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Navigating Main Street: A User's Experience with Interactive TV On the way to the information superhighway, interactive television can be seen as the noncomputer user's on-ramp. Home entertainment, we believe, […]

A logical way to speed up data transfer in a publishing business is to get a faster network, such as fddi, atm or Fast Ethernet. However, this will help only […]

Electronic Delivery of Ads; Newspapers of the Future We've been hearing, thinking and writing about the digital, online "newspaper of the future" for so long that it is almost anticlimactic […]

Approaching a show such as Digital World from a publishing perspective is not an easy task. On a show floor that is dominated by the noise and lights of Nintendo-like […]

Craig O. McCaw, founder of McCaw Cellular Communications, now runs a small start-up, ALAACR Communications Inc, which has been attracting attention among the telecommunications industry as they bid in the high-stakes auction of personal communications services (PCS). McCaw gained nearly $1 billion in stock from the sale of McCaw Cellular to AT&T in 1994, and is set to re-enter the wireless arena via PCS. The FCC recently auctioned 99 PCS licenses in 51 markets, but many of the larger telecommunications companies were outbid in early rounds by McCaw. Rivals speculating on McCaw's role in the PCS licensing auctions claim he may be a stalking horse for AT&T, driving up license pricing. McCaw is AT&T's largest stockholder with 17 million shares. Others speculate he may be acting as middleman, trying to get a few licenses to sell at a huge premium.

Bell Atlantic wants a federal court to proclaim its business practices are not abusive toward MFS Communications Co, attempting to silence a vocal critic and possibly uncover an antitrust suit. The unusual move may force MFS to reveal any antitrust actions it has planned against the regional Bell company. MFS offers local phone connections for long-distance companies and larger corporate customers in competition with regional Bell companies. MFS has publicly denounced Bell Atlantic's business practices as anticompetitive for the last 18 months, first beginning in Jan 1994. MFS officials dismissed Bell Atlantic's action as an attempt to gag a competitor and has indicated plans to continue to speak out against Bell Atlantic's alleged anticompetitive behavior.

Cellular One customers in NY will have to dial a four-digit security code before making a phone call to stop the spread of cellular phone fraud. The campaign is part of an effort by industry officials losing monies as a result of an increasingly sophisticated scam. The Fraud Task Force of the Cellular Telecommunications Industry Association claims most of the previous technological fixes have been ineffective. Cellular phone operators lost $482 million to fraud in 1994, a 32% increase over the previous year. The lost revenue amounted to 3.7% of the industry's $13 billion revenue in 1994. The industry's largest problem is trying to get federal and local prosecutors to understand that money is being lost, not just air time. In NY, Cellular One is mandating new and old customers use security PIN codes, which are free of charge.

Sony Corp and Microsoft Corp are announcing a broad partnership to develop hardware and software for interactive TV and other multimedia applications, starting with set-top boxes for video on demand. The venture is also expected to produce other services that rely on new high-speed network technologies and special database server software for the fledgling market. Some of these interactive products are slated to be tested in Microsoft's laboratories later in 1995. Sony and Microsoft say they expect set-top boxes to be ready by 1996, but a Sony insider claims it may take longer. The Sony Microsoft venture is one of the most powerful to date, aimed at exploiting the convergence of entertainment and communications technology. Microsoft spends $100 million annually on the development of interactive technologies and has some pieces of its proposed plan, its Tiger server software, in place.

A number of issues dealing with the allotment and regulation of telephone numbers are causing heated battles between local Bell companies and their rivals. The local telephone companies that have control over phone numbers contend that they do not have the technology that would allow them to transfer numbers to a competitor easily. However, the FCC and some state regulators are skeptical about such claims and are taking a closer look at the issues involved. The debates between local Bell companies and their rivals are expected to become more complex as Congress attempts to open telephone services to more competition. Competitors have discovered that most potential customers are not willing to change their telephone numbers in order to obtain cheaper rates and better service.

Under a plan that will be introduced by Senate Republicans, regional Bell telephone companies will be allowed to provide long-distance service by 1998. Other provisions of the proposed legislation include easing the restrictions on the manufacture of telephone equipment, allowing electric utilities to provide fiber optic service, and enabling local telephone operators to provide video services. Under the GOP proposal, Justice Dept oversight over the seven 'Baby Bells,' as established by the 1982 consent decree, is reduced. The GOP proposal stresses cooperation among the Bell companies and potential competitors, and intends to reduce state barriers to local telecommunications competition. AT&T lauded portions of the legislation which facilitate the entry of long-distance companies into the toll-call service market, but expressed concern over the time frames established by the proposed legislation.

