Former Baby Bell in the Forefront of Telecommunications Industry : Merger: Bell Atlantic’s deal with Tele-Communications Inc. culminates much of its effort to transform itself.

Share via

Bell Atlantic early on staked out a reputation as the most ambitious of the regional telephone companies when it came to breaking into the cable TV business. Yet all its ventures to date pale compared to the latest.

Today, Bell Atlantic and Tele-Communications Inc., the big cable firm, are expected to announce they will combine to form a $44-billion telecommunications colossus that will immediately become one of the largest corporations in America.

The merger culminates a good deal of effort on the part of the Philadelphia-based Baby Bell to transform itself from just another phone utility into a company at the forefront of emerging telecommunications technologies.


Just this week, Bell Atlantic agreed to pay up to $1 billion for as much as 42% of Grupo Iusacell, a major Mexican cellular phone company. The company is also hard at work on advanced technology to compress and pump high-quality video over traditional copper phone lines, and it has taken the unorthodox step of challenging some local cable TV monopolies.

Bell Atlantic’s plans to join TCI were given a boost recently when a federal court in Virginia ruled that it could provide video programming in its service area, which spans the mid-Atlantic states.

The same judge later ruled that his decision applied only to Bell Atlantic; other phone companies would have to seek similar permission independently.

As if to underscore its seriousness, Bell Atlantic over the last year formed a special group within its Alexandria, Va.-based Network Services division devoted entirely to developing opportunities in cable and emerging multimedia technologies. The phone company has quietly hired 150 people for the new unit, many of them veteran TV industry executives.

“We think that information services has the potential to evolve into a third core business for our company by the end of the decade,” Arthur Bushkin, president of Information Services for Bell Atlantic, said in an interview with The Times earlier this year. “We see it as very, very significant.”

Bushkin was referring to the array of interactive entertainment and educational services that are expected to be delivered over the high-capacity, fiber-optic lines that both cable TV and telephone companies are deploying throughout their networks.


Bell Atlantic believes that the so-called electronic superhighway will be one of the country’s fastest-growing businesses in the next century. “It’s not just a $10-billion or $20-billion market,” Bushkin said. “We’re talking in the $100-billion category.”

The services are expected to encompass everything from home shopping to video on demand--the ability to watch any movie or TV program instantly at the flick of a remote control. One area that Bell Atlantic executives expect to be exceptionally lucrative is continuing education and training for professionals.

Such services are several years away at the earliest, although some cable companies are expected to have early versions of these high-tech systems in operation by next year.

Nonetheless, Bell Atlantic has been actively trying to get a toehold in the cable television business. One of the technologies the company is working on, known as ADSL, would make it possible to transmit a video picture over regular telephone lines, which could pave the way for video on demand.

The technology is potentially a breakthrough that, by eliminating the need for fiber-optic wiring from trunk lines to individual homes, could radically lower costs and advance the timetable for the advent of interactive television.

Bell Atlantic has also been active in developing its own challenge to cable television. In New Jersey, for example, it is building and leasing channel capacity to a cable operator in three towns, taking advantage of recent regulatory decisions that let phone companies provide “video dial tone.”


In addition, Bell Atlantic has made a deal with an independent cable programmer to challenge an incumbent cable system in Toms River, N.J. And in Alexandria, Va., Bell Atlantic is experimenting to provide interactive television service to 400 households.

Perhaps most intriguing is Bell Atlantic’s recent decision to invest in an outfit called Cellularvision to provide multichannel “wireless” cable to New York City residents. Cellularvision hopes to compete with cable TV by using microwave technology to provide a broad mix of many of the same channels as traditional cable operators--at 15% to 20% lower cost.

Bell Atlantic at a Glance Bell Atlantic Corp. is the nation’s second-largest provider of local telephone service. On Monday the company agreed to invest up to $1 billion for as much as 42% of Grupo Iusacell, Mexico’s second-largest telecommunications company.

* Headquarters: Philadelphia

* Employees: 72,200

* Chief Executive: Raymond W. Smith

* Tuesday’s stock close: $60, up 62.5 cents

1992 results:

* Revenue: $12.6 billion

* Profit: $1.3 billion

* Provides dial tone service to 18 million subscribers in New Jersey, Pennsylvania, Maryland, Virginia, Delaware, West Virginia and Washington, D.C.

* Fourth-largest U.S. cellular operator, serving 763,000 customers.

* Holds 34% of Telecom Corp. of New Zealand

* Other businesses include telephone directories, paging service and computer maintenance.