HomeAccess Merging for Internet Product

Coyote Network Systems, a Los Angeles telecommunications company, said Wednesday that it will merge with HomeAccess Microweb, an Irvine incubator company owned by the electric and water utility concern Duquesne Enterprises.

The firms will combine to produce a new line of low-cost Internet appliances--essentially telephones with video screens--that will be distributed free to subscriber homes and small businesses.

In addition to regular telephone service, the machine will provide e-mail and specially tailored links to local merchants. The phones will also be equipped with a bar-code scanner so consumers can purchase products by scanning items in their homes that they want to reorder.

Under the terms of the merger, Duquesne Enterprises, which is based in Coraopolis, Pa., will invest $7 million in Coyote. HomeAccess will continue to operate as its own division.

HomeAccess, a four year-old company with 15 employees, will handle the software development and business relationships. Coyote, which has 108 employees in Los Angeles and Richardson, Texas, will manage the telephone networks.

The cost of these Internet phones will be absorbed by the linked merchants. Consumers will pay for phone service, intended to be comparable to that of other phone carriers.