Yet another offering from the Red Herring. This one concerns broadband delivery via cable TV. They mention competition for Replay and TIVO but not inTelicast.
Cheers
Bob Spears
Stay tuned for broadband on
TV
By Owen Thomas
Red Herring Online
March 1, 1999
NEW YORK -- Computer users may be howling for
fast access to the Net, but the companies bringing
broadband Internet access to the home are already
looking past the PC.
At the Jupiter Consumer Online
Forum Monday, Network
Computer (NCI) announced a deal
with US West (USW) to combine
data, enhanced TV, and phone
service to customers, using a
set-top box to come out later this
year; @Home Network CEO Tom
Jermoluk touted his company's partnership with
Tele-Communications (TCI) to provide Net-enabled
digital cable; and Steve Perlman, president of
Microsoft's (MSFT) WebTV Networks unit, talked up
a recently formed partnership with satellite broadcaster
