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TCI moving slowly on telephony

The cable giant is expanding its business in many directions, but its phone service is still a work in progress.

People who are curious about Tele-Communications Incorporated's telephone offerings are instructed on the company's Web site to click on the icon called "People Link." But the link is broken, a telling indication that the cable giant's plan for phone service is still very much a work in progress.

In the past two years, TCI has begun offering phone service in Hartford, Connecticut; Arlington Heights, Illinois; and Fremont, California. The service, dubbed "People Link," was an offshoot of deregulation, which allowed cable and phone companies to enter each other's markets.

But little of this cross-pollination has materialized, as both industries seem preoccupied with protecting their core businesses.

"Cable has never been successful getting into phone," said Fred Voit, an analyst with the Yankee Group, an industry consulting firm. "It has not happened. There's no natural bundle, like local and long distance phone calling."

In TCI's case, many of the executives responsible for launching the company's phone service are gone. A new management team has decided that the previous plan was uneconomical, a spokeswoman said.

But TCI is not abandoning the phone business. Instead, it is looking at launching Net telephony products.

As reported, Net telephony is booming. The technology takes advantage of so-called Internet protocol, or IP, which carries email and other traffic across the Net. It is considered more efficient and less costly to provide than traditional phone service.

TCI's plan for offering such a service still is being drawn up, executives said. But the goal is to provide phone service along with Internet access and digital cable TV. All three would be provided via the next-generation set-top box, which still is under development. (See related story)

TCI faces plenty of obstacles, however. First, the company must complete the upgrade of its two-way cable network, a costly proposition. It also plans to make Net access a priority over Net telephony.

Competition is intense as well, not only from telephone carriers, but from start-ups such as Qwest, Level 3 Communications, and ICG Communications.