Sprint Corp and three cable television providers purchased 49% of American Personal Communications Inc, a high-profile wireless venture run by the Washington Post Co, which may place the carriers a leg up in the hotly contested wireless personal communications services (PCS) arena. Sprint and its partners acquired their stake for $23 million and may begin offering services as early as fall 1995. American Personal Communications is one of three entities given 'pioneer-preference' licenses for PCS from the federal government. New services will be marketed in the Washington-Baltimore region using the well-known Sprint brand name. American Personal Communications' officials say the new services will cost less than current cellular phone services.

MCI Communications Corp is revealing on Nov 21, 1994, its plans to begin offering a wide range of Internet services by early 1995. Called 'internetMCI,' the initiative will provide both consumers and businesses with Internet access, including fiber-optic hookups for businesses that desire it. Also part of the plan are an online shopping mall called 'marketplaceMCI' located on the World Wide Web. Thanks to easy-to-use software being developed by MCI partner Netscape Communications Corp that is similar to the Mosaic browser currently in use, marketplaceMCI will make it convenient for consumers to use their credit-card numbers to purchase goods and information over the Internet. MCI will face a host of competitors in its Internet initiative, including not only traditional rivals AT&T and Sprint Corp, but also a large number of bargain-basement access providers who typically operate out of their garages.

Numerous British and US companies have joined British Telecommunications PLC (BT) in its 1995 trial to market interactive video services. The trial will be the largest in Europe, including 2,500 paying customers. The large number of new companies joining the trial has prompted BT to delay the test by at least six months to mid-1995. The BT trial will offer more services than most US trials. BT has been able to set tough terms for participating companies due to the number of companies interested. Some companies will provide programming and cash. The difficult negotiations are only a hint of what will come if the trial is successful and BT launches a commercial service later in the 1990s. Five TV broadcasters, for example, are collaborating on the trial but would likely compete for programming in a commercial service.

The Williams Cos' WilTel subsidiary is increasing its influence on telecommunications markets and has become a force to be reckoned with for rivals AT&T, MCI and Sprint. WilTel has invested close to $1 billion in a fiber optics network installed in decommissioned fuel pipelines and obtained $1 billion in 1993 revenues, or 39% of Williams Cos' overall revenues. LDDS Communications Inc has made a takeover bid for WilTel, offering $2.5 billion for the fiber optics firm. Wiltel is also expanding into frame-relay communications services, where it has a 20% share in this small but rapidly growing market. Some of WilTel's technologies may be ahead of their time. For example, the company has only about 20 subscribers to its ATM service, which transmits data much faster than frame-relay service.

Time Warner is planning to offer telephone service to businesses in New York City in an effort to compete with the regional telephone company Nynex Corp. Time Warner owns the largest urban cable-television system in New York with one million subscribers. The announcement suggests that cable companies will likely present a challenge to the regional Bell operating companies. Time Warner has already developed a business partnership with US West. That company owns a 25% share of Time Warner's cable and film entertainment division. An initial offering will be developed by 1995, providing alternate access service that will provide connections between businesses and long-distance companies. Time Warner will develop a 22-mile fiber-optic network in Manhattan in order to offer the services and will use an AT&T digital switch to handle network traffic.

Sprint Corp, Tele-Communications Inc (TCI), Cox Enterprises and Comcast Corp are forming a joint venture to develop a wireless network service that will compete with similar services to be offered by the regional Bell companies and AT&T. The deal will allow the new joint venture company to offer both long distance telecommunications service and cable service, both services that the regional Bells are currently prohibited from offering. AT&T has not been able to develop a deal with any cable companies yet. Sprint will own 40% of the new company, TCI will own 30% and Comcast and Cox will each own 15% of the company. The deal is part of the current trend of telecommunications, cellular service and cable companies racing to sign partnership deals in order to meet an Oct 1994 deadline set by federal regulators. Companies must file their intent to merge by the end of that month to be eligible for an auction of wireless frequenies.

Bell Atlantic, Nynex Corp, U S West and AirTouch Communications are teaming to form a nation-wide cellular network of wireless services and are continuing efforts to draw MCI Communications into the venture. The deal comes on the heels of a recent announcement that Sprint Corp is close to unveiling a similar network alliance with TeleCommunications Inc, Cox Enterprises and Comcast Corp cable companies. The activity is part of a rush to establish multi-billion dollar alignments to compete for federal licenses for personal-communications services (PCS) by the end of Oct 1994. Bell Atlantic, Nynex, U S West and Pacific Telesis spinoff, AirTouch, will establish a partnership and jointly invest in building a new generation of PCS instead of merging assets or exchanging equity. The partnership will be directed by a board of members from the four Baby Bells.

