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The Baby Bells Take Their First Steps In Tinseltown

Industry Outlook -- Services: MEDIA/ENTERTAINMENT


As he stood before his shareholders at Ameritech Corp.'s annual meeting, chatting via a video hookup with Mickey Mouse, Chief Executive Richard C. Notebaert left little doubt that the telephone companies' pin-striped world had definitely gone Hollywood. In 1996, in a wide swath of head-to-head confrontations from San Diego to Chicago, the Baby Bells intend finally to launch their attack on the cable-television industry.

The sweeping telecommunications bill in Congress would allow phone companies to challenge cable operators outside their home markets immediately, and within their regions once they prove their phone business faces competition. At first, phone-company offerings won't look all that different from what TV viewers get now by handing over $40 to $50 each month to their local cable companies. Down the road, however, the phone companies hope to beat the cable companies to the interactive market with such features as home shopping and games. "The idea is to outdo the cable companies, not just match them," says Howard Stringer, chairman of the Tele-TV venture that includes three of the seven Baby Bells.

First off, the telcos plan to offer more channels. In Glendale Heights, Ill., Ameritech's network of optical fiber and copper cable will offer 90 channels, compared with the local cable operator's current 60. In Riverside, Calif., where the 90 channels will be delivered over the air through a system called wireless cable, the reception is expected to be sharper. With only 15% of Riverside County receiving cable, Pacific Telesis Group expects to make inroads by stuffing marketing literature into the weekly phone bills it sends in the area.

The telcos won't lack programming firepower, either. Walt Disney Co., a partner with three of the Baby Bells and GTE Corp. in another joint venture, has assigned top animators to work on tailor-made programming, including a souped-up on-screen guide. As for Tele-TV, Stringer says it has a production facility ready for action. For phone companies, Hollywood will be quite a change from selling call-waiting service.By Ronald Grover in Los Angeles

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