Two Bell Units Back Away From TV Plan
By MARK LANDLER
ell Atlantic and Nynex, which announced a $22 billion merger last April, are retreating from a key part of
their strategy to expand into television, according to people familiar with the two regional Bell companies.
The decision makes it almost certain that they will reorganize their ambitious programming venture, Tele-TV --
either shutting it or folding it into Bell Atlantic.
Bell Atlantic and Nynex had intended to offer Tele-TV to tens of thousands of East Coast telephone customers,
using a microwave transmission technology called wireless cable. But the technology has proven to be fatally
flawed because the signals are obstructed by trees, hills and structures.
After receiving a disappointing response to preliminary market tests of the technology, executives said, the
companies have now decided to shift their focus to direct-broadcast satellite, a fledgling television service that has
attracted almost 4 million subscribers since it became widely available through DirecTV and Prime Star two years
ago.
"The wireless penetration did not come in at the levels we expected," Eric Rabe, a spokesman for Bell Atlantic,
said.
Frederic Salerno, the vice chairman of Nynex, cautioned that the companies had not made a final decision to
shelve wireless cable. But given its technical problems, Salerno acknowledged, "You have to question how much
of it we can deploy, and how quickly."
Bell Atlantic and Nynex are beginning to coordinate their video strategies. At a critical meeting at Bell Atlantic's
offices in Arlington, Va., two months ago, according to one person familiar with the companies, Nynex executives
informed their Bell Atlantic counterparts that they no longer had confidence in wireless cable technology.
The retreat is the latest in a series of retrenchments by the Bell companies. Bell Atlantic, in particular, has been
forced to scale back its ambitions, as the technology to deliver video over phone lines has proven costlier and
more difficult to develop than expected.
Rabe said Bell Atlantic was still committed to getting into television by upgrading its telephone networks to deliver
video programming. And he said Nynex and Bell Atlantic still planned to introduce wireless cable on a limited
scale next year in Boston and Newport News, Va.
Several executives said the two companies were also negotiating to buy an equity stake in American Sky
Broadcasting, a service being started by Rupert Murdoch's News Corp. and MCI Communications Corp. Rabe
declined to comment on any talks.
The retreat from wireless cable has hammered the stock of CAI Wireless Cable, a small company in which Bell
Atlantic and Nynex agreed to invest up to $100 million last year. After reaching a high of $10.50 last June, the
shares of CAI Wireless closed Thursday, unchanged, at $2.75 in Nasdaq trading. |
