Sunday, February 14, 1999

Cable horns in on phone business

USA Today

        NEW YORK — The joint venture announced earlier this month by AT&T and Time Warner is expected to hasten the day when people across the country will be able to place local phone calls over upgraded cable networks.

        Service in two test markets will begin by the end of this year.

        Both companies say they will nab almost a quarter of phone users in each of the 33 markets Time Warner serves within five years.

        Some questions and answers about how their cable phone, TV and high-speed Internet access services will work.

        Question: How quickly will Time Warner customers receive these new services?

Answer: AT&T and Time Warner will roll out their service starting next year, offering local phone service over Time Warner's upgraded cable networks. Separately, Time Warner will sell high-speed Internet access and television over those networks. Combined with AT&T's purchase of cable operator Tele-Communications Inc., which is expected to close this quarter, AT&T will have access to more than 35 million U.S. households, or 43 percent. It expects to sign deals with additional cable operators by this spring, boosting its coverage to 66 percent of U.S. households.

        Q: Will phone calls over the cable network be cheaper than regular calls?

A: AT&T and Time Warner say phone calls will be about 20 percent cheaper than traditional calls. Each additional phone line will cost an extra $4 to $5 a month.

        Q: Will I still be able to make calls if my cable service goes out?

A: Yes. AT&T is installing backup power supplies in the cable network.

        Q: What kind of new wires must be installed for cable phone service?

A: The installation will be simple, said Lewis Chakrin, an AT&T product manager overseeing the deployment of cable telephone service.

        A cable technician will need access to customers' homes, usually the basements, where local phone companies already have installed boxes. The cable technician will install a new box next to the phone company box. The technician will unplug a copper phone wire from the phone company box and plug it into the new cable box.

        All the phones, phone jacks and phone wires in the household will immediately switch over to the cable system. Consumers won't need to buy new phones or phone jacks.

        Q: So what changes?

A: At first, the cable phone service will use traditional phone technology known as circuit switching. That means every conversation takes up an entire circuit, or phone line. The circuit is busy, even when someone stops talking to take a breath or answer the doorbell. By the middle of 2000, AT&T and its cable partners plan to begin deploying a more efficient system based on the Internet. Phone calls will be broken into tiny bits of digitized information and share common pipes. That means that people won't waste space on the network when they pause in a conversation. That's why it's cheaper, according to AT&T. Consumers will need another box installed when the Internet-based technology arrives.

        Q: How will the cable TV service work?

        A: The new cable networks also will offer digital cable TV, with more channels, a sharper image and new features, such as on-screen programming guides. Customers will need a digital cable box, which is about the size of a small VCR. The first boxes will be leased to consumers. Electronics stores eventually will sell them for about $250 or $300, Mr. Chakrin said.

        Q: What about cable modem service for PCs?

A: Upgraded cable networks from Time Warner, TCI and others also will carry high-speed Internet access. Consumers will need to buy a cable modem, Mr. Chakrin said. The devices sell for several hundred dollars each. Internet service providers, such as At Home and Road Runner, also rent them as part of their $40 monthly fee, he said. Computer makers also are expected to sell PCs with cable modems installed, just as analog modems are now.

        One big difference: Cable modems plug into cable jacks, not phone lines. That means many consumers will have to pay technicians to install extra cable jacks in their work areas because few people have extra cable jacks around the house. The price of that installation will be set by local cable operators. Cable set-top boxes, which are used for cable TV service, might eventually include modems for PCs.

        Q: And I'll be able to choose my Internet provider?

A: At Home and Road Runner will be your only choices.

        Q: Will the cost of all of these services be combined on a single bill?

A: That's the goal, but it's unclear when that will happen.


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