TCI attacks Pac Bell over cable trial

Cable giant Tele-Communications Incorporated is out to stall Pacific Bell's cable television trial in San Jose, California, contending that the telephone company is taking unfair advantage of a lack of government regulation to gain a foothold in the market.

TCI filed a motion Friday with the Federal Communications Commission, asking the agency to delay the test until the Baby Bell either signs a formal agreement with the City of San Jose or receives certification as an open video system, or OVS, as decreed by the Telecommunications Act signed in February. The FCC has not yet finalized rules on OVS certification but expects to issue a preliminary order this month.

FCC cable services bureau spokesman Morgan Broman wouldn't comment on the TCI-Pac Bell case but said it isn't the first of its kind. "Anywhere there's been a phone company getting into video, the local cable company has challenged in some way," Broman said.

Pac Bell called TCI's motion is "an anxious attempt" to thwart competition.

The Baby Bell is still in negotiations with San Jose for rights to a citywide cable franchise, but in the meantime continues to test a 50-channel system in over 1,000 homes, while adding about 50 new customers a day, according to Steve Harris, external affairs vice president for Pacific Bell Video Services. Harris said the company had no plans to put a ceiling on the number of users in the trial, citing the need to "prove that the system is industrial strength. We've told the FCC we could go up to several thousand customers."

TCI bristles at Pac Bell's use of the word customers, charging that the telco never had authorization to run a commercial trial. "When there is no tariffed rate and they're giving away service, it should raise serious concerns in the FCC's mind," stated Thom Prevette, TCI regional director of regulatory and government affairs. Prevette accused Pac Bell of siphoning customers from TCI, which is expected to control about 90 percent of the Bay Area cable market in the near future.

Pac Bell's Harris ackowledged that "a significant number...maybe half" of the new trial users are previous TCI customers. He cited TCI's recent 14 percent rate hike in the San Jose area as a primary motivation of the defections.

Pac Bell intends to deliver movies on demand and Internet access through its cable service, which could compete closely with the cable-modem venture @Home, which is now testing in the San Jose suburb of Sunnyvale. @Home is a joint venture between TCI and a venture capital company.