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Expanding Cable Telephony Is New Kid on SBC's Block

January 21, 2003|James S. Granelli | Times Staff Writer

Wally Roberts is in telephone heaven, a longtime gadget guy taking advantage of everything that budding competition in the telecommunications market has to offer.

His San Clemente condominium has two telephone lines from different carriers, two cellular phones from a third company and cheap long-distance service provided by yet another firm.

His various telecommunications devices include enough fancy features -- from call waiting to a sophisticated privacy manager to screen calls -- to stupefy even the savviest techie.

"I've probably got too much," said Roberts, a serious-minded retired airline pilot, as he surveyed a small cluster of phones atop his computer.

It's a problem that most consumers can only dream of -- at least as of now. For many Californians, there is still only one company that provides local phone service -- either SBC Communications Inc. in 79% of the state or Verizon Communications Inc. in most of the rest. Long-distance carriers AT&T Corp. and WorldCom Inc. have grabbed small chunks of the local market by leasing SBC lines at wholesale prices, but even that level of competition could evaporate if regulators allow SBC to raise its wholesale rates.

Cable telephony, meanwhile, is still in its infancy. Nationwide, cable phone service accounted for only 1% of all telephone lines at the end of June, according to data from the Federal Communications Commission.

For Roberts and others in south Orange County, though, the situation is different -- and, depending on how things shake out, it provides an unusual glimpse of the choices that consumers across California and the nation may enjoy in coming years.

Roberts' five-story condo building overlooking the Pacific Ocean is served by Cox Communications Inc., one of two major cable television providers moving aggressively into the phone business.

As of the end of September, Cox provided telephone service for 30% of the 304,000 households it has wired in 14 south Orange County cities, where nearly all the homes are hooked up. It has a similar share in the San Diego County communities it serves.

Roberts, 66, loves the clash among companies. An avowed "Internet junkie," he prowls the telephone companies' Web sites to stay up to date on the latest equipment and the best deals.

His telephone technology habits began decades ago. "I was an airline pilot, so I had too much time on my hands," he said.

Working on technical safety issues for the Air Line Pilots Assn. since the mid-1970s, Roberts has needed sophisticated features such as three-way calling, call waiting, caller ID and call forwarding at his home.

Around the same time, he met a PacBell engineer on jury duty and delved into the industry's technologies. He became something of a gadfly on telephone issues, successfully challenging phone companies' actions twice at the state Public Utilities Commission.

As a consumer on the cutting edge, Roberts experienced the misery of trying to use things that don't always work. One bout of frustration led him to abandon the old GTE Corp. and pay extra to extend a local Pacific Bell line to his home.

Despite the court-ordered break-up of AT&T in 1984, telephone service was still essentially a monopoly. Pacific Bell became one of the seven Baby Bells offering local service in their respective territories, while AT&T dominated the long-distance market.

The Telecommunications Act of 1996 was aimed at boosting local competition. One provision freed cable companies and wireless operators, among others, to sell local phone service. Unlike conventional wireline carriers, which are regulated by the state PUC, cable and wireless companies can set their own prices.

Cox leapt in. Within a year, the company upgraded cable equipment in Aliso Viejo and began selling phone service. By January 1999, San Clemente was wired for phone service as well.

Roberts switched both his lines to the cable company soon after. He was fed up with what he described as SBC billing errors and what he termed an "arrogant" attitude at its parent company, which is based in San Antonio.

He also found the advantages of Cox irresistible:

For a one-time charge of $10, he was able to keep his two telephone numbers and get a wider local calling area than he had with SBC.

He gets a monthly discount on his second phone line, paying $9.99 for the first and $4.99 for the second. Under state regulations, SBC charges $10.69 for each line.

He receives a single monthly bill for his cable TV, high-speed cable modem and telephone service, all of which come over one cable wire. Cox also provides a variety of discounts for subscribing to multiple services.

"There's no question Cox has been successful," conceded Frank Mona, executive director of consumer marketing for SBC California. A major factor, he said, is that Cox owns its own equipment and doesn't lease anything from SBC.

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