FCC APPROVES PACIFIC BELL'S VIDEO APPLICATIONS; Paves the way for new choices, and services.

SAN FRANCISCO--(BUSINESS WIRE)--July 19, 1995--Californians are one step closer to increased choice in the video marketplace thanks to an Federal Communications Commission (FCC) ruling approving Pacific Bell's Video Dialtone (VDT) applications. For Pacific Bell, it's an important step in the company's comprehensive plan to overhaul the state's communications infrastructure from border to border.

The eagerly-awaited approval allows Pacific Bell to begin installing the video-specific components of its advanced communications network in the San Francisco Bay Area, Los Angeles, Orange County and San Diego. Construction of the telephone portion of the network began in May 1994.

Pleased with the approvals, Michael Fitzpatrick, President and CEO of Pacific Telesis Enterprise Group, pointed out that this sets Pacific Bell ahead of the many companies working feverishly to build various versions of information highway on-ramps. We have our technology tested and working, our construction underway, and our regulatory approvals for broad-scale commercial launch in hand, he said. With this approval we are on track to be the first to offer a full service network, supporting telephony, data, and video on a single network, in the United States.

Technology trials will be conducted during the second half of this year in the south Bay Area. When paying customers are hooked up early next year, it will mark a national first according to Fitzpatrick. Pacific will then proceed launching in San Diego, followed by Los Angeles and Orange County. Interactive services will be offered to consumers beginning mid-1996.

While we still have critical regulatory issues to resolve before we can deliver full benefit of our vision and plans, this opens a big door for us to rewire California, Fitzpatrick said. The FCC needs to provide clear rules soon so we can finalize our business plans and get into the marketplace, he added.

Citing surveys that show customers want a choice of video providers, Fitzpatrick commented, "It's not hard to guess why. Customers want reliable service, competitive prices and excellent customer service and their survey votes show we can be counted on to deliver on those promises, and the cable industry can't. But that hasn't stopped them from working very hard to convince the FCC that the cable industry was the protector of consumer interests. Unfortunately, these unfounded claims forced the FCC to wade through hundreds of pages of rhetoric. We're pleased the FCC has rejected the cable industry's blatant calls for protectionism," said Fitzpatrick.

The company's approved Video Dialtone applications, filed late December 1993, cover approximately 1.3 million homes throughout California. Construction of the video-specific elements this ruling allows will give customers access to such interactive services as movies and television shows on demand, interactive news, tele-education, home shopping, video games, community information listings and high-speed Internet access.

Pacific Bell remains committed to the state-of-the-art hybrid fiber/coaxial cable architecture it has selected, said Fitzpatrick, noting that the technology is cost effective to deploy and operate, and allows the company to achieve significant operational savings. Furthermore, the architecture is flexible enough to meet customer needs today, and network capacity can easily be expanded as demand grows.

Since we announced our vision in late 1993, we have stayed steady on our course. We remain convinced that our network design is the right choice for California, he said. We are moving ahead.

Pacific Bell is a subsidiary of Pacific Telesis Group, a diversified telecommunications corporation based in San Francisco. -0-

Pacific Bell's Advanced Network Deployment Progress On The Communications Superhighway

Network Investment Plan - November 11, 1993

Announced a multi-billion dollar plan to upgrade our core infrastructure and begin building an integrated telecommunications, information and entertainment network providing voice, data and video services. AT&T was named as strategic supplier for the project.

Video Dialtone applications with FCC - December 1993

Filed four video dialtone "214" applications with the Federal Communications Commission to build a network allowing multiple video operators in each of our four initial deployment areas. The filings cover about 1.3 million homes in the S.F. Bay Area, Los Angeles, Orange County and San Diego. We asked the FCC to take into consideration that entrenched cable providers are rushing to deploy networks that will provide two-way voice and data services, as well as cable services.

LA Times joint venture - January 12, 1994

Announced with Los Angeles Times a joint venture that will offer electronic shopping information - business listings, classified and display advertising, and editorial, consumer rating and promotional material -- an electronic marketplace that will save buyers and sellers time, money and energy.

While shopping information services will be offered first in Southern California, the joint venture will seek partnerships with other information providers to offer its services throughout California. The initial services in mid-1995 will offer telephone access to shopping assistants who will help callers find businesses and products they need. Eventually, the services will be available via personal digital assistants, screen phones and interactive television.

Video server agreement -- January 24, 1994

Announced with Hewlett-Packard Company an agreement between Pacific Telesis Video Services and H-P to work together to build an interactive video system that will offer consumers movies and other programs "on demand" by early 1996. H-P will provide large video servers built around a "video transfer engine" that is flexible, reliable and more efficient than competitive systems.

