Telecom Breaks Into Show Biz

Hollywood is full of video producers, turning out everything from commercials and "X-Files" episodes to the dazzling special effects in feature films. But once their wizardry is complete, their work often reaches its destination via low-tech transport: messengers on motorcycles.

Now the state's largest phone companies are touting new high-bandwidth networks they say will enable studios and post-production firms to transmit digitized video across town--or across the country--almost as easily as electronic mail traverses the Internet.

Armed with the new services, Pacific Bell and GTE are squaring off in an attempt to capture new business with the entertainment industry just as it makes the pivotal shift to digital technologies from the analog equipment that still dominates parts of the broadcast and Hollywood businesses.

The entertainment industry--spurred on by improved technology and looming federal mandates for digital broadcast signals--is stepping up its shift to digital in nearly all phases of the business.

There is also a push to move to digital distribution, which could enable the nation's movie theaters to receive films over a network, eliminating the mass shipment of prints.

On the production and broadcasting side, where the phone companies are focusing their sales efforts for now, the graphics, filming and other work is often spread out across town, across the country and sometimes overseas. Linking up those locations with ease, and at a reasonable cost, could make remote video editing and review immediate and commonplace, saving both time and money.

Bent on becoming players in the new fully digital Hollywood, both phone companies have been digging up streets and laying fiber right through each other's home territories--boundaries that have prevented GTE and PacBell from competing against each other for more than a decade.

With the deregulation of telecommunications, the old phone boundaries are crumbling. And while the companies downplay the competition, it's clear the Southern California entertainment industry has become the focal point of an aggressive, rare head-to-head battle between the two firms.

GTE, for example, has spent more than $10 million on equipment and a new fiber-optic network that stretches well into PacBell regions such as downtown Los Angeles, Hollywood, Burbank and Glendale. About 60% of GTE's target market for video is beyond the company's traditional Westside turf.

"This is one of the largest initial investments we've made to roll out a non-dialtone service," said Lyle Watkins, head of branch sales engineering for GTE. "It is a strategic corporate decision to go after this market, and we have not considered franchise boundaries or where GTE used to be able to play and where PacBell used to be allowed to play."

PacBell says it has invested "a few million dollars" laying fiber under Olympic Boulevard and other streets to hit the heart of Santa Monica's thriving entertainment and advertising communities.

Aiming to Become Full-Service Providers

It's not hard to see the attraction: Hollywood is a potentially valuable business trophy for any firm. In addition to the bragging rights and publicity that come with serving such high-profile customers, the phone companies also are eyeing a big chunk of business.

And as television and movie studios branch out, their enterprises increasingly include major operations in both GTE and PacBell service areas.

Both companies hope to become full-service providers to the entertainment industry, supplying everything from video to phone, data and Internet services. GTE and PacBell also hope to expand their video networks to serve business-to-business videoconferencing, distance learning and other markets.

"There is no other industry within Southern California that is larger for PacBell than the entertainment industry," said Bill Powers, the company's vice president of priority markets. "It's the No. 1 or No. 2 business in terms of volume in Los Angeles."

With their latest offerings, PacBell and GTE are promising big benefits for the entertainment industry. But many in the business have heard it before.

Over the years, PacBell, GTE, MediaOne and others have periodically rushed forward with video projects with such fancy names as Media Park, HollyNet and Studio of the Future--each promising the entertainment industry the ability to send and edit video from multiple locations without the expense of satellites or the use of motorcycles and Federal Express.

But those early attempts failed to revolutionize the industry or even supplant its tried-and-true ground transportation, especially for works whose quality suffers when squeezed through phone network pipes.

"The bottom line was, they didn't listen to what the customer wanted," said Jim Fancher, chief science officer at Pacific Ocean Post, a post-production firm that has participated in several phone company projects over the years. Some projects were too costly, and others just didn't deliver anything Hollywood wanted or needed, Fancher and others said.

"I know that there were huge investments to do this before, and I believe that [the companies who tried it] took it in the shorts," said Michael Walker, director of long-form editorial at Todd-AO Hollywood Digital, a post-production firm based in Hollywood. "But if you want to serve our industry, we need big pipes, and we really want to have the best service for minimal cost."

Undaunted by earlier missteps, PacBell and GTE are betting big that they've got it right this time. Both companies have spent millions of dollars to piece together special networks capable of high-speed video transmission--at 270 megabits per second--without the complexities and hassles of compressing and decompressing images in the process.

