GTE Seeks Approval to Offer Video Services : Technology: Ventura County is among four markets the telephone company plans to provide with programming.
GTE Corp. said Tuesday that it plans to build a high-tech network that will initially allow customers in Ventura County and three other markets to receive video programming from the phone company instead of their cable operator.
Pending approval from the Federal Communications Commission, GTE said it will begin construction this year on a system that will deliver programming as early as next March to 550,000 homes in Ventura County; St. Petersburg and Clearwater, Fla.; Honolulu, and northern Virginia. Over the next 10 years, GTE plans to make its video service available to about half its customers nationwide, or about 7 million homes.
Stamford, Conn.-based GTE, the nation’s largest local phone company, thus becomes the latest among several telecommunications firms in recent months to directly challenge cable TV companies. The phone companies will develop systems of fiber-optic lines and coaxial cable that can deliver broadcast, cable TV and interactive programming, such as movies on demand or home shopping.
Regional phone companies are attempting to set up video networks as quickly as possible to head off impending competition in their core local phone markets while providing new sources of revenue. U.S. West and Time Warner’s cable division, for example, have targeted Hawaii and Florida for a joint project to build “full service networks” that provide local phone service as well as cable and interactive video.
About 83,000 households in Thousand Oaks, Newbury Park, Camarillo, Port Hueneme, Santa Paula and Oxnard will be among the first in California to have access to a television programming provider other than their local cable operator. The cable companies in the area that would face competition for the first time include Century Cable, Comcast Cable, Jones Intercable and Ventura County Cable.
Cable companies have said they welcome the competition as long as they are allowed to compete in providing phone services.
Pacific Bell is awaiting FCC approval to build a similar network and hopes to have its first customers in San Jose, Reseda, Orange and San Diego connected later this year. Both GTE and Pacific Bell said they expect the investment to be recouped by revenue from the new services and will not ask for basic rate increases from phone customers to fund the expansion.
GTE said installing the network will cost $300 to $350 per home, plus the cost of a converter box in each home that decodes the digital information sent over the lines. It said the $250 million to build the system in the first four markets is in addition to the $2.7 billion GTE spends annually on upgrading its network.
The phone company said it is selecting the communities to get the service first based on competition, population density and demographics. Robert Calafell, vice president in charge of video services at GTE’s Irving, Tex.-based Telephone Operations unit, said consumers today spend an average of $31 a month on cable.
“We’re looking at consumers who will in 10 years from now spend $75 to $80 a month on cable and cable-like (interactive) services, so that average has to do a little more than double,” Calafell said. He and other GTE officials declined to say how much they would charge for their service.
But both GTE and Pacific Bell, along with local phone companies in other states that plan to dive into the video business, face a struggle to line up programming to send over their fiber webs. Pacific Bell has announced no programming deals since its announcement last November that it would spend $16 billion over the next 7 years to deliver video service to 5 million homes.
GTE hopes to capitalize on the telephone industry’s reputation for reliable service, compared to the spotty record of cable, Calafell said. And while conceding that his cable competitors may have the advantage in packaging programming, he said programmers of all kinds will be interested in the new distribution network his firm will be offering.
The new service could be especially valuable for regional-based programming, such as sports networks, which may not have the clout or national appeal necessary to get room on a cable operator’s channel lineup.
Still, there’s no telling how many consumers are likely to sign up for “TV via telco.” Of the 7 million homes that would have access to its video services by 2003, GTE expects about 2 million to subscribe. But GTE’s western area vice president, Mike Crawford, declined to estimate how many Ventura County residents would opt for GTE’s service.
“Main Street”--the interactive service GTE developed in Cerritos that includes movies on demand, long-distance learning and interactive games--will be available in Ventura County. But Crawford said the Cerritos test, which got a lukewarm reception and is viewed by some as proof that consumers are not interested in interactive services, was about technology, not the consumer market.
Said Crawford: “If I had any good market research on that, I would give it to you, but we’re just going to have to learn.”
* CABLE RATES: The Federal Communications Commission said no new hikes are expected. D2
