US telephone utilities can carry TV

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The Independent Online
REGIONAL telephone utilities in the United States will be allowed to offer video services over their phone lines, although they will continue to be barred from holding more than a token stake in TV programme producers.

The Federal Communications Commission, overruling strong objections from cable television operators, voted unanimously yesterday to allow the phone companies to carry a 'video dial tone' over their networks. New fibre-optic phone lines could be plugged directly into TV sets, giving consumers and programmers an alternative to existing cable networks.

The seven largest phone companies, known as the 'Baby Bells', are still barred by law from producing programming or other video services such as home shopping, and will be limited to carrying signals for others. They can also provide menus of video programming, offer billing services for programmers and sell subscribers the equipment needed to adapt their TV sets.

The Baby Bells are also barred from owning cable companies in towns with populations greater than 10,000.

American cable operators complain that they will now face unfair competition from the much larger phone utilities, which together generate more than dollars 100bn a year in revenues.

But the FCC chairman Alfred Sikes argues that the video dial tone will provide competition for local cable monopolies - whose high prices have prompted threats of new regulation by the US Congress - and encourage the rewiring of the US with fibre-optic cable.

Fibre-optic networks allow for fast, clear transmission of vast amounts of data, including video pictures, and are considered key to developing interactive information services.

The phone companies and their competitors have estimated the cost of replacing existing copper wires nationwide at between dollars 100bn and dollars 400bn.

Despite yesterday's ruling, direct competition with the cable industry in the US is a long way off. The Baby Bells do not yet have any complete fibre networks in place, and most have only limited experience in the entertainment business.