Education First - February 14, 1994

Announced a $100 million investment in California public schools and public libraries to start them rolling on the communications superhighway. The initiative gives schools and libraries a baseline technology capability for telecomputing (high speed data access) and interactive learning (video conferencing.)

Groundbreaking - May 19, 1994

Launched construction of Pacific Bell's advanced fiber optic and coaxial cable telecommunications network in the S.F. Bay Area, Los Angeles, Orange County and San Diego. However, work will not begin on the video-related portion of the new network until the Federal Communications Commission approves the company's video dial tone applications.

Anchor Pacific Corp. - July 28, 1994

Announced contracts with the first of many programmers expected to supply video content over our advanced communications network, Anchor Pacific Corp. and California Standard Television Corp., both companies owned by Ron Dorchester.

Pacific Telesis, Bell Atlantic and NYNEX Agreement - Oct. 31, 1994

Bell Atlantic, NYNEX and Pacific Telesis Group announced the formation of two new companies to deliver the next generation of nationally branded home entertainment, information and interactive services. Two companies were established: a media company to develop a portfolio of branded programming and services and a technology and integration company which will provide the systems needed to drive the delivery of this programming over the telephone companies new video dial tone (VDT) networks.

The partners also formed a strategic relationship with Creative Artists Agency, Inc. (CAA) to consult with the media company.

First Amendment Relief -- December 30, 1994

The Ninth Circuit Court ruled in favor of Pacific Bell's First Amendment suit to enforce its rights to provide broadcast video programming to customers in its telephone service area. The Court ruled in favor of a similar suit by US West, and issued a separate order to the Northern California District Court - San Jose (where we had filed our own First Amendment suit) to rule in favor of our suit.

Landmark Agreement With San Diego - January 18, 1995

The City of San Diego passed an ordinance formalizing an agreement with Pacific Bell. The agreement was forged from a mutual belief that consumers, business and the economy will benefit from a network capable of providing voice, video and data services. The city will receive 5% of the gross revenues resulting from video services carried over Pacific Bell's network, thereby compensating the city for revenues lost as consumers switch from cable systems currently paying the city franchise fees. While Pacific Bell is not legally obligated to pay franchise fees, it has nevertheless expressed an interest in keeping the city whole financially. The ordinance also calls for the city not to regulate Pacific Bell under local cable television franchise ordinances.

Howard Stringer named as media company CEO - Feb. 23, 1995 Pacific Telesis Group, Bell Atlantic and NYNEX appoint Howard Stringer as chairman and chief executive officer of their media and technology businesses. Stringer is former president of the CBS Broadcast Group. Sandy Grushow, former president of the Fox Entertainment Group, was subsequently named president of the venture.

Northern Telecom Equipment Purchase - March 25, 1995

Pacific Bell announced a major contract with Northern Telecom for purchase of Sonet-based equipment and software to expand its fiber optic capacity to carry voice, data and video services between central offices.

Cross Country Wireless, Inc. Acquisition - April 18, 1995

Pacific Telesis announced plans to provide wireless cable service in Los Angeles and Orange counties, Riverside and San Diego. To do that, it is acquiring 100% of the stock of Cross Country Wireless Inc., a company that holds licenses and rights to provide wireless video service in these markets. The move will allow Pacific Telesis to quickly establish a video market presence in a five-million customer service area that includes most of Southern California, reaching many customers years before the new, advanced communication network reaches their homes. It also gives Pacific Telesis more flexibility in service offerings once the wired network is complete.

Scientific Atlanta named Video Equipment Vendor - April 24, 1995

Pacific Telesis named Scientific-Atlanta, Inc. as key supplier and integrator of a video delivery system that includes video headend equipment and set top terminals. Two Telesis subsidiaries, Pacific Bell and Pacific Telesis Video Services, anticipate purchasing equipment from S-A that could total $150 million over the next three years.

Microsoft Agreement - May 8, 1995

Microsoft agrees to test pre-deployment phase versions of its interactive television technology in the media company's lab being created in San Ramon.

New Venture Named - May 9, 1995

TELE-TV was announced as the new name for the media company joint venture. The new name combines the strengths of the two best consumer relationships in technology: your telephone and your TV, according to CEO Howard Stringer.

PTVS first joint Oracle/Hewlett Packard customer - May 30, 1995

Oracle Corp. and Hewlett-Packard Company announced that the two companies are working together to deliver a scalable interactive television system to Pacific Telesis.

FCC announces approval of Pacific Bell's Video Dialtone application - July 19, 1995

CONTACT: Pacific Bell

Robbie Neely, 415/542-6813

Rebecca Weill, 415/542-4640