Roads to the Telecommunications Future

While nearly everyone agrees that a combination of old and new technologies will deliver a plethora of advanced services, each player has its own plan to do it. A look at the technologies competing to serve up everything from interactive television to two-way paging, and which companies are backing them:

Cellular

The most popular form of wireless calling involves dividing a region into cells, each served by its own antenna. As a caller moves from region to region, the call is transferred from antenna to antenna. But analog cellular phones have limited range and can be easily tapped. Digital cellular networks are being developed that would also transmit pages and e-mail messages.

Companies: Traditional phone companies are the biggest players in the cellular market, with AT&T; owning the largest network (after purchasing McCaw Cellular in 1994 for $12.6 billion). Many of the Baby Bells are in the game as well. Pacific Telesis spun off its cellular operations in 1994, creating AirTouch Communications. SBC sells cellular services and may market them in California after the merger. Cable operator Comcast owns several cellular networks as well.

Personal Communications Services

PCS technology mainly competes against cellular, although it has the potential to provide two-way paging and e-mail in addition to clearer sound and more reliable connections. Companies bid billions of dollars at auction for parts of the radio spectrum the federal government set aside for PCS--but development of the networks has run into obstacles.

Companies: Nearly every phone and telecommunications company is making a move into PCS. US West, Bell Atlantic, Nynex and AirTouch have formed PCS PrimeCo to build a cellular network to link 11 cities by the end of this year. Sprint, Comcast Corp., Cox Communications and TCI have formed Sprint Spectrum, a wireless venture that plans to offer the ability to make and receive voice calls, paging messages and voice mail on a single device. AT&T; also has PCS plans.

Coaxial Cable

This is the cable used to deliver scores of stations to the majority of television sets in the United States. But coaxial cable can transmit more than just TV programs, and that excess capacity is now in demand for growing services like Internet connections and video-on-demand. There is also room to transmit telephone calls.

Companies: US West is the most optimistic Baby Bell when it comes to the future of coaxial cable, buying Continental Cablevision in February to bring its total number of cable subscribers to 13 million. In February, GTE got the green light to build cable franchises in Thousand Oaks and Tampa, Fla., and plans to offer interactive television by next year. Ameritech has similar plans. On the flip side, Time Warner is the first cable operator to offer local calling over its coaxial cable lines. Tele-Communications Inc., the nation’s largest cable operator, is expanding into wireless and local calling ventures with Sprint.

Wireless Cable

This system uses microwave signals instead of wires to transmit programs to homes. The cost to reach a home is about $500, between one-third and one-quarter the cost to reach a home by copper cables that must be buried underground or strung on poles.

Companies: Pacific Telesis Enterprises, a subsidiary of Pacific Telesis Group, bid $2 million for wireless cable licenses in recent federal auctions. Last year, the company also agreed to buy two wireless cable companies with plans to begin offering service later this year or in early 1997. Pacific Bell has also teamed up with Bell Atlantic and Nynex to develop programming for delivery via the wireless networks. The two East Coast Baby Bells are large investors in CAI Wireless Systems, which bid the most last week in the first round of auctioning for wireless cable TV licenses--$49 million for 32 licenses.

Direct Broadcast Satellites

DBS systems beam audio and video programming to home satellite dishes about the size of bicycle wheels, making them an alternative to cable television service. They can also be used to distribute data, but two-way communications is difficult to implement.

Companies: DirecTV, a unit of Hughes Electronic Corp., has staked out a strong lead in DBS, and AT&T; recently signed on as an equity investor and marketing partner. Last month, MCI and News Corp. teamed up to buy two high-powered satellites to deliver direct broadcast satellite services to businesses and consumers by the end of next year.