Business Notes Communications

Although both are public utilities that deliver their services directly into American homes by wire, cable-TV operators and phone companies have rarely competed head to head. But with deregulation and new technology blurring the lines between them, the two businesses are set to collide. The showdown drew closer last week, when the Federal Communications Commission proposed rules that would hasten the phone industry's entry into the TV business.

Under the FCC proposal, telephone companies would be allowed to package and deliver a smorgasbord of television programming, including shows already carried by cable systems and broadcast stations. The programs would be transmitted via a so-called video dial tone, carried over fiber-optic cable, which would cost the phone companies billions of dollars to install. Defending their turf, cable-TV operators contend that the phone companies would have an unfair advantage because they could subsidize their video service with profits from their phone business.