TV’s New Frontier : FCC Proposes Cellular-Style Delivery System

The Federal Communications Commission on Thursday proposed opening the nation’s airwaves to a breakthrough technology that could provide a lower-cost alternative to existing cable television, fiber-optic and telephone services.

Already in operation on a trial basis in Brighton Beach, N.Y., the new technology uses super-high-frequency microwaves previously believed to be too weak and volatile for significant commercial applications.

A Freehold, N.J., company called Cellularvision patented the new technology, which mimics the operation of cellular phone systems. Like cellular, it uses an array of transceivers that can provide, simultaneously, 41 or more channels of cable television, local telephone service, video conferencing, and even interactive, two-way video communications.

The commission signaled its intent on Thursday to authorize full-scale development of the technology by next summer in 489 local service areas across the nation. New licenses for operating the local systems would be awarded by lottery, an agency official said.

The FCC invited industry officials to comment on the potential impact of the plan.

Experts say the new system could pose a significant competitive threat to cable--as well as even newer video technologies, such as direct broadcast satellite. The new system can deliver services to homes that can’t be reached by cable, they note. And its compact disc-sized antenna is much smaller than those of many other video services.

“This could be significant competition to the cable industry,” said Cheryl Tritt, chief of the FCC’s common carrier bureau, which is overseeing the new technology.

“It’s a technology worth watching,” added John J. Sie, chairman of Encore Media Corp., a Denver-based cable program supplier. “It seems to have a much lower cost” of operation than cable and other video technologies.

A cable industry spokeswoman, nevertheless, seemed unfazed.

“Cable television developed and legitimized the concept of subscription television, so it’s no surprise to us that we would face competition from a variety of sources,” said Peggy Laramie, a spokeswoman for the National Cable Television Assn.

The new technology is known as “local multi-point distribution system,” or LMDS. It is so little known that few industry officials understood it well enough Thursday to speculate how it might affect the communications industry, which has erupted with a number of new technologies in recent years.

But among those willing to hazard an opinion, several had reservations about how the microwave technology would fare in inclement weather or amid tall buildings that might interfere with the transmission signal. Others said that it would take more than superior technology to crack cable’s video juggernaut.

“It sounds like it’s a better mouse trap,” said John Reidy, a media analyst with Smith Barney, Harris Upham & Co. “But new technology doesn’t make an entertainment business. It’s what you are offering on that technology.”

For a $29.95 monthly fee, subscribers in Brighton Beach can receive up to 41 channels of video, including basic cable service and such pay-television programming as Showtime and The Movie Channel, said Bernard Bossard, a partner at Cellularvision who invented the new technology.

The system, which has an information-carrying capacity that rivals fiber optics, uses a part of the super-high frequency microwave band to provide a signal that is superior to cable or broadcast TV, Bossard said. So far, he added, the company has not encountered problems acquiring video programming from suppliers.

On the telecommunications front, Bernard Walker, an associate manager at Teleport Communications Group, a New York-based company that provides telephone services to several business, said LMDS could join firms like his in facing significant resistance from the regional Bell phone companies. The local Bells would have to provide access to their telephone switching stations.

In supporting the new technology, the FCC is carrying out provisions in the recently passed Cable Television Act aimed at encouraging greater cable competition.