Staff Reporter

In Los Angeles, as in most metropolitan areas, consumers have three options for receiving their TV programming: through rooftop or rabbit-ear antenna, underground cable or satellite dish.

But in the next few weeks, Southern Californians will have a fourth choice unique to this part of the country: a high-tech receiver about the size of a box of crackers. The devices will soon be installed on local rooftops by a division of Pacific Telesis Group.

PacTel’s Southern California “wireless cable” service is the last vestige of what was once an ambitious plan by three Baby Bells to join forces and compete with cable operators. Most of those plans are now dead or in hibernation.

PacTel is pressing on with its strategy despite the fact that its two partners appear to be dropping out and that PacTel itself was just acquired by a company with competing television interests.

Wireless cable is the oxymoronic phrase for a little-known technology called MMDS, or microwave broadcasting (MMDS stands for multichannel, multipoint distribution service).

Only about 850,000 households nationwide own the special antennas needed to receive MMDS broadcasts. Most systems air low-budget community programming, home shopping channels or educational broadcasts produced by local colleges.

The biggest drawback to MMDS is that its signals cannot penetrate tall objects such as mountains, buildings and trees, which is the main reason microwave broadcasting has never really caught on.

That obstacle remains, though using new technology developed through a partnership with Bell Atlantic Corp. and Nynex Corp., PacTel executives believe that the MMDS system is now a viable alternative to cable and satellite television.

In 1994, the three Baby Bells formed a joint venture called Tele-TV whose mission was to lead the phone companies into the world of deregulated telecommunications. At the time, cable operators were gearing up to provide phone service through TV cables, while the phone companies were rushing to come up with ways to beat cable at its own game.

Led by former CBS Inc. broadcasting chief Howard Stringer and Fox Broadcasting Co. programming head Sandy Grushow, Tele-TV set out to acquire programming, develop technology, and create billing systems for a new television programming delivery service.

The three Bells, meanwhile, began gearing up to create MMDS systems in their own markets Tele-TV would supply programming and technology for those systems, but each would be owned separately. The Bells also started working on fiber-optic upgrades that would eventually allow them to transmit voice, video and data communications through phone lines.

Technological advances made MMDS broadcasting more feasible than ever before. There are only 30 analog MMDS channels, but digital signals can be transmitted in a much narrower band than analog meaning five digital channels can be compressed into a single analog channel.

The PacTel video service coming to Los Angeles will thus deliver 150 channels of digital programming, far in excess of existing cable systems.

Tele-TV signed a $1 billion contract under which Thomson Consumer Electronics would produce 3 million boxes capable of receiving digital MMDS signals. Original plans called for PacTel to launch a digital MMDS service early this year in Los Angeles, while similar ventures would be launched in Boston by Nynex and Hampton Roads, Va. by Bell Atlantic.

But by December, Nynex and Bell Atlantic abandoned those plan, reportedly because topography in the Eastern cities trees, hills and tall buildings made microwave broadcasting unfeasible.

The company has laid off about 43 of its 200-plus workers at its offices in L.A., New York and Reston, Va., according to spokeswoman Monie Begley Feurey. Grushow has returned to Fox, and Stringer left the company on April 4 and is said to be in talks with Sony Corp. of America for a top post there. Also, The Wall Street Journal reported in December that the three partners were in the process of shutting down the entire venture.

Feurey denied that is the case, but provided few specifics about Tele-TV’s current activities. Company officials are concentrating mainly on developing support services for PacTel’s soon-to-launch MMDS system in L.A., she said.

PacTel has maintained since last fall that the service would launch in spring of 1997. Now that spring has arrived, company officials still decline to be more specific, saying only that it will begin airing programming before the last day of spring on June 20.

Throwing a possible monkeywrench into the launch is last week’s acquistion of PacTel by San Antonio-based SBC Communications Inc., which is involved in another joint venture with Walt Disney Co. That joint venture, called Americast, is developing an alternative video service that may rely on phone line delivery.

PacTel spokewoman Susan Petoletti said the acquistion will not affect the launch of the MMDS video service in Los Angeles.

When the service does launch, PacTel will offer it at a price “very competitive with cable,” Petoletti said.

Unlike satellite television, for which consumers must buy and install receiver dishes, the digital receivers used by PacTel will be owned and installed by the company. Consumers will pay a monthly rental fee for the box, similar to cable service, to get many of the same channels that appear on cable and satellite, as well as local broadcast stations, 40 channels of digital music, and 40 channels of pay-per-view movies, sports and special events.

The programming will be broadcast in Los Angeles and Orange counties from two towers located on Mount Wilson and Modjeska Peak in Orange County’s Cleveland National Forest. The relatively flat topography of the L.A. Basin makes the service more feasible here than in other parts of the country, although people living behind tall buildings or other obstacles may be unable to receive the transmissions.

Analysts expressed mixed opinions about PacTel’s strategy. But they all agree that the MMDS strategy is, at best, an interim solution for phone companies seeking to break into the television business.

The future, they said, lies in phone lines once the fiber-optic networks allowing for video transmission are in place, companies like PacTel will no longer need microwave towers to compete with the cable operators.

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