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Pacific Bell to spend $16 billion on 'information highway'

LOS ANGELES -- Pacific Bell announced Thursday it will spend $16 billion over the next seven years to accelerate development of its portion of the 'information superhighway.'

'New network services will help customers in their daily lives,' said Pacific Bell President Phil Quigley. 'Learning, shopping, playing, living and personal communication will be enhanced as customers control the information they access, when they get it and how they want it packaged.'

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The announcement represents one of the biggest commitments by one of the several regional telecommunications companies to deploying fiber optics and advanced switching equipment to build part of a network to deliver television and high-speed data services to consumers.

Pacific Bell also announced it will buy about $5 billion of advanced switching equipment from American Telephone & Telegraph Co., which helped push up shares of AT&T by $1.50 to $56.875 in active trading on the New York Stock Exchange.

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The Pacific Bell order to AT&T is believed to be the largest ever made in the telecommunications industry.

Pacific Telesis Group, the parent of Pacific Bell, has been reported as exploring alliances withe cable companies in recent months, particularly following Bell Atlantic Corp.'s decision last month to buy Tele-Communications Inc. and Liberty Media Corp. for $21.4 billion.

But Thursday's announcement means that Pacific Telesis has decided to act on its own rather than copying Bell Atlantic or several other Baby Bells, including U S West Inc., which has acquired a 25 percent stake in Time Warner Inc.'s entertainment assets for $2.5 billion; Nynex Corp., which is investing $1.2 billion in Viacom Inc.; and BellSouth Corp., which is near a $1.5 billion investment in QVC Network Inc.

Until Thursday, Pacific Bell had been among the slowest of the Baby Bells to modernize, due in part to its current moves to split off its wireless operations from its core telephone services through a $1.5 billion stock offering later this year.

Pacific Bell said the construction program to modernize its network would begin next year and initially focus on parts of the San Francisco Bay Area, Los Angeles, Orange County and San Diego.

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It said more than 1.5 million homes will be hooked up to the 'communications superhighway' by the end of 1996, and more than 5 million homes will be connected by the end of the decade.

The new system will use fiber-optic lines, high-speed transmission systems abd cable TV-like coaxial wires to deliver phone calls, data and entertainment programming. As in most other ventures by telecommunications companies, the earliest service likely to be offered to customers will be movies on demand.

Pacific Telesis officials indicated that they believe the new system can be funded without cutting the company's dividend to shareholders.

The company will need to win approval from regulators to sell video services. Bell Atlantic has won a court decision vacating a ban on the Baby Bells' sale of video services in their own area.

Quigley had first indicated they were moving toward such a goal earlier this year by pledging that Pacific Bell to connect all California homes to the information superhighway by the year 2015.

The company had also announced in April that it had planned to begin trials for interactive services in 1994 or 1995.

'We're committed to bringing real products and services to California customers first,' said Quigley. 'This is the best marketplace in the world, and we expect our competitors to target large, cluster markets.'

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