Pairgain Tech nails French deal, expects Pacific Bell pact shortly.

Pairgain Technologies Inc. is expecting a roaring 1993 for its telecommunications products, with a licensing deal expected to be reached with Pacific Bell this winter and an international deal already in place with Alcatel of France.

The 4-year-old Cerritos-based private company makes devices that squeeze more data onto traditional copper telephone wire more cheaply.

Pairgain's patented device represents one of several technologies that industry analysts claim will someday enable companies to economically send each other video images, animation and complicated graphics as they do telephone calls or faxes today.

"Here you've got a regular phone line, and you just add electronics at the other end," explained USC Marketing professor William Davidson, who last week co-published a study on U.S. telecommunications infrastructure. "Video-conferencing gets real promising."

Pairgain has licensed its palm-sized HiGain device to three telephone companies in the East and Southeast and is currently field-testing it for Pacific Bell in California, said Director of Marketing Mike Lefkowitz. Phone companies use it in the installation of so-called T1 lines, the high-speed data circuits thousands of businesses already use.

In January the first large shipment - some 200 HiGain systems -- are headed to Alcatel, the world's largest vendor of telecommunications equipment. Alcatel sells phone systems to some 200 countries.

Pairgain President Howard Flagg estimated his HiGain product will comprise some 5 to 15 percent of sales next year. The remainder comes from other products that also cram more than one channel onto a pair of twisted copper wires, termed "pairgain" by laboratory engineers for years.

HiGain typically puts 12 channels on a line. Sales totaled $8 million last year and are expected to climb by at least 200 percent in 1993, said Lefkowitz, a former engineer and manager for Bell Labs and AT&T.

Pacific Bell hasn't decided on HiGain, said Robert Volker, PacBell product manager for high-speed dedicated services. At least two vendors would be tapped, he said.

Competing products are made by Tellabs Inc. of Illinois, and Adtran Inc. of Alabama has one in the pipeline, officials at those companies confirmed.

The HiGain product relies on HDSL technology, or "high bit-rate digital subscriber line." HDSL is one of two quickly emerging technologies that make high-speed data transmission easier and cheaper for certain businesses. The other is ADSL, "asymmetric digital subscriber line," being tested by the Bell Atlantic phone company to deliver movies over common copper wire into homes.

Only about 2 percent of telephone lines have been upgraded to fiber optic cable, which has far greater capacity for multimedia traffic.

Most of the remainder is short links from phone company offices out to businesses and homes. Typically, phone companies must install signal repeaters about every 4,000 feet along them to counteract interference.

Pairgain and several competitors now have devices that don't need repeaters, and phone company staff don't have to open up manholes and install repeaters and other equipment under streets, where most wires reside today.

That cuts T1 installation to one or two days from weeks or months, said Vancouver-based telecommunications consultant E.V. Hird. He wrote that the error rate is no worse than that of fiber cable in an article for Telephone Engineer & Management Magazine this month.

Trouble-shooting and facility engineering costs are lowered, claimed Hird, who studied installations in Washington and Las Vegas.

"Hopefully, with a faster and easier installation ... we'd be able to reduce our installation charges," said PacBell's Volker. HDSL "has the potential to do that significantly."

Also, companies linking sites less than 2.5 miles apart often buy direct and pay no phone company charges.

HiGain began shipping last summer. "It's easier and cheaper, but not really better (in quality)" than a traditional T1 installation, said Davidson. And, he said there are some "mixed feelings" about the Alcatel deal over Pairgain surrendering its ability to market direct abroad. "Basically Alcatel cut a good deal," said Davidson, who is also an investor in Pairgain.