Pacific Telesis Group Gets Approval to Build Network That Offers Video Programming

Federal regulators on Wednesday gave Pacific Telesis Group the go-ahead to build an advanced communications network that will offer phone service and up to 220 channels of video programming to 1.3 million California households and businesses.

The company said it could begin commercial service in Los Angeles, San Diego and Orange counties as well as the San Francisco Bay Area as early as next year and reach 5 million homes by 2000.

But the decision by the Federal Communications Commission to free Pacific Bell to compete with cable operators is tempered by published reports that the FCC is considering requiring Pacific Bell--as well as other phone companies seeking to provide video programming--to obtain cable franchise approval from local authorities.

In an unusual alliance, phone company executives, Hollywood producers and consumer groups held a news conference in Washington on Wednesday to urge the FCC to wait for Congress to conclude its sweeping efforts to overhaul the nation’s 61-year-old telecommunications laws before acting on the cable franchising issue.

The Senate has already approved a measure that would allow the phone companies to offer video programs without also seeking approval from local franchising authorities. A similar provision is pending on the House floor.

“Obtaining a cable franchise is a lengthy and expensive proposition and it forces the telephone companies to duplicate the closed model of cable television, where the cable operator has editorial control over all of the channels and determines all of the programming,” said Andrew Schwartzman, executive director of the Media Access Project, a Washington group active on media legal issues. “What we had hoped for is more [video] competition . . . between companies.”

But FCC Chairman Reed Hundt, who has been smarting from criticism that his agency has not moved fast enough to approve phone company applications for video service, said Wednesday that he plans to proceed with an FCC review of the franchising issue.

Hundt said the industry’s complaints are “like asking the umpire not to call balls and strikes in the middle of the game. This umpire thinks that the rules ought to be changed, but we shouldn’t stop the game for those who want to play.”

Local phone companies such as Pacific Bell have long been interested in expanding into video services as a way of offsetting a possible loss of profits in their local phone businesses.

Pacific Bell’s new video network would be the largest of 12 phone company video networks that have been approved by the FCC in the last year. Pacific Bell plans to spend about $1.1 billion to construct a so-called hybrid fiber-optic and coaxial network that would provide broad-band communications services.