First Cities is perhaps the broadest alliance that’s attempting to pull together a new network infrastructure, but it certainly isn’t the only action in town. If anyone had doubts about the effectiveness of competitive pressures for spurring investment and innovation, just look at what has happened in the U.S. in the past month alone.

WIRED SERVICES

In wired services, Bell Atlantic demonstrated transmission of one channel of MPEG compressed digital video over an existing twisted-pair copper phone line. Northern Telecom, Pacific Bell and IBM announced a technology alliance they hope will eventually allow phone companies to transmit digital video to a subscriber’s home over existing phone lines. The hardware, they say, is available immediately. Both initiatives presume that the video service provider (who may or may not be the phone company itself) has a video “server” capable of calling up and transmitting a different video signal to each subscriber who dials in.

Then Viacom and PBS announced selection of vendors to provide them with hardware for satellite delivery of compressed digital video. TCI announced its selection of technology and partners for home delivery systems at the Western Cable Show in Anaheim.

All three expect to have systems in operation within the year. In fact, they are so concerned about getting service off the ground as quickly as possible that they are willing to start with technology that may have to be retrofitted at a later date rather than waiting for standard digital video compression technology to gel. (See related stories, starting p. 19.)

The cable industry expects to broadcast hundreds — or even thousands — of channels concurrently, with the “switching ” (program selection) most likely taking place at the subscriber end. The differences in existing infrastructure are likely to give us two very different approaches to achieving similar objectives.

No one involved in these processes has the slightest illusion that either the phone companies or the cable industry would be pushing as hard as they are without the prospect of competition from the other, as well as from direct broadcast satellite. The faster each party moves, the faster the others are compelled to move.

Equally important, if we play our cards right, we will have three or even four alternative delivery systems for video programming (broadcast, cable, telephone and direct broadcast satellite). This is how you control cable rates!

WIRELESS PHONE SERVICE

The wireless industry is moving just as fast. The biggest announcement was AT&T’s last month; it agreed to spend nearly $4 billion to purchase a one-third interest in the biggest cellular company in the U.S., McCaw Cellular.

In essence, this puts AT&T into position to move back into local phone service. Forced to divest its regional Bell operating companies by the 1984 Consent Decree, AT&T — via McCaw — gains access to a cellular network that services 40 percent of the U.S. population and the majority of its larger cities. And, the rapidly growing cellular system does not carry any obligation to serve low-volume (and mostly low-income) phone users. Its customers are the “cream” of the phone market.

Rival MCI countered almost immediately with an announcement (mostly for show, some say) that it was establishing a consortium for a nationwide PCS (Personal Communications System) which, by virtue of using much smaller cells than conventional cellular, promises smaller and cheaper phones and lower-cost service.

By Nov. 9 (the final date for submissions), the Federal Communications Commission had received more than 100 proposals for PCS systems.

The cellular industry, very concerned about impending competition from PCS services, issued a Request for Proposals for a nationwide switching system that would tie together regional cellular networks. The objective (as with both PCS and satellite-based phone systems such as Motorola’s Iridium) is to provide a transparent nationwide network that will automatically direct calls to a cellular phone no matter where in the country it happens to be.

Cable operators, too, have long been hopeful players in the PCS arena. They hope to use the cables they control as high-bandwidth backbones to link together all of an area’s PCS transmitter/receivers. The missing component is the switching logic to “hand off” a call as the device moves from one cell to the next.

Everyone we talk with tells us that they are driven to meet this or that target because of competitive pressures. Competition really works.

Jonathan Seybold