THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, August 3, 1994 TAG: 9408030379
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY GAGE HARTER, STAFF WRITER
LENGTH: Medium: 70 lines
Larry Williams says he first became excited about the prospects for something called Interactive Video Data Services seven years ago.
Then a Motorola engineer, Williams was leafing through a government publication about IVDS. The new technology would use radio waves to deliver catalogs, games and movies to people's homes and businesses. Williams wanted in on the ground floor.
Eventually, he formed Chesapeake-based Phoenix Data Communications Inc. to bid on licenses for IVDS. And last week, Phoenix bid more than $2 million to buy the rights to bring the technology to Hampton Roads.
Phoenix was one of three high bidders in the Federal Communications Commission's auction of area air waves set aside for IVDS. The company acquired one license each for South Hampton Roads and the Peninsula. It also won IVDS licenses in Richmond, Petersburg and Las Vegas.
``It's like the Jetsons, and the cars that fly,'' said Williams, president of Phoenix. ``Maybe it's not on the road (yet), but the application and technology is here.''
Two other licenses were awarded locally, the FCC said. Community Teleplay, based in Washington, bid $850,000 for a South Hampton Roads channel. A New York-based company, 22nd Century Communications, bid $600,000 for a channel on the Peninsula.
Phoenix bid a total of $7.7 million for its licenses in Virginia and Nevada. Auction rules that give preference to minorities and women will knock 25 percent off Phoenix's final price. The company is minority-owned.
The FCC's Audrey Spivack said minority-owned companies bought one-third of the 594 licenses auctioned nationwide. Another 38 percent were bought by non-minority women. Ninety-five percent of the bidders were small businesses.
The FCC expects to take in about $216 million from the entire auction, after discounts are taken into effect.
Phoenix's Williams declined to provide details of how his company's service will work. Generally, however, interactive TV subscribers will receive a box and a joy stick that will provide services such as home shopping, movies on demand and academic instruction. The technology works much like a cellular phone, sending signals to radio cell sites throughout an area.
Phoenix vice president Tal Shamgar said customers who use his company to subscribe to cable-TV services will pay 20 to 30 percent less than what they now pay to traditional cable operators. That is because the overhead for IVDS will be 90 percent less than for cable, he said.
``We don't need trucks to fix cables, or phone lines,'' Shamgar said. ``Everything is going wireless. We are a replacement system like fiber optics is to telephone wires.''
Shamgar said Phoenix has projected annual revenues of up to $100 million from its five markets in as little as three years.
But John Mansell, a senior analyst with Paul Kagan Associates, a Carmel, Calif.-based cable research company, said IVDS is extremely speculative. ``I don't think IVDS will be a serious threat to cable companies,'' he said.
Phoenix's Shamgar said the next step for his company will be to contract with an equipment supplier and build the system. FCC regulations require such systems to be available to 10 percent of the market's population by year's end, and 50 percent in five years. ILLUSTRATION: Color photo
D. KEVIN ELLIOTT/STAFF
Larry Williams, left, and Tal Shamgar of Phoenix Data Communications
Inc. Phoenix bid more than $2 million for the rights to bring
interactive video here.
by CNB