The new service far outpaces the current standard of 45 megabits per second, which is the peak speed offered in most areas of the country. The slower speed requires compressing and decompressing the images for transport, which degrades the quality, and often demands special translation software to allow different brands of equipment to talk to one another.

Customers are welcoming the stepped-up competition for their business. Fox Sports Net is one of them.

The broadcasting firm is setting up a new all-digital multi-studio facility in Marina del Rey. In an attempt to win the business, GTE, PacBell and MCI WorldCom have offered to run extra fiber to the building for free, according to Robert Dutcher, director of broadcast and technical operations for Fox Sports Net and Fox Sports International.

Facing Competition From Other Fronts

Other companies also are eager to get a foothold in the video transport business. Among them: traditional phone companies such as AT&T; and video specialists ranging from long-haul carrier Vyvx, to WamNet, a firm backed by MCI WorldCom that aims to become a worldwide video transport hub.

Vyvx, for example, is finding ways to bypass the local phone companies completely. The company recently ran a big fiber pipe into the Fox Digital lot, where the company produces NFL football games, among other things, according to Dutcher. He said the move probably cut the local phone company out of 30 to 40 local lines.

WamNet has snagged several local deals, including transporting movie trailers for Universal to a New York advertising agency for "creative review"--a process that takes a few minutes instead of more than a day through mail and messenger.

The phone companies also must keep a wary eye on fiber-rich entities--ranging from Enron, the Los Angeles Department of Water and Power and even the city of Burbank--which could offer to sell excess capacity to entertainment companies and others.

Even if PacBell and GTE capture that business, keeping it is no sure thing. While the lure of uncompressed video transmission may be tempting, few companies will sign up if the price is too steep or the network doesn't cover the right locations.

In fact, many post-production shops only occasionally need the quality and speed offered by the phone companies' 270-megabit services, according to Fancher of Pacific Ocean Post.

"I'm recommending hooking up all our sites on a full-bandwidth network because that provides the most bang for the buck," Fancher said. "But a lot of the people that participated in these trials and tests have been unable to make a business case for it."

PacBell's AVS-270 service, introduced last September, is priced based on the distance of the connection. It will cost Fancher's firm about $1,200 a month each way, plus there are switching fees for changing the routing and other add-on costs if he needs to translate the signal to match equipment on the receiving end of the transmission.

For PacBell, the price is cheap compared with what it could get by selling the same bandwidth as phone lines. A 270-megabit pipe is equal to more than 3,000 individual voice circuits, which phone companies could easily sell for more than $10 each--raking in revenue of $30,000 per month, more than 12 times what it will get from Fancher for the same capacity.

GTE, which unveiled its new video services at a showy open house in April, plans to begin selling them in the next two months. The company hasn't yet disclosed its prices.

"It is a tough industry, and we've taken our lumps, but I think we've learned from our mistakes," said GTE's Watkins. "We've done our homework, and we are giving the industry what they've wanted for a long time."

Speed Seen as Most Important Factor

Yet Fancher and others said they will only buy the high-speed service to have dedicated links to certain key spots, such as Universal and the other big studios. The rest of their connection needs are short-term, and the locations vary from project to project--making it hard to justify the high price of the 270 service compared with a $50 tape run via motorcycle messenger.

When time is critical, however, the speed of a 270-megabit connection will be worth the cost, industry experts say.

Todd-AO Hollywood Digital, for example, creates a lot of movie trailers for Universal. Often there are tight deadlines and multiple versions of the movie advertisements to be approved by the studio and then sent to television stations nationwide.

In those cases, the 270 service could save an hour, according to Todd-AO's Walker. "That doesn't sound like a lot of time, but if you've got lots of television stations waiting, and you've booked satellite transmission time, it can be crucial," he said.

Industry experts are unsure which phone company is better situated to win the Hollywood and broadcast video business. Both companies have long histories in broadcast video, with experience handling Olympic, Emmy and Oscar coverage and the like.

PacBell has longstanding business relationships with big studios in Hollywood, which falls within its franchise boundaries. But GTE's territory includes Santa Monica, where many studios and others have set up additional operations.

Alan Hart, executive vice president of Modern Videofilm, a Burbank post-production firm, is encouraged but cautious about the emerging phone-company services.

"The phone companies are trying, but it's a difficult business model for them, and their whole world is changing," he said. "But they need to be able to move a lot faster."


Times staff writer Elizabeth Douglass can be reached at

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