MPR: The MediaOne Challenge

The MediaOne Challenge
By Andrew Haeg
December 21, 1999

Cable television company MediaOne says it is now offering local telephone service to residents of twelve St. Paul suburbs.

MEDIA ONE'S ANNOUNCEMENT may come as welcome news for anyone who's ever felt frustrated by the service of local telephone service provider U.S. West. MediaOne's move promises to bring at least some consumers the benefits of competition.

Tony Mendoza of the Minnesota Department of Commerce says the development is just what the Ventura administration has been hoping for.

Mendoza: It's exactly the type of thing that we intend to promote throughout the state of Minnesota as part of the governor's strategic plan that he announced last Tuesday.

But it's hardly clear sailing for MediaOne. It still has to figure out how to offer local phone service, which is a lot more complicated than providing cable television service. Milda Hedbloom is Director of the Telecommunications Forum at the Humphrey Institute. She says MediaOne has had problems with service in the past and will almost certainly face some major challenges as it remakes itself as a full-service telecommunications provider.

Hedbloom: It's not just a, how shall one say, a seamless move; sometimes there's plenty of problems, as you would expect with a new service, it's not novel. But the point is it's not free of hiccups, and so you have to bear that in mind, before we all start cheering.

MediaOne's Gary Lane disagrees. He says the company has taken steps to ensure quality service.

Lane: When we deliver telephone service, high-speed video services, high-speed data services, video services over the network, it is basically coming over a brand new network with all kinds of new processes and reliability and backup included as we provide that service.

MediaOne's announcement was not exactly clear. In a morning press conference, the company said it would only be offering a premium package of features like call waiting and caller ID for which customers would pay about $23 a month. Company spokesperson Gary Lane said MediaOne feared it couldn't live up to its service pledge if too many customers flocked to buy basic local service from MediaOne.

Lane: We want to be sure that we're in a position to deal with the volume demands that we get, and so we want to be sure that we're ready to deal with the requests that come in as we move along and we think if we were to offer a line with no features, the demand would be so significant we wouldn't be able to deal with it.

By mid-afternoon, however, Brian Dietz of MediaOne was saying that MediaOne would, indeed, provide a basic phone service to all its customers for around $15 per month.

As MediaOne moves into the world of telephone service, it faces the prospect of increased regulation. The department of commerce's Tony Mendoza says if companies like MediaOne offer the same services as phone companies, the administration feels they should be regulated like phone companies. Among other things, this means MediaOne may be restricted from bundling all of its services into a single package.

Meanwhile, MediaOne's announcement may strengthen U.S. West's efforts to get into the long-distance market. Federal and state regulators have stopped it from doing so until U.S. West could demonstrate that it was operating in a competitive market for for local phone service.

Mendoza: They can now show that there is some level of competition in their service area, although there is much more that needs to be done for them to get that authority from the federal government and the state government to provide those interlata, long distance services.

MediaOne is now offering its local phone service in 12 eastern suburbs, including Shoreview and Roseville.

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