10/14/96 THE DUEL FOR YOUR DIAL TONE

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THE DUEL FOR YOUR DIAL TONE

The Boulevard at Old Town, a red-brick, 159-unit apartment complex in Alexandria, Va., is ground zero in the war between the cable-TV industry and the Baby Bells. This colonial city of 117,300 is where Jones Intercable Inc., based in Englewood, Colo., has spent $38 million to install what may be the nation's most advanced cable system, offering not only CNN but also cut-rate phone service and high-speed Internet links. But the residents, who should be prime Jones customers--twentysomethings raised on MTV--won't be easy to lure away from rival Bell Atlantic Corp. Given a choice, ``we'd stick with the phone carrier we've been with,'' says 28-year-old Valerie Dorian.
PORTABLE NUMBERS. Jones knows it faces an uphill struggle. Customers who like their current operator need ``a compelling reason to switch,'' admits Jeff P. Spiegleman, vice-president and general manager of the Alexandria system. And in the 11 months since the service was launched, only 247 residents have signed up.
Still, industry watchers aren't counting Jones out. The company is laying the fiber-optic foundation for a system with the technical capacity to be far more interactive than either direct-broadcast satellite or the wireless cable phone companies can be. Some analysts think cable phone-service sales will take off--but only when bundled with interactive services that finally capture the public's imagination. ``They have to offer service that is slam-dunk better than the phone company's and people [feel they] have to have it,'' says Robert P. Norcross of Mercer Management Consulting Inc. in Lexington, Mass. Still, Jones is going ``in the right direction for cable.''
Jones's Spiegleman says that blockbuster interactive services are coming, including a gizmo that lets you watch Seinfeld on Saturday if you missed it Thursday--without a VCR. But he admits they are at least 18 months away. Meanwhile, Jones has inked a deal with Bell Atlantic for access to the local phone network and recently negotiated number portability. That means customers who switch from Bell Atlantic no longer have to change their phone numbers--a big win for Jones, since the need to give up long-standing phone numbers was a huge marketing obstacle.
The portability issue may help explain why Jones has signed so few phone customers, though Spiegleman says the company is happy with its progress. Analysts figure that growth will speed up as word of mouth spreads about its prices and service. Jones charges $13.99 for its phone package, vs. $24.88 at Bell Atlantic. The low cost and quick response has new Jones subscriber Joan N. LoPresti ``very pleased.'' And Jones asks $39.95 a month for its 10-megabit, unlimited-usage Net link, which is 347 times faster than a 28.8-baud modem.
The entire project is costing plenty, but Jones may have little choice as Bell Atlantic gears up to invade its turf. The Alexandria battle is a test of how well cable can respond.
By Stan Crock, with Amy Barrett, in Alexandria, Va.

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