Pac Bell Has Fiber-Optic Linkup Plan : Communications: Company will spend $16 billion to create network for interactive service by the end of the decade.
In a move that would make California the first large region to receive video and interactive services via phone lines, Pacific Bell said Thursday it will spend $16 billion to connect much of the state in a high-speed, fiber-optic network by the end of the decade.
The plan to speed up the company’s investment in a digital system, the costliest and most extensive to date by a regional phone company, is expected to provide several thousand new jobs in California as the firm rips out its maze of twisted copper wires in favor of fiber cables.
Pac Bell plans to begin by connecting 1.5 million homes by 1996 in the state’s major population centers: Los Angeles, Orange County, San Diego and the San Francisco Bay area. Another 3.5 million households statewide will be connected by 2000.
The first Southern California communities wired will be Canoga Park, Reseda, Sherman Oaks, Calabasas, Hidden Hills, Inglewood, Anaheim, Buena Park, Cypress, Garden Grove, Orange, Stanton and Villa Park. They can expect to be connected between 1994 and 1996.
Pac Bell’s goal is to deliver all the possibilities of high-capacity two-way communications--yes, the information highway--to California homes, including video on demand, shopping and interactive education.
Gov. Pete Wilson praised the project as an example of California’s ability to stay competitive in a new technological age. “This is the latest signpost on the road to economic recovery for this state,” he said.
Pac Bell’s decision to concentrate on its home territory contrasts sharply with the strategy laid out in recent months by other Baby Bells, such as Bell Atlantic and U.S. West, which have sought to expand their reach through alliances with cable television operators.
“In the end, all competition is local,” said Pacific Telesis chairman Sam Ginn. “I’d rather compete with (cable operator) TCI in the neighborhoods of Los Angeles than in Denver.”
If all goes as planned, Pac Bell’s program will pit the phone company against local cable operators throughout the state, giving consumers a choice of video service providers they’ve never had before. But that’s a big if. Federal law bars telephone companies from providing video programming to households in their service area, and only Bell Atlantic Corp. has successfully challenged the ban. Pac Bell plans to pursue a similar legal challenge to the rule.
Still, phone companies are legally allowed to provide new interactive services that don’t compete directly with what cable firms currently offer, and Pac Bell plans to offer such futuristic features as “tele-medicine,”--where patients can hook themselves up to a terminal and phone in their electrocardiograms--and the more pragmatic movies on demand, for which the success of pay-per-view programming suggests a market exists.
In the new Pac Bell network, a box attached to the side of a house or apartment will sort out digital and analog streams of audio and visual data. A coaxial cable from the home will connect to fiber-optic cables at a neighborhood “node,” from which signals will be transmitted back to the main Pac Bell switching office. AT&T; will provide the equipment and cable for the project at a cost of about $5 billion--thought to be the single largest equipment purchase in telecommunications history.
Ginn, who was in New York but spoke by teleconference, said the firm will not raise phone rates to fund the program.
Like other regional Bells, Pac Bell is facing competition from new wireless and cellular services, which are siphoning off more local phone calls. But while the drive to find new markets spurred Pac Bell’s acceleration of its plan to connect California with fiber--the original plan had been to wire the state by 2015--it was not the main factor, officials said.
“Competitive intensity is one of the factors that suggested we should go through with this,” said Pac Bell President Phil Quigley. “But the real ‘aha’ here is that we found the efficiency of this system would make this a self-funding effort.”
Shares in Pac Bell’s parent, Pacific Telesis, fell $1.375 to $55.25, after surging $3.125 on Wednesday.
Dialing the Future
Pacific Bell plans to spend $16 billion to build a network capable of delivering high- quality sound, video and interactive services to 5 million California homes by the end of the decade, including:
* Movies on demand. Dial up a favorite film whenever you feel like it.
* Time-shifted TV. Wish you hadn’t missed Seinfeld at 9? Ask your TV to rerun it at 11.
* Interactive news. Not satisfied with a sound bite? Ask for previously run segments on the same topic or already-gathered material that wasn’t aired.
* Tele-education. Call up a video of Martin Luther King Jr.’s “I Have a Dream” speech or listen to President Kennedy’s inaugural address through interactive libraries.
* Home shopping. Buy with the touch of a few buttons.
* Video games. Play with friends hundreds of miles away.
