Tele-TV, the joint venture of Bell Atlantic, Nynex and Pacific Telesis, is preparing to fill some of the 120 channels it will offer to consumers in major cities next year with brand-new niche cable networks.
A number of discussions have taken place between Tele-TV and cable programming entrepreneurs, said Howard Stringer, chairman and CEO of Tele-TV, speaking at a panel session here sponsored by the Intl. Radio & TV Society. Although he declined to name names, Stringer said one narrowly focused cable network told him it could break even with only 200,000 subscribers.
Tele-TV also used the forum to announce that it had selected Thomson Consumer Electronics as its wireless set-top box supplier. Tele-TV said that Thomson would build 3 million set-top boxes to be used in the delivery of video entertainment. The contract is valued at more than $1 billion over the course of three years with a per-set-top cost of less than $400. The boxes will be used to deliver programming and interactive fare on the microwave multipoint-distribution system or wireless cable systems the telcos have acquired in their service area.
The set-tops boxes will have a power PC processor, 4 megabytes of memory, an eight-byte video graphics plane with 256 colors, a modem, infrared controls and enough memory to support an electronic program guide and other features, Tele-TV said.
The most important item on Stringer’s agenda is to sign the broadcast networks to contracts that will allow Tele-TV to re-transmit their programming by the fourth quarter of next year.
“We’re negotiating with the broadcast networks and the major studios simultaneously,” he said. “Our service will end up providing an enormous source of potential revenue” for the networks and the studios that have “built up a lot of hostility to cable over the years.”
The hostility springs from their conviction, Springer said, that cable operators created a multibillion-dollar business “on the backs of the networks and the studios.” In Stringer’s analysis, cable systems just plucked the network signals out of the air throughout the 1970s and ’80s and beamed them into homes wired for cable, charging subscribers a fee for the privilege.
Stringer said Tele-TV’s competitive wireless service will lure subscribers away from cable because, with 120 channels, it’ll be able to offer more pay-per-view movies and events, plus the new networks that most cable systems will still not have the channel capacity to pick up. Another benefit to Tele-TV is that “the technology will allow us to deliver better pictures and better sound,” he says.
Ray Smith, chairman and CEO of Bell Atlantic, who also participated in the panel sesh, said the penetration of big cities by Tele-TV “will break the monopoly power of the cable systems forever.” The new deregulatory communications bill grinding its way through the mills of Congress will accelerate the development of rival distribution systems like Tele-TV, Smith says, predicting that President Clinton will sign the legislation.
Smith says Clinton wouldn’t dare veto the bill because failure of the legislation “would be a disaster for jobs in California.”