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US West looking to be a high-tech leader

After years of trying on different corporate identities, US West is now trying to reinvent itself as a technology leader among the Baby Bells.

After years of trying on different corporate identities, US West is now trying to reinvent itself as a technology leader among the Baby Bells.

With the exception of its commitment to DSL service, however, the company's past attempts to offer advanced services haven't added up to a complete high-tech strategy--and may not help the company survive independently, some analysts say.

US West recently unveiled a television set-top box service that will integrate telephone functions such as caller ID and voice with Internet access and traditional cable TV.

The new @TV service--which will compete with @Home and WebTV--is just the latest in US West's string of high-tech trials, which has included broadband wireless Net access, cable Internet and telephony services, and even television signals through phone lines.

The move echoes other long-forgotten attempts by the Baby Bells to move into interactive television, such as Bell Atlantic's proposed Stargazer service--which, if successful, would have turned the Baby Bell into a full-fledged media programming company.

The @TV service, by contrast, is focused more tightly on integrating existing telephony and Internet services into a television interface.

Going it alone
US West's high-tech forays have in a large part been the company's answer to the industry's series of megamergers and acquisitions. Still a loner in the rapidly consolidating telecommunications world, the company has poured its resources into developing new technologies to merge telephone, Internet, and now television services.

"US West and BellSouth have both sent messages to the market that they're going it alone, and this is a way for them to expand within their customer base, really leveraging their strengths," said Meredith Rosenberg, an industry analyst with the Yankee Group.

But many analysts note that US West still is not painting a clear picture of where it wants to go in the changing market.

In the last several years, the company has sold or spun off its wireless phone division and the MediaOne cable TV group. Reversing its course, the company is now touting the buildup of new wireless ventures, and is conducting several television-related trials.

It has also kicked off a several Internet related projects, such as today's @TV services. But the target market for most of these services has yet to be defined, observers said.

"There is a lack of coherence that I see," noted Abhi Chaki, senior telecommunications analyst with Jupiter Communications. "It is a very nebulous strategy."

Even if US West does take the high-tech services road while other Baby Bells complete mergers and concentrate on long distance service, the company needs to make sure its customers are ready to pay for these newfangled services, analysts added.

"I don't see a lot of value in any of their interactive services except for DSL," Chaki said. "The other experiments are interesting, but whether they translate into dollars and cents remains to be seen."

The new offerings may just be a way to raise the company's asking price, however.

Although the company has remained independent thus far, many analysts believe that US West is likely to become an acquisition or merger candidate in the near future.

"They seem to have backed themselves into a corner, where they're a possible acquisition target," said Victor Schnee, president of Probe Research.

This would likely have happened earlier, were it not for US West's highly rural market, which makes service difficult and cuts into profits, Schnee noted.

But if the company can establish itself this time around as a Baby Bell that is leading the pack in technological innovation, it may become a more attractive buyout candidate, or possibly partner with a larger international player.

"They're the smallest Bell," Chaki noted. "The chances of them surviving deregulation of the markets are very slim."