Thread --Good Morning ---Some information on AOL ---
America Online Unveils Plans
For Interactive TV Venture
By THOMAS E. WEBER and ANDY PASZTOR
Staff Reporters of THE WALL STREET JOURNAL
Attention, cable and phone companies: Satellite operators are staking out
their own piece of the high-speed Internet.
America Online Inc. and Hughes Electronics Corp. announced Tuesday that
they will team up to combine satellite television with Internet access in a
single service. That would let consumers tune in Hughes's DirecTV and surf
the Web with AOL from the same set-top box.
The alliance underscores the potential role for
satellites in the broadband world and adds
another twist to the hubbub over AT&T
Corp.'s planned purchase of cable operator MediaOne Group Inc. Perched
in orbit, satellites can beam down movies, Web pages and phone calls
anywhere on the globe at lightning speeds, without the need to lay cables or
phone lines.
"We think satellite will be part of the mix," says Barry Schuler, president of
AOL's Interactive Services Group and the company's point man for
broadband.
'Two Titans'
Tuesday's move may also be a harbinger of broader cooperation toward
interactive TV, a goal that has so far eluded every effort by giant
telecommunications companies. "It's an example of two titans coming
together, with the ability to quickly push the technology and content
delivery," says Jimmy Schaeffler, chairman of the Carmel Group, a research
concern. "It's likely to trigger momentum toward this new arena."
But compared with cable and phone technologies, satellites have plenty of
bugs that must be worked out. The most troublesome: Typical satellite
setups are strictly one-way -- they can beam data down, but consumers
can't talk back. Current Internet-over-satellite systems rely on a telephone
connection to let users tell the satellite which Web pages to hurl from the
sky.
The first generation of the AOL-Hughes system won't even be that
ambitious. Television programming will be delivered via satellite, but Internet
traffic in both directions will run over phone lines. But AOL firmly believes
that satellites will be part of the broadband mix -- either through future
generations of the Hughes alliance or by working with other operators. AOL
has talked with EchoStar Communications Corp. and SkyBridge LP, among
others.
Even Microsoft Corp. Chairman Bill Gates is betting on satellite broadband.
He is an investor in Teledesic LLC, the satellite company founded by
cellular pioneer Craig O. McCaw and backed by Boeing Co., Motorola Inc.
and Saudi Prince Alwaleed Bin Talal. Teledesic's system and other
low-flying satellites on the drawing boards would handle two-way traffic.
For AOL, even without the high speeds of satellite data delivery, the Hughes
alliance is an opportunity to get a piece of the incredibly valuable real estate
of the television set. Microsoft moved ahead of AOL in this regard when it
purchased WebTV in 1996. AOL played down the broadband angle
Tuesday, arguing that getting on top of consumers' TV sets is the important
thing, regardless of whether the connection is a phone line, cable line or
satellite.
AOL has long held the view that the growth of broadband services -- and
the movement of the Internet from personal computers to TVs, phones and
other devices -- will be driven by the millions who are already online and
want to expand their options. By letting consumers get AOL on their TVs,
the company hopes to further cement its relationship with its 17 million
subscribers.
But AOL is under considerable pressure from Wall Street to demonstrate
that it won't be frozen out of broadband by its failure to strike any deals with
cable companies. Last week's landmark agreement enabling AT&T to buy
MediaOne pushes AOL farther than ever from being able to deliver its
service over cable. For the short term, AOL's huge base of subscribers and
brand-name recognition are likely to help boost DirecTV's aggressive drive
for new subscribers.
Farther down the road, analysts predict, advances in interactive satellite
technology could turn the partnership into a primary force in delivering stock
quotes, electronic mail, video games, banking and other services through
satellite networks.
Whether consumers will embrace satellite-based broadband remains to be
seen. The AOL-DirecTV configuration lacks the simplicity of cable modems
or the intuitiveness of broadband over phone lines. Christopher Mines, a
senior analyst with Forrester Research, is pessimistic, predicting:
"It will be the alternative of last resort for consumers who aren't served by
upgraded cable or telecom infrastructure."
Wired for Speed
Right now, that's a lot of consumers. Only about 750,000 homes have cable
modems, and another 50,000 use digital-subscriber-line technology, which
achieves high speeds over traditional copper phone lines. But with big
players such as AT&T throwing billions into overhauling these land-based
networks, analysts expect that much of the country will soon be wired for
speed.
Yet satellites may offer some unique advantages. Teledesic, based in
Kirkland, Wash., aims to offer two-way communications at the speeds of
fiber-optic networks to far-flung businesses. No cables are necessary to
plug into this network -- just a rooftop antenna.
Teledesic's system will use 288 satellites, none of which have yet been
launched, floating several hundred miles above Earth. Traditional
communications satellites fly much higher-more than 22,000 miles above
ground -- to remain stationary in relation to Earth and cover more territory.
BEST WISHES
BILL |