Four large telecommunications companies are reporting mixed financial results despite a rise in operating performance due to strong growth in cellular services and lower cost structures. Bell Atlantic's revenues rose to $3.42 billion from $3.29 billion, a 3.8% increase, and the company's number of wireless service subscribers rose to nearly 1.5 million, an increase of 58%. Pacific Telesis Group reports a decline in revenue from $2.34 billion to $2.33 billion, and a rise in profit from continuing operations from $307 million to $314 million. GTE reports a slight revenue increase from $4.94 billion to $5 billion and a growth of 4% in the company's telephone business. Ameritech reports a 5.9% increase in revenue from $2.95 billion to $3.12 billion and an increase in cellular service subscribers of 51% to 1.1 million subscribers over a one-year period.

Bell Atlantic, Nynex Corp, U S West Inc and AirTouch Communications are planning to form an alliance to offer wireless services while plans for a strategic alliance between Bell Atlantic, Nynex and MCI Communications have run into problems. The deal with MCI is having problems as a result of disagreements between the companies about how to value the MCI brand name. The proposed deal would have Bell Atlantic and Nynex merging their cellular businesses and U S West and AirTouch merging their cellular businesses. If the four merge, they would create a wireless service that would be able to effectively compete with the merger between AT&T and McCaw Cellular. The four companies will be able to bid together for lucrative federal licenses for personal communications services that will be auctioned in Dec 1994. Companies must declare their intent to merge by the end of Oct 1994.

U S West is continuing its move into the interactive video arena by teaming with seven major Hollywood Studios, including Warner Bros and Paramount Pictures, and Visa to provide a new entertainment information service. U S West has signed agreements with Paramount, Warner Bros, Columbia Pictures, Twentieth Century Fox, MCA, MGM/United Artists and TriStar Pictures to supply interviews with celebrities, local movie listings, and promotional programming for the network. The Visa credit-card consortia has signed on agreeing to advertise its wares on the new service, which will be called GOtv. GOtv will be supplied free of charge, with advertising revenues footing the bill. GOtv will be unveiled in Orlando, FL in spring 1995. Customers will be able to make dinner reservations and purchase movie tickets at home via an interactive set-top box.

Southwestern Bell Corp is attempting to sell Hauser Communications to a larger operator less than one year after it became the first regional phone company to purchase a cable system. Southwestern Bell has talked to possible buyers, including Jones Intercable and Comcast Corp, about selling Hauser, which it purchased at the high end for $650 million. Two cable systems serving 220,000 subscribers were included in the deal. The phone company is looking to sell Hauser, but whether it is gauging interest or actually discussing details with buyers remains uncertain. The sale of the cable system could prove problematic for Southwestern Bell due to a provision in the 1992 Cable Act, which forbids 'flipping' properties soon after purchase. Unloading Hauser would indicate a quick departure for Southwestern from the cable industry, marking the speed with which strategies can change in a rapidly evolving market.

Regional Bell phone companies will need to intensify their efforts with legislators and state officials to garner softer regulatory restrictions and enter new business arenas as a result of the failed telecommunications bill. Experts proclaim Baby Bell and other local phone companies may be the hardest hit by stopping the legislation. Regional Bell companies will continue to be prohibited from entering the long-distance segment, while competitors continue to chip away at the best markets. The Bell companies will lose toll call and access fee market share over the next few years. The cable TV industry is also affected because the proposed bill would have removed regulatory restraints that prohibit cable companies from providing network phone service. The legislation would have granted greater freedom in using the spectrum and created a opportunity for electrical utility companies to offer phone service.

The Congressional Budget Office (CBO) has failed to recognize a huge tax on the telecommunications industry that could cost companies as much as $20 billion. Senator Ernest Hollings has written the Communications Act of 1994 to include any telecommunications and information services, even interactive video, as universal services. These services must be provided at reasonable and fair rates to all Americans, including those in rural and hard-to-reach areas, forcing the companies to pay substantial sums to the FCC to subsidize the offering of these services. These sums could be as high as $20 billion but the CBO does not want to call these costs taxes because of the stigma attached to the idea of increased taxation. It may be reasonable to expect the telecommunications industry to help provide telecommunications service to all Americans but not to subsidize the provision of such services as interactive home shopping to people in middle- and upper-class rural areas.

