PacBell to Test Movie Distribution by Phone : Technology: Pilot program would eliminate need for prints. Theaters could show different versions of a film.

In a step that could radically alter the way movies are produced and distributed, Pacific Bell today plans to announce a test project that will deliver movies over high-speed phone lines to as many as 10 Los Angeles-area theaters later this year.

The phone company’s pilot program--the first of its kind--will replace physical prints of movies, thousands of which are distributed to theaters each year, with high-definition video stored in a central computer and transmitted digitally to theaters with the touch of a button.

PacBell’s project comes as small stretches of the fiber-optic “superhighway” are being rolled out across the country. The move is important for the San Francisco-based utility, which is in heated competition with other telecommunications companies and has been criticized for being slow to enter new businesses.

The ability to send high-quality video over phone lines for ever-lower prices will benefit the entertainment industry, whose core business is moving images. But the pilot program is likely to meet with resistance from some of Hollywood’s creative community who fear that the new technology will make it easier for studios and theater owners to tamper with their artistic work.

Because the PacBell system would eliminate the cost and logistic hassle of distributing film prints, studios could easily make several different versions of a movie to cater to different audiences. Technically, all a theater owner would need to do to access a G-rated version of, say, “The Fugitive,” would be to type in a simple command on a terminal.

“You can get really creative,” said Bob Stewart, project manager for PacBell’s video services. “A studio could have 10 or 15 different endings and the audience could vote when they come in on which one they want to see. Majority rules.”

Or, suggested Howard Gunn, vice president of business development for Richardson, Tex.-based Alcatel Network Systems, which will be providing the switching technology for the pilot: “Let’s say in some towns you’d get five more Baptists coming into the theater if you took out the swear words. Boom, they’re gone.”

To be sure, producers and directors would have a say in whether such changes could be made. But the digital technology potentially opens up a whole new dimension to the movie business that could affect every stage, from screen-writing to distribution.

The technology could be a boon to studio executives. With digital distribution, movies that bomb on opening weekend could be fairly inexpensively re-cut and re-released quickly with an alternate ending. Last fall, the Walt Disney Co. spent a hefty sum cutting out a controversial scene in “The Program”--in which college football players lay in the middle of a highway as cars whizzed by--and reprinting it after the film had been released.

Sony Pictures Entertainment, which has invested heavily in high-definition technology with little result thus far, is expected to participate in the trial this summer, sources said. The studio will likely supply films from its Columbia and Tri-Star subsidiaries. PacBell said AMC, United Artists and Loew’s theater chains have expressed interest in being included in the project, but no theaters have yet been chosen.

PacBell, which is a subsidiary of Pacific Telesis, estimates that the move to digital could save distributors 25% of the nearly $500 million a year spent on making thousands of prints and shipping them from theater to theater. The new form of transmission would also make it harder to pirate copies of the studios’ films.

Digital high-definition video format is immune to the deterioration that makes for grainy prints that wear out. Although some keen-eyed viewers may detect a loss in the sharpness of the picture, high-definition video is arguably equal in quality to a reel of 35-millimeter film that has been run through a projector a few times.

PacBell said its demonstration of the technology with “Bram Stoker’s Dracula” to a Los Angeles audience last fall and to theater owners at a convention in Las Vegas this month generated rave reviews. Saturday night, Sony executives in Las Vegas for the National Assn. of Broadcasters convention enjoyed a showing of “A Few Good Men” piped over phone lines from their high-definition center on the studio’s Culver City lot. The phone company will show off the system for entertainment executives and press in Las Vegas tonight.

Still, it probably will take years for digital distribution of film to be adopted on a wide scale. Perhaps more than any other entertainment format, the physical film itself has long been associated with the soul of its medium. While music has graduated smoothly from LP to tape to compact disc and television is interchangeably delivered via cable, satellite or over the airwaves, the reel of film and the projector it is played on have become icons through which movies are understood.

Many film industry veterans retain a reverence for the tangible nature of the stuff, even as editing and production slip increasingly into the realm of the computer.

There are practical considerations as well. PacBell, a public utility, needs to get regulatory approval for its technology test, though this is not considered a stumbling block. The phone company will go through another approval process in 1995, when it hopes to begin offering the system as a service.

And theater owners, who will need to buy about $100,000 worth of new equipment per screen to receive the digital transmission, need to be persuaded to buy into it. One of PacBell’s selling points: High-definition broadcasts of live sporting events can be piped to the theaters using the same equipment, creating a new source of revenue for owners whose facilities go unused much of the time. Theaters could also be used for high-definition video conferencing.

In the PacBell trial, movies will be scanned into a high-definition scanning machine and digitized into a form that can be sent over phone lines. They will then be compressed and shipped over fiber-optic cables and stored in a powerful computer at a PacBell office in Hollywood. When theater owners want to show a movie, they type in titles and times on a terminal in the theater. The phone line remains active during the playing of the movie; the signal is not downloaded into a computer at the theater.

Perceived as a laggard in the race to construct the next generation superhighway, PacBell sees the industry on its home turf as a potentially lucrative niche. But the phone company, eager to avoid alienating the people it hopes to do business with, plans a gingerly strategy, at least at first.

Last year’s disastrous attempt by an IBM-Blockbuster joint venture to introduce a new method of distributing music compact discs without first consulting the recording industry has become a textbook case on how not to approach the entertainment industry with new technology. And it is fresh in the minds of PacBell representatives.

“I want to re-emphasize that this is not a threat to anybody,” PacBell’s Stewart said. “We are not going to force this on anybody. This is just a test. We’re going to take it slow.”

PacBell’s Cinema Video Project

High Definition Tele-Cine: Film is scanned into tele-cine machine and digitized.

HD Digital Compression: The digitized video is compressed to travel over phone lines.

ATM Switch: Asynchronous transfer mode switch allows several theaters to access a single copy of a movie from the computer simultaneously.

Cinema Server: The video is sent over fiber lines and stored in a powerful computer at a PacBell office. About 100 movies fit in each computer.

Fiber rings instantaneously re-route transmissions in case of a break in the fiber network.

HD Digital Decompression: When theaters order movies, they are sent over phone lines, decompressed, and projected with a high-definition projector.