It's lights out for convergence: U S West reviving DSL as video technology

Convergence as first envisioned may not be dead, but U S West has sent it to its death bed with its decision to split into two companies-one providing voice and data service in its 14-state region and the other operating as a traditional cable company. However, the Bell regional holding company won't abandon the in-region cable market and in fact is looking to digital subscriber line technology to provide video transport.

Under the proposed split, which must win regulatory and shareholder approval, U S West Communications Group will become U S West Inc. and will be led by Solomon Trujillo, currently president and chief executive officer. The new group will include the company's in-region service provider and its directory publishing unit.

U S West Media Group, which includes all the properties the RHC acquired with Continental Cablevision, will become MediaOne Group Inc., with Charles Lillis as CEO. The MediaOne business will also include U S West's interest in Time Warner Entertainment, the wireless operations of New Vector and all of U S West's international assets. Jan Peters was recently appointed president to replace Amos Hosteter, who quit after refusing to relocate to Denver, and will continue in that position with MediaOne.

U S West's board agreed upon the split, scheduled for mid-1998, after it determined that the cable and telephone network architectures were not converging as anticipated, said Richard McCormick, chairman and CEO of U S West Inc., who will oversee the split.

"The biggest change for us has been the realization that building hybrid fiber coax inside the telco did not look like an economic proposition, and secon dly, the data phenomena and particularly the explosion of that opportunity" was another eye-opener, said McCormick. "When you translate that to the network architecture that each of these companies is going to deploy, you find very different solutions, different partnerships and different capabilities. There's not a common product."

Instead, U S West is reconsidering the possibility of using DSL to push video service over twisted copper pairs, Trujillo said. Already, the company is doing just that in Scottsdale, Ariz., where it has signed an agreement with the developers of the 7500-home DC Ranch subdivision to be the preferred provider of voice, data and video service.

The announcement even caught some industry observers off guard. William Rodey, vice president of marketing and business development for Westell and vice president of the ADSL forum, said ADSL certainly has the capacity to deliver video. However, building the business case on that alone could be difficult for U.S. operators.