The International Maritime Satellite Organization (Inmarsat) has commenced a project to finance a $2.6 billion Inmarsat-P 12-satellite cellular phone communications system scheduled to begin offering services in 2000. Inmarsat has pledged $150 million of its own funds for the system and hopes to raise $1 billion in the first phase. Inmarsat counts major telecommunications entities among its shareholders, including British Telecommunications PLC and the Kokusai Denshin Daiwa Ltd company of Japan. However, Motorola is a part of the rival Iridium project, which has already raised $1 billion to fund a 66-satellite communications system slated for completion in 1998. Other telecommunications and satellite companies have been readying projects. These competitors are attempting to block Inmarsat's effort by lobbying the US government.

MCI Communications has unexpectedly cancelled its $1.36 billion bid to purchase 17% of wireless service provider Nextel Communications Inc. Nextel is now scrambling to keep the communications giant interested, but the deal is complicated by another player: Motorola. In early Aug 1994, Motorola agreed to sell its radio-dispatch portfolio to Nextel for $1.7 billion worth of stock. With this deal, Motorola would effectively gain some 21% of the company at a substantially lower price than MCI had agreed to for 17%. MCI's actual share with the Motorola deal would have been reduced to 13%, while holding steady in price. MCI officials called meetings to resolve the situation, demanding a 10% to 20% discount of the $36-per-share agreement. Motorola, meanwhile, expressed concern that such a move would devalue Nextel stock. The three firms are continuing discussions.

Unisource NV, a Dutch-based telecommunications company, may be forming a partnership with AT&T as part of its effort to improve its trans-Atlantic services. Although neither company has provided any details on the possible partnership, Unisource has confirmed that AT&T is one of the companies under consideration. Unisource Pres Viesturs Vucins reports that the nature of the partnership could involve a commercial contract, joint venture or equity investment. AT&T reports that there have been a number of conversations regarding Unisource's recent agreement to join WorldPartners Assn, a consortium for worldwide business communications. An AT&T-Unisource partnership would significantly boost AT&T's position in the $128 billion Western European telecommunications market. The deal is far from certain, however, partly due to the concern expressed by Unisource shareholders.

Six major cable TV companies have released a request for proposals to more than 100 equipment vendors seeking expertise in building systems to send and receive telephone transmissions over cable TV networks. The six companies include Time Warner Inc, Viacom Inc, Continental Cablevision Inc, Comcast Corp, Tele-Communications Inc and Cox Enterprises Inc's Cox Cable Communications unit. The cable companies plan to spend about $2 billion on the project. However, it may be years before a cable-based telephone service is available because the technology needed to transmit telephone signals via cables is still being developed. The coaxial cables carrying pay TV service into most homes have greater communications capacity than copper telephone lines.

The planned joint venture between British Telecommunications PLC (BT) and MCI Communications Inc receives approval from the European Commission under European Union (EU) antitrust laws. Two conditions are included with the EU's approval to protect competition in the market of enhanced and value-added telecommunications services, which is growing rapidly. Analysts say those provisions are minor. BT is to own 75% of the alliance and MCI will own 25%. BT will purchase a 20% stake in MCI for $4.3 billion as part of the agreement, making it MCI's largest shareholder. The joint venture proposal was approved by the US Justice Dept in Jun 1994 and the FCC has also given its approval.

Ing. C. Olivetti & Co, led by 59-year-old Carlo De Benedetti, is incorporating telecommunications in its line of business. The Italian company, which began as a maker of typewriters, is at work on a cellular-telephone network in Italy that will enable it to offer satellite-communications service across Europe. The network will also position Olivetti to enter the Internet service market as well as other on-line electronic communications service markets. The company is looking to align with a major telecommunications company, according to Olivetti Vice Chmn Elserino Piol. The company intends to select a few choice segments in the market for business communications instead of making itself a full-service competitor to the state phone company.

The FCC is receiving some sizable bids in the first round of auctions for narrowband airwaves for personal communications services. Sources report that the offers for the 10 available licenses have reached the $500 million mark, well above the $50 million figure that had been expected by industry analysts. Among the companies competing for the licenses are BellSouth, US West, AirTouch and McCaw Cellular Communications. The licenses will enable licensees to offer a variety of services to customers including two-way paging, digital data transmission and wireless voice-mail functions. Some industry watchers, however, are concerned that the elevated prices being generated for the licences, combined with the high cost of installing the wireless networks, will mean that such services will be priced well over the $40 monthly fee that had originally been anticipated by the industry.

