CEOs discuss building device to bring TV, Internet to home
Thursday, June 12, 1997
By Geoffrey Rowan
The Globe and Mail
The computer and cable television industries are working together to create a single device that will deliver TV programming and Internet services to the home, Ted Rogers says.
The informal alliance to create a low-cost standardized device, which the Rogers Communications Inc. chief executive officer hailed as the salvation of the cable TV business, sprung from a series of meetings between senior executives in both disciplines -- but especially between cable executives and Microsoft Corp. chairman Bill Gates, Mr. Rogers said.
"We commit our subscribers, he commits his technology," Mr. Rogers said.
Having a standard technology that the computer and cable industries agree on means they can roll out products faster and cheaper than with non-standard systems, concentrating on what they are going to put on consumers' TV and computer screens rather than how they are going to put it there.
This month, the chief executive officers of North America's largest cable companies went calling on the CEOs of many of the largest computer hardware and software companies.
"When I left Mr. Gates last week, I said: 'Today is the most historic day for the cable industry since I've been in it,' " Mr. Rogers said in a meeting with journalists. "We made a real campaign of falling in love with the computer and having them marry us. This is monumental. There's nothing I can compare it to."
Mr. Roger's ebullience follows an announcement this week that Microsoft is investing $1-billion (U.S.) in Comcast Corp., the fourth-largest cable company in the United States. The news has buoyed the entire cable industry, but Mr. Rogers said that's only the first deal between the two industries. He expects more, including an equity investment in his own Toronto-based company.
"This means we have a very strong ally," Mr. Rogers said. "We need this."
What such an alliance would mean, if it emerges, is that the cable industry would be able to roll out a broad range of new interactive services, which might help it fend off competition from satellite TV companies.
Rogers Cablesystems Ltd., for example, would be able to marry its high-speed Internet access service, Wave, with digital television, creating a hybrid interactive medium.
For the computer companies, a partnership with the cable industry would provide the high-speed connection into the home that they need to justify the sales of a new generation of computer equipment and software.
Under the scenario Mr. Rogers put forward, computer companies will be producing a new generation of Internet-capable TV sets, and producing them faster than traditional TV manufacturers can and at much lower prices.
"The computer people are ecstatic because they can see TV computers in the living room," he said, adding that this would counter the slowdown in personal computer sales.
In the interim, there will be set-top devices, like the one the cable executives saw in Microsoft's research labs in Redmond, Wash., that will be able to handle digital data meant for existing computers or TV sets.
Mr. Rogers said members of the leading cable companies who sit together on an industry standards body, called Cable Labs, have already agreed in principle to large enough orders of the hybrid Internet-TV boxes to bring their price below the current $450 cost of a cable modem.
And Mr. Gates will be the driving force behind this new cable-computer hybrid, Mr. Rogers said.
For its part, Microsoft sounds like it is not so much married to the cable industry as it is dating it -- and Microsoft likes fast dates.
"It's really a vote for speed," said Ken Nickerson, who runs Microsoft's on-line service in Canada, the Microsoft Network. A high-speed connection to a computer network, such as the Internet, allows providers to deliver audio and video services, unlike slower-speed connections that can only handle text and some graphics.
Mr. Rogers acknowledged that there is no exclusive deal between the cable and computer industries, but said cable will benefit more than its competitors because it is in more homes than other programming delivery services, which means the computer companies are more likely to focus their development efforts on products for cable.
Mr. Nickerson disagreed with that, insisting that Microsoft will go wherever the speed is.
Meanwhile, Mr. Rogers said the computer industry's apparent endorsement of cable companies will almost certainly result in more equity investments by technology companies in cable companies.
He said he was sitting at the table when Comcast chief executive officer Brian Roberts suggested to Mr. Gates that Microsoft invest some of its research and development budget into the cable industry.
Within a few days, Microsoft had agreed to invest $1-billion in Comcast. Asked why he didn't solicit a Microsoft investment, Mr. Rogers said: "I didn't think of it." |
