THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 22, 1996 TAG: 9601200176
SECTION: BUSINESS WEEKLY PAGE: 10 EDITION: FINAL
SERIES: Forecast 1996
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Medium: 91 lines
Competition and cooperation are generally thought of as opposite ways to get ahead in business. But many of the leading telecommunications players in Hampton Roads will employ both strategies in 1996.
From television to telephones, companies all across the country are forming partnerships in hopes of increasing their market shares. Increasingly, that means blocks of companies butting heads with other blocks.
Take the phone business in Hampton Roads.
In late 1996 or early next year, there will be new competitors on two key phone fronts:
In so-called local-exchange service, the plain old telephone service that in Hampton Roads Bell Atlantic Corp. and GTE Corp. now provide.
In wireless communications. GTE's Mobilnet cellular unit and Sprint Cellular Co. will face new rivals providing a cellular-like service known as Personal Communications Services or PCS.
In the former, Cox Communications Inc. is expected to be one of Hampton Roads' leading new contestants. But it won't be going it alone in the local phone business. Cox and several other large cable operators have teamed up with Sprint Corp. to develop a nationwide strategy for offering a range of phone services.
Meanwhile, in the wireless arena, Bell Atlantic, Nynex Corp. and two other big phone companies have combined to win a PCS license for Hampton Roads. They figured 'twas better to cooperate than compete against one another for such licenses. They'll be facing an even-larger fish, AT&T Corp., which is going it alone to build a nationwide wireless network that includes Hampton Roads.
The partnering push goes for TV too.
In Hampton Roads, for instance, Bell Atlantic, Nynex and a couple of partners plan to supercharge an existing ``wireless cable'' system now operating unsuccessfully in the area.
Last year, they teamed to purchase a large stake in the wireless operator, CAI Wireless Systems Inc., which uses microwaves to distribute about two dozen channels. Bell Atlantic and its partners in a venture called Tele-TV are aiming to boost the offering to as many as 120 channels sometime this year.
In broadcast TV, a whole spate of partnerships is working. LIN Television Corp., owner of NBC affiliate WAVY-TV, last year signed a deal to run a second station in the area, WVBT-TV. Later in the year, LIN used its muscle to wrestle a Fox network affiliation for WVBT away from WTVZ-TV.
Meanwhile, two other station duos teamed for 10 p.m. news shows: CBS affiliate WTKR-TV and United Paramount station WGNT-TV, and ABC affiliate WVEC-TV and independent WPEN-TV.
Edwin Hale, president and general manager of WTKR, said he wouldn't be surprised to see more cooperate-to-compete deals in telecommunications this year. ``I think we're all looking around trying to see if there's something else that makes business sense for us,'' he says.
Here's an outlook for some sectors for 1996:
Telephone, wireless. Headiest growth prospects are in this arena. Robert Sage, Hampton Roads general manager for Sprint Cellular, is pushing for a 50 percent growth in local subscribers this year - after a similar increase in '95.
Cellular players keep moving down the income strata to lure new customers. Sprint opened outlets in Wal-Mart, HQ, Sears, Radio Shack in '95. With PCS competition looming, cellular carriers will offer unheard-of discounts this year to lure customers. Use of cellular to transmit data (faxes, computer files) will grow rapidly.
Telephone, landline. Steady if unspectacular revenue growth, driven by growth in data lines and for special services like Caller ID and call forwarding.
Cox's Fibernet unit, which offers businesses an alternate way to connect to long-distance carriers and to move data internally, will keep racking up new accounts. More telecommunications-intensive service centers - like the Avis and TWA reservations centers - will land in the area, predicts Norman Neal, regional GM for Bell Atlantic's network services unit.
Cable TV. More consolidation this year. Cox, already the region's largest cable operator, hopes to complete its previously announced acquisition of Tele-Communications Inc.'s system in Chesapeake. Cox's local GM, Frank Bowers, says: ``there's a standing offer to talk'' to other local cable outfits about buyouts. Competition from phone companies for cable customers could give Cox fits.
Broadcast TV. Ad revenues are the all-important measure here. Hale predicts a slight improvement over last year's marketwide ad revenue growth, which he pegged at about 7 percent. Local stations' additions of more news and other local programming, he predicts, will help them win back viewership from cable networks. ILLUSTRATION: Drawing
Phoning someone? It's getting more and more complicated.
KEYWORDS: TELEPHONE COMPANIES by CNB