BellSouth pens short list for Net TV equipment

Alcatel is favored among three finalists to supply BellSouth with the equipment the local phone giant needs to offer movies-on-demand, multichannel high-definition TV and other video features, analysts said Thursday.

Lucent Technologies, Ericsson and Alcatel are finalists among the companies responding to a request for proposals BellSouth issued in late August, according to an industry update from Jeffries analysts George C. Notter and Rajat K. Das. Both learned of the short list during recent conversations with industry contacts.

BellSouth, SBC and other major U.S. local phone companies plan to spend billions of dollars to upgrade their networks in a bid to fend off cable television giants that are stealing customers and turn the tables by converting antiquated infrastructure into digital dynamos.

The analysts said a key reason for Alcatel's favored status is BellSouth rival SBC's decision in October to tap Alcatel to provide the same type of equipment and to oversee its installation. In mid-November, SBC also said it will pay $400 million to use Microsoft software to power its Internet TV service, which is slated for launch late next year.

"Lucent Technologies and Ericsson are probably there to keep Alcatel honest," the analysts wrote. "They are on the short list to maintain incremental leverage over Alcatel."

BellSouth's decision is due soon, according to the analysts, and previous statements by BellSouth executives.

Representatives from Alcatel and Lucent Technologies had no comment. Ericsson and BellSouth spokesmen did not immediately respond to calls seeking comment.