Ameritech Lands Cable Service Contract in Northeast Ohio.(Originated from Akron Beacon Journal, Ohio)

Apr. 10--Ohio's largest local telephone company, Ameritech, has landed a toehold in Northeast Ohio's cable business.

The Chicago-based company's New Media Enterprises division was awarded the right by North Olmsted to begin providing cable service to the city's 35,000 residents.

The franchise agreement is the company's third such agreement in Ohio, and its 14th in the Midwest.

The company expects to begin constructing its fiber optic cable network in North Olmsted this summer, and will begin providing service sometime before the end of the year, said spokesman David Onak.

The move is part of Ameritech's broader strategy to expand its services. Eventually, the company wants to offer one-stop-shopping for services including local and long-distance telephone service, shop-from-home service, interactive games and video service.

The move is the latest development in the race among huge national telephone, cable and communications companies to take advantage of deregulation by grabbing chunks of each other's markets.

The numbers are huge. Nationally, the local telephone market is a $90 billion industry; long-distance calling represents a $70 billion market while cable TV is a $25 billion business.

Ameritech's arrival into Northeast Ohio's cable market will shake up an industry that has seen virtually no head-to-head competition. Entering the market takes a huge up-front construction investment.

In North Olmsted, Ameritech will be in direct competition with Cablevision of Ohio, Northeast Ohio's largest cable provider.

Most analysts believe that a cable competitor entering a new market automatically will land a certain percentage of customers, simply because customers want a choice.

Further, companies with high name recognition -- such as Ameritech, which provides telephone service to two-thirds of Ohio -- may be able to snag market share even more quickly.

Cablevision spokesman James P. Evangelista immediately questioned how Ameritech's contract was awarded.

Evangelista suggested that the North Olmsted city council passed the agreement with little or no public debate. North Olmsted city officials could not be reached last night.

Under the agreement, Ameritech will pay North Olmsted 5 percent of its gross revenues.

Ameritech will offer subscribers as many as 90 channels "competitive price," Onak said.

Initially, Ameritech telephone customers who subscribe to its cable service will receive separate bills. Ultimately, however, the company hopes to market all of its services on one bill, he said.

Ameritech also has franchise agreements with central Ohio cities Upper Arlington and Dublin, and is negotiating with Columbus.

The company is in franchise talks with 30 other cities throughout the Midwest, including Chicago and the Cleveland suburbs of Berea, Brook Park, Middleburg Heights, Strongsville and Parma, Onak said.

Ameritech currently is not discussing deals with communities in the Akron and Canton areas, Onak said. Those areas are served mostly by Warner Cable of Akron, which has 15 franchises in the Akron-Canton area, said Warner spokesman Bill Jasso.

Ameritech said it targets cities for potential franchises based on such factors as consumers' computer usage, frequency of movie video rentals and disposable income, Onak said.

Ameritech is offering a programming package developed by Americast, its joint venture with The Walt Disney Company, BellSouth, GTE and SBC Communications.

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