Battle for Cable High Ground Begins Underground

You know for sure that the battle for cable television customers is getting a little frenzied when telecommunications giants start arguing about who is at fault when an underground wire is chopped.

“GTE has been cutting our cable by accident,” said Dan Deutsch, general manager of TCI of Ventura County, the cable company that serves 93,000 customers in Ventura and Los Angeles counties. “They are moving so fast that they are getting sloppy.”

Officials at GTE Media Ventures Inc., which is poised to become TCI’s cable television rival in Thousand Oaks by the end of summer--and later, in other parts of Ventura County--say TCI is at fault for the cable mishaps. GTE’s work crews, who have been laying cables throughout the city, have accidentally sliced some TCI cables because they were not laid out according to city code, GTE officials said.

But the skirmish over cut wires is only the opening round in a high-stakes telecommunications war.

By the end of next month, GTE officials hope to begin offering cable television service to thousands of households in the Conejo Valley, turning Thousand Oaks into one of the nation’s first battlegrounds in which a giant telephone company will directly compete for customers with an established cable operator--a rivalry unleashed by the Telecommunications Act enacted by Congress in February.

Supporters of the bill said the resulting competition would be a bonanza to the consumer--predicting that prices would go down and the quality of service would improve.

But whether cable television prices will drop remains to be seen. For competitive reasons, both GTE and TCI are closely guarding pricing information.

“It will be very, very good value,” is all that Rick Wilson, president of GTE Media Ventures Inc., would say. “We will have a lifeline offering that will consist of a basic package that will be very competitive.”

The two companies are also secretive about the launch dates for new services. But in view of the competition, both TCI and GTE are touting the quality of their service and the diversity of their offerings, which in both cases will include different versions of what they each call “interactive television.”

With eight crews working rapidly to install a network of coaxial and fiber optic cables throughout Thousand Oaks, GTE hopes to launch an initial 76-channel network with three tiers of service.

The basic package will include about 64 channels with the standard cable offerings, which will be little different from what TCI offers, Wilson said.

A second tier of service will include premium channels, such as HBO, Showtime and The Movie Channel, as well as, at a later date, GTE’s mainStreet--a package of about 80 interactive services including home shopping, games, stock quotes and news on demand. The premium tier will include pay-per-view services.

TCI, which took over Ventura County Cablevision in March, is fighting back with its own interactive service. Later this year, it plans to introduce a service provided by New York-based ACTV Inc., which TCI has been test-marketing in about 1,000 households in Calabasas, Westlake Village and Agoura Hills for more than a year.

“We are trying to take what people enjoy and make it better,” said Brent Imai, vice president and general manager of ACTV Entertainment, a subsidiary of ACTV Inc.

The service, which can be more appropriately described as “customized television,” allows viewers to choose “what they want to see, when they want to see it,” Imai said.

So far, ACTV is offering enhanced viewing with only a handful of programs--”Prime Sports,” CNN’s “Prime News” program and a game network.

While watching “Prime Sports,” for instance, the viewer, armed with a simple remote control, can play trivia quizzes, request game stats, watch interviews with players or use the Starcam feature--a camera that follows a star player throughout the game.

“The stuff you used to get at halftime, you can now get any time,” Imai said.

On CNN’s “Prime News,” ACTV viewers can also play news quizzes, as well as select expanded coverage on a particular news story, and view poll results and special interviews. ACTV subscribers can also play such games as roulette, blackjack and chess on their television screens.

TCI, which charges $26.85 for basic cable service in Thousand Oaks, is expected to offer the premium ACTV service for about $10 extra.

But both mainStreet and ACTV have received mixed reviews in their test markets.

“I watch ‘Prime Sports,’ ” said Richard Enoch, a Mercedes-Benz mechanic from Calabasas, one of ACTV’s test customers who watches an average of 15 hours of television each week. Enoch, a sports fan, said he enjoys the game stats, the Starcam and the trivia quizzes. “It makes the television experience a little better,” he said.

But the instant-replay feature is not as good as the one he already gets on his $3,500, 52-inch television, Enoch said.

“ACTV will replay what you just saw and then continue with the game. On my system, I can watch the replay as many times as I want,” he said.

His 15-year-old son, Dallas, has played several of the games offered on ACTV but has quickly tired of them, Enoch said. “Everything that is on it, like blackjack and roulette, are all the same since I first got the service,” he said. “It gets old. You watch enough times, and you have it all figured out.”

The service has been free so far. If the quality remains as is, Enoch said, he wouldn’t pay extra for it. But if the games changed, he would be willing to pay between $25 and $30 each month for the service, he added.

Although they say the service has been well received, TCI and ACTV are keeping details of the market test results secret. And the delay in the launch date, which was originally slated for March, may signal that the service needs fine tuning.

By comparison, GTE’s mainStreet, which has been tested extensively in Cerritos, as well as in areas of San Diego County and suburban Boston, is considered more high-tech. But it has also met with some resistance.

Some services, such as video on demand, have failed to catch on because viewers still prefer to go to the local video store to rent a movie. And other services, such as home shopping and some games, are now available through the Internet.

Unclear about how their services and prices will stack up against each other, GTE and TCI are hoping to remain competitive by offering good customer service.

“We are going to position ourselves as the local cable company,” said TCI’s Deutsch, whose company offers free cable service to area schools.

GTE officials say they will beat the competition with better image quality. They also tout the company’s experience maintaining 16 million telephone lines.

“The same quality of service will be used to monitor our cable television network,” Wilson said. “We will be able to fix glitches before they impact the customer.”

In any case, GTE officials say they are ready for the uphill battle to sign customers who now get their cable service through TCI. Their marketing will include direct mail, door-to-door sales and possibly a demo on wheels--a van equipped with a video center that will travel around to community events and shopping centers allowing area residents to see for themselves what the service looks like, Wilson said.

GTE selected Thousand Oaks, as well as Tampa, Fla., to launch its $250-million foray into cable television because the affluent community would be able to support the quality service the company hopes to provide, Wilson said. Company officials also perceived TCI as a strong competitor that would allow GTE to gauge its competitiveness.

GTE, which has already received approval to provide cable service in unincorporated areas of Ventura County, plans to seek approval for franchises in areas of Ventura County where it offers telephone service, such as Oxnard, Camarillo, Santa Paula and Port Hueneme. The company plans to reach 7 million customers in 66 markets across the country by 2004. TCI, based in Englewood, Colo., now serves 12 million customers nationwide.

But in the long term, the outcome of the battle is about much more than cable service. The telecommunications bill, which allows local and long-distance telephone companies, as well as cable companies, to get into each other’s business, is about to usher in a future when an array of information services will be offered by the same company.

And the so-called one-stop shopping for local and long-distance phone service, cable, Internet access and other data services, may come to Thousand Oaks before long.

“We are going to be in all those businesses,” Wilson said. That will be the only way to stay competitive, he added. Through a cable modem service, the company hopes to provide Internet access that will be more than 10 times faster than current modems, he said.

TCI is developing similar plans. The company has begun talks with several Internet access providers, Deutsch said, adding that TCI is also considering providing local and long-distance phone service.

“Our infrastructure can support telephone service,” he said. “We hope we’ll do that in Ventura County in the future.”