TV Cable Firm Revs Up Race to Hot-Wire U.S. : Communications: In scramble to build fiber-optic networks, the government risks being left behind.
As expected, the nation’s biggest cable company announced plans Monday to build a $2-billion fiber-optic network, a move sure to intensify the race between cable TV and telephone firms to provide cutting-edge services.
In making its previously reported plans official, Denver-based Tele-Communications Inc. offers the latest evidence yet that private firms are leapfrogging the Clinton Administration’s efforts to create a national “information infrastructure.”
TCI’s goal of laying about 168,000 “fiber miles” of cable this year in more than 100 cities would exceed by more than 50% the amount of fiber-optic cable installed in 1991 by 23 urban telephone concerns surveyed by the Federal Communications Commission.
Fiber-optic cable, made from hair-thin strands of glass, can transmit many thousands of times as much information as ordinary copper telephone wire. Its widespread installation would pave the way for high-capacity communications systems in which video, voice and other data could be sent both to and from homes in quantities so vast that viewers could choose from among 500 or more cable TV channels, for example.
“There probably will barely be an industry in the country that won’t be affected by implementation of this technology,” said TCI Chief Executive John Malone during a Denver news conference that was broadcast across the country. “It should make America a world leader in all the businesses that feed off this technology.”
TCI, which suffered a loss of $34 million on revenue of $3.6 billion last year, hopes to recoup its $2-billion fiber-optic investment by offering new services that take advantage of the material’s huge information capacity.
The services could include interactive TV, data transfer and home shopping and banking. TCI also believes that the growing number of people who work at home and already use computers, telephones, fax and other information devices will eventually make up an important market.
“We’re betting that . . . there will be new entertainment services, new sports services, a vast increase in pay-per-view movies and other programs on demand, such as sophisticated computer work projects, that the phone lines are too slow to handle,” said Bob Thomson, TCI’s senior vice president of communications.
The TCI project, which will accelerate the company’s planned replacement of copper coaxial cable, calls for the company to spend $750 million this year alone to install fiber-optic cable in 100 cities. Another 200 cities will receive the upgrade over the next four years.
When the project is complete, all of TCI’s 10 million customers would be served by fiber-optic cable, the company said.
TCI plans to install about 7,000 actual miles of fiber-optic cable along streets and utility lines, but it does not plan to replace the coaxial cables that connect the main lines with neighborhoods of 500 to 2,000 homes. Over distances of less than a mile, coaxial cable is capable of transmitting large quantities of data.
TCI officials said the upgrade program is driven by the advent of new technology, and does not reflect fears of increased competition from the telephone industry.
The investment program is being undertaken as TCI and other cable system operators contemplate the impact of a recent Federal Communications Commission ruling cutting basic cable rates by 10% to 15%. The FCC has estimated the rollback, which carries out legislation approved by Congress last year, could cut cable rates by $1 billion annually.
During last year’s presidential campaign, Clinton promoted fiber-optic cable as a way to improve the nation’s information network and create jobs. The economic plan he submitted to Congress includes nearly $5 billion over the next four years to develop new software and equipment for expansion of the electronic infrastructure. Administration officials envision a national network that would enable consumers, industry and government to easily and rapidly exchange large quantities of data.
But some high-tech executives are opposed to any government intervention.
“Washington should stay away from the intricacies of high-tech competition,” Cypress Semiconductor President T.J. Rodgers told Congress last month. “America’s entrepreneurial companies have the guts, brains and drive to beat the best the world has to offer. Allwe need from Washington is the confidence to let us fight it out.”
After years of resistance, some lawmakers seem to be warming to the notion.
Last month, Reps. Rick Boucher (D-Va.) and Michael Oxley (R-Ohio), both members of the House telecommunications and finance subcommittee, introduced a bill that would lift a ban against phone companies providing cable TV within their service areas. That would increase an already heated battle between phone companies and cable firms vying to wire the nation with fiber-optic cable.
Getting Wired Fiber-optic cable is the way torrents of information and entertainment will someday be carried into American homes and businesses. The telephone companies are way ahead of cable companies, but Tele-Communications’ plans to lay 168,000 miles of fiber-optic cable will double the amount owned by cable companies. Strand miles of fiber-optic cable owned by phone companies and cable operators: All cable companies: 170,000 Pacific Telesis: 330,000 Ameritech: 445,000 Southwestern Bell: 542,000 US West: 720,000 NYNEX: 772,000 Bell South: 886,000 Bell Atlantic: 1.5 million Other long-distance carriers: 2.6 million Note: Each fiber-optic cable carries an average of 20 strands. A strand mile measures the distance that 20 strands cover. Source: Bell Communications Research
