Bell Atlantic’s High-Tech Rewiring to Cost $11 Billion : Communications: Phone company’s customers will be on line to receive movies, interactive games and other services.
Joining scores of competitors gearing up to deploy advanced communications networks, Bell Atlantic Corp. on Thursday announced it will spend up to $11 billion to rewire its phone lines to enable customers to receive movies, interactive games and other services.
Bell Atlantic, which thanks to a favorable court ruling is the only Bell telephone company with authority to offer video service, said that up to 1 million of its customers in northern New Jersey, Philadelphia, Pittsburgh, Baltimore, Washington and Virginia Beach, Va., will be hooked up to the network by the end of 1995.
The system will be capable of two-way analog and digital transmission of phone, data and video signals. While the $11 billion does not represent a significant increase in what Bell Atlantic had already earmarked for capital spending, the announcement is the latest evidence that phone companies have renewed their intense push to build the costly networks that will electronically link homes and businesses.
No one knows how much demand there is for the fancy services the system would offer, but cable operators and telephone companies are committing billions to rewiring their networks.
BellSouth Corp., for example, said Thursday that it will spend up to $18 billion over the next six years as part of its upgrade plans to install fiber-optic cable and digital switches capable of handling the simultaneous transmission of voice, video and data. And at the Federal Communications Commission, there are 17 outstanding applications from local phone companies to offer video programs to customers.
Bell Atlantic, which needs similar approval for its video plan, will probably have to wait several months for the FCC to review its application.
The company, which won a federal court ruling in August to provide video programming in its own service area, has long sought to offer movies and other video fare. Last year, it pursued a merger with cable giant Tele-Communications Inc. until depressed stock prices led the parties to call off the deal. Phone companies view video services as more lucrative than ordinary phone service, whose growth has flattened.
“I think the Bell Atlantic announcement is extremely significant,” said George Kotelly, a fiber-optic analyst.
He said that instead of deploying costly fiber-optic cable to consumers’ front doors, most systems now propose using cheaper coaxial cable to take the signal from a local fiber-optic “node” to individual homes.
Bell Atlantic has selected American Telephone & Telegraph Co. and tiny Broadband Technologies Corp. to help build the fiber-optic and coaxial network. General Instruments Corp. will build the TV set-top boxes needed to receive the new information services.