Telefonica Internacional de Espana pays $2 billion to acquire a 35% position in Peruvian telephone companies, Peruana de Telefonos and Empresa Nacional de Telecommunicaciones de Peru SA. The $2 billion offer was more than double that of rival bids submitted by two US telecommunication firms GTE and Southwestern Bell. Telefonica Internacional CEO Ignacio Santillana believes that the gap in the bid prices is due to the US firms' failure to adequately grasp both the perils and rewards of operating in Peru. He believes the political situation in Peru is more stable than in the past and cites a drop in Maoist-backed terrorism. He also believes that the Peruvian phone market is poised for growth and that the number of lines in Peru should grow from 2.6 to at least seven per 100 people. The Peruvian acquisitions are also part of Telefonica de Espana's strategy to expand its customer base in South America. The company has made similar acquisitions in Chile, Venezuela and Argentina since 1989.

The FCC approves a $4.3 billion investment in MCI by British Telecommunications PLC (BT), the United Kingdom's largest telephone service provider. The investment will give BT a 20 percent stake in MCI. The commission imposes restrictions on the investment which will prevent BT from giving MCI favorable contracts over other US long-distance telephone carriers. The FCC also forbids MCI from receiving any concessions from international telephone carriers and requires the company to place information on its telephone traffic in the public domain. The company will give the commission information on its quarterly revenue regarding the amount of messages and minutes of calls it handles between the US and the United Kingdom. The FCC also approves BT's and MCI's application to jointly operate Concert, a company to manage the international telecommunication services of companies.

Eunetcom SA, an international telecommunication service provider, is slowly increasing its share of global telecommunication services management contracts. The company is a joint venture between French and German telephone companies that started in Oct 1993. Industry analysts estimate it has invested between $20 million and $30 million to gain contracts worth in excess of $300 million by 1999. Company executives expect to announce additional contracts during the summer of 1994. The company and its competitors are using standard consumer advertising to differentiate their services from one another. Some are using aggressive advertising campaigns, while others are trying to sign up the most international telecommunications partners. Its main competitors, AT&T and MCI, have 10 and 19 management contracts respectively.

LDDS Communications Inc is negotiating to buy IDB Communications Group Inc, an international satellite-based phone carrier. The final purchase could be valued at $700 million, and the companies are considering an all-stock trade. LDDS CEO Bernard Ebbers is not giving details on the talks. LDDS, the fourth largest long-distance phone carrier, may be in competition with at least four other companies interested in buying IDB, according to sources close to IDB. LDDS attempted to buy WilTel Communications, of Tulsa, OK, making a $2 billion offer that still stands, according to Ebbers. Analysts are dubious about LDDS' ability to afford both deals.

Whale Securities, a small NY brokerage firm, has been aggressively marketing Cellular Technical Services stock. However, some analysts say the value of Cellular's stock may follow a pattern similar to other Whale offerings, remaining high for a time before entering a rapid, permanent decline. Cellular has had flat sales of $5 million in both 1992 and 1993 for its specialized products which enable cellular phone companies to monitor customer accounts and identify fraudulent use. Cellular's market value at the close of Nasdaq on Jul 8, 1994 was 13.75, which is equal to $132 million, or more than 26 times its annual sales. Most stock is sold for less than one times sales. Whale analysts say Cellular may become profitable in 1994 because the company may win a major contract from McCaw Cellular Communications. However, estimates of the contract's value vary widely. A high-profile investor associated with financier Michael Milken has also sold 285,000 Cellular Technical shares between May 5 and Jun 9, 1994, which some experts say is cause for alarm.

AT&T has obtained a UK communications license which will enable the company to market its WorldPartners global network services to multinational corporations operating in Great Britain. AT&T plans to begin installing switching equipment and leasing lines to corporate customers immediately. The WorldPartners program involves 10 international phone companies jointly offering a range of services to huge global conglomerates. AT&T has struggled since May 1993 to acquire operating privileges in the UK in order to better compete with British Telecommunications PLC (BT). BT has recently obtained US Justice Dept approval to acquire 20% of MCI Communications for $4.3 billion. AT&T has been able to supply data communications services in the UK through it AT&T-Istel Ltd subsidiary, but will now have a stake in voice communications, which comprise 80% of the UK market. BT says AT&T now has more room to operate in the UK than BT has in the US.