Cable Companies Encroach on Telephone Territory

THE relationship between cable and telephone companies is growing closer.

Last week MCI Communications Corporation and Jones Lightwave Inc., the country's eighth largest cable system, announced an experiment enabling consumers to use their cable TV wire for long-distance calling.

Starting in March, residents of Alexandria, Va., will be able to bypass the local phone company to make long-distance calls. The MCI/Jones announcement came at the same time as a bill was introduced in Congress that would break up local telephone companies' monopoly and allow phone companies to offer TV services in the areas they serve.

In Massachusetts, meanwhile, three top cable companies recently set out to prove that they could get into the telephone business and even outdo cellular systems.

Continental Cablevision, Cablevision of Boston, and Time Warner Cable joined Massachusetts Lt. Gov. Paul Celluci to place a wireless telephone call from downtown Boston to an outlying suburb. The call used interconnected cable television systems that bypassed the local telephone company.

The demonstration was to show how cable technology can be used to create a personal communication network (PCN). Calls routed over two or more cable systems are connected via a fiber optic-based regional network and a centralized switching center.

``We're really no different than the phone company,'' says John Dolan, a strategic analyst for Cablevision Systems.

The advantage of cable television systems, he says, is that the infrastructure is already in place to create a PCN.

The advantages cellular services have over cable, including name recognition and market share, ``can be made up in a very short time,'' Mr. Dolan adds.

The technology for PCN will use part of the radio spectrum that the federal government will begin auctioning off next spring.

``Three different cable companies got together, proving that the industry can work together to provide a seamless network,'' says Kevin Casey, vice president of technology at Continental Cablevision. ``In one to three years, PCS [personal communication spectrums] will start to become a reality.''

Whether or not the cable companies will bid independently for the radio spectrum remains to be seen. ``Strategic alliances will work themselves out between now and when the auction begins,'' Mr. Casey says.

The biggest hurdles remaining for the cable companies include driving down the cost of the equipment and enhancing the technology so it has a greater cell coverage.