Bell Atlantic Corp., apparently choosing technological sophistication over rapid deployment of a network to offer TV programs over telephone lines, asked the Federal Communications Commission yesterday to put its applications to build the system in Baltimore and five other major markets on hold.
The move will push back the day when Baltimore residents can look to the phone company to provide a second video xTC connection into the home to compete with local cable TV monopolies. But it also signals an apparent decision by Bell Atlantic to build a fully interactive network rather than the cable TV-like system it had originally proposed.
Eric Rabe, a spokesman for the Philadelphia-based phone company, emphasized that Bell Atlantic was suspending, not withdrawing, its application to build a high-speed, high-capacity (broadband) network.
"We're going to build a broadband system and we're going to pass millions of customers with it by the end of the decade," said Mr. Rabe. He said the company would take a couple of months to consider its technological options and draft a new application.
Mr. Rabe acknowledged that the technological review would delay its deployment of a wired network in the Baltimore area, but he said the company still expects to begin construction in late 1996 to mid-1997 -- almost a year later than it had projected.
The move does not mean cable companies are getting a reprieve from competition. Mr. Rabe said one of the critical factors allowing Bell Atlantic to slow its network deployment was its decision last month to offer up to 150 channels of video programming in Baltimore and other cities next year through an emerging medium known as "wireless cable."
Ironically, the decision to seek a postponement comes as the commission was in the last stage of acting on Bell Atlantic's two long-delayed petitions -- known in the industry as "214" applications. The original 214s were filed in June, and company officials all the way up to Chairman Raymond Smith had complained about the FCC's drawn-out process before Bell Atlantic itself short-circuited a decision.
Besides Baltimore, the metropolitan areas for which Bell Atlantic had filed 214 applications were Washington; Philadelphia; Norfolk, Va.; Pittsburgh; and northern New Jersey.
Mr. Rabe said Bell Atlantic's turnabout was prompted by drastic changes in the development and pricing of new technologies over the course of a year.
Last spring, Bell Atlantic announced it would build the bulk of its "full service network" using a system called "hybrid fiber-coax," or HFC. This combination of modern fiber-optic cable and the coaxial cable that serves many homes today was seen as an economically viable compromise between the low-end copper-based system known as ADSL and the high-end digital video system known as fiber-to-the-curb, which offers higher quality and two-way video interactivity.
Last year's decision reflected the conventional wisdom in the industry at the time. But over the course of the past year, the technological tides have turned.
Mark Wegleitner, Bell Atlantic's vice president for the broadband media network, said the company discovered that the bands of HFC that carry voice traffic from the home back to the network were susceptible to "noise" that degraded signal quality. Meanwhile, the price differential between HFC and fiber-to-the curb was narrowing.
Mr. Rabe did not say definitively which technological course Bell Atlantic would choose, but he strongly hinted it would be fiber-to-the-curb.
FCC Chairman Reed Hundt praised Bell Atlantic's apparent decision, which is in line with the commission's preference for a system with greater interactive potential than the one the company originally proposed.
"We think it's very important for the country to have ultimately a common carrier of video, voice and data in the digital world," said Mr. Hundt. "If Bell Atlantic is rethinking its application to come up with a better idea to be that carrier, it's great for the country."