Cable TV, phone industry in race to sell their wires
Whose wires will tomorrow's electronic revolutions plug into? A lot of money hangs on this question. Behind the slick scenarios of banking, shopping, letter-writing, and holding conferences from a TV screen lie some lucrative business propositions. And a few of the nation's largest corporations are lining up their money behind the possibilities.
The technologies in these scenarios are already built, say spokesmen from the telecommunications industry. The race is to string them together.
It could pit the big guns in the cable-TV industry against the likes of American Telephone & Telegraph Company (AT&T) in the latter part of the decade -- each selling their wires.
The loudest competition now is among cable-TV firms aggressively courting the 17 community franchises still left to be awarded out of the hundreds of franchises in the country. Some major markets remain -- Boston, Denver, and several New York City boroughs among them.
Barring major lawsuits, this cable franchise quilt will be sewn up in two or three more years, estimates Mark Chriss, an analyst with the Yankee Group in Boston.
But beyond the din of ambitious cable- company promises to mayor's offices -- promises many observers feel may be overreaching -- the lines begin to form on the next field of competition.
AT&T is testing its range in the information business. In a joint project with Knight-Ridder Newspapers, AT&T has tied phone lines to a TV screen and a keyboard in homes in Coral Gables, Fla. Residents can summon news or video catalogs and send and receive messages on their screens through a central computer.
"We're feeling our way into the market," says Ed Langsam, an AT&T spokesman, "trying to find out what people want."
At the same time, the cable firm Warner Amex has rigged a similar system on its Qube network in Columbus, Ohio. Subscribers can call up anything from financial news or stock descriptions to computer games on their two-way TV sets.
In 18 months, Qube also will offer electronic shopping through video catalogs.
Much sooner, AT&T will begin another test project in Austin, Texas. Customers type a name on a keyboard to get a phone number on a TV screen. Or type a subject in for reference to what may still be called the yellow pages.
These market experiments are pointing cable-TV and the telephone companies toward the same business.
Businessmen on both sides agree that stiff competition looms ahead between cable networks and telephone lines. Satellite relay stations, such as Satellite Business Systems, already are pushing the phone companies in their traditional areas, according to Robert Schmidt, president of Communications Technology Management.
M/A-COM in Burlington, Mass., in a run of rapid-fire acquisitions, has bought up a package of companies to deliver an entire business communications system: its own satellite system, microwave transmitters, cables, and computers.
By spring, M/A-COM will have a network set up for video and voice conferences and for passing out nearly instant report facsimiles between M/A-COM offices around the country. Company spokesman Jack Forbes says some 50 Fortune 500 companies already are negotiating to tie into the network.
The M/A-COM network will also be developed to allow computers to communicate directly in private, and efficient, conversations. Now, most computer networks work through telephone lines.
The phone companies currently hold the upper hand in the race with cable -- 98 percent "penetration" of American households and offices. Cable networks, so far, are ambitious promises.
Cable has an advantage in the number of channels on its wire, however. "Cable brings a whole highway of information into the home," says Leo Murray, a vice-president at Warner Amex. Companies seeking franchises are promising between 20 and 120 channels to coy mayors.