Hollywood, Burbank and Glendale. About 60% of GTE's target market for video is beyond the company's traditional Westside turf.

"This is one of the largest initial investments we've made to roll out a non-dialtone service," said Lyle Watkins, head of branch sales engineering for GTE. "It is a strategic corporate decision to go after this market, and we have not considered franchise boundaries or where GTE used to be able to play and where PacBell used to be allowed to play."

PacBell says it has invested "a few million dollars" laying fiber under Olympic Boulevard and other streets to hit the heart of Santa Monica's thriving entertainment and advertising communities.

Aiming to Become Full-Service Providers

It's not hard to see the attraction: Hollywood is a potentially valuable business trophy for any firm. In addition to the bragging rights and publicity that come with serving such high-profile customers, the phone companies also are eyeing a big chunk of business.

And as television and movie studios branch out, their enterprises increasingly include major operations in both GTE and PacBell service areas.

Both companies hope to become full-service providers to the entertainment industry, supplying everything from video to phone, data and Internet services. GTE and PacBell also hope to expand their video networks to serve business-to-business videoconferencing, distance learning and other markets.

"There is no other industry within Southern California that is larger for PacBell than the entertainment industry," said Bill Powers, the company's vice president of priority markets. "It's the No. 1 or No. 2 business in terms of volume in Los Angeles."

With their latest offerings, PacBell and GTE are promising big benefits for the entertainment industry. But many in the business have heard it before.

Over the years, PacBell, GTE, MediaOne and others have periodically rushed forward with video projects with such fancy names as Media Park, HollyNet and Studio of the Future--each promising the entertainment industry the ability to send and edit video from multiple locations without the expense of satellites or the use of motorcycles and Federal Express.

But those early attempts failed to revolutionize the industry or even supplant its tried-and-true ground transportation, especially for works whose quality suffers when squeezed through phone network pipes.

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