
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, November 12, 1993                   TAG: 9311120196
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: The New York Times
DATELINE:                                 LENGTH: Medium

PACIFIC BELL PLANS TO BUILD VIDEO, DATA SUPERHIGHWAY

With huge new rivals hungrily eyeing its lucrative territory, the Pacific Telesis Group drew a $16 billion line in the sand Thursday by announcing it would build a high-speed video and data superhighway in California.

Pacific Telesis made its move after failing to team up with a big cable television operator or a big programmer, as several other regional Bell companies have done lately.

But company officials said Thursday that they had been "very close" to two different deals in recent months, and they made it clear that they were still looking for partners.

Pacific Telesis, which provides telephone service in California and Nevada, is feeling particularly vulnerable to the competitive threat posed by cable-telephone alliances like Bell Atlantic's pending acquisition of Tele-Communications, the nation's - and California's - largest cable operator.

With its large and affluent population, California soon could shape up as the first real battleground in the multimedia wars, as competitors seek to offer everything from telephone links to home-shopping networks and movies on demand.

By upgrading cable networks in a city with the advanced switching technology of a telephone network, cable companies can grab both conventional telephone business and be ready to seize the markets for interactive television expected to emerge in coming years.

Pledging to spend $16 billion on its own over the next seven years, Pacific Telesis said Thursday that it would build a high-powered network that would reach 1.5 million homes within three years and 5 million homes by the end of the decade.

At least initially, construction will be limited to California's biggest markets: San Francisco, Los Angeles, Orange County and San Diego.

"What Pacific Telesis has concluded is that strategically our most pressing need is to upgrade its network," said Sam Ginn, Pacific's chairman and chief executive officer, said Thursday. "If we're going to provide all the services our customers want, we're going to have to transform the network."

Though ambitious, the plan marks only a modest expansion of Pacific Telesis' efforts now. The company already is spending $1.8 billion a year on network modernization, roughly in line with what several other Bell companies are spending, and the annual budget now will climb about 22 percent, to $2.2 billion.

Indeed, Wall Street analysts were either neutral or slightly bearish as they sized up the company's prospects. And investors showed little enthusiasm, driving down Pacific Telesis' stock $1.375 on the New York Stock Exchange Thursday, where the shares closed at $55.25.

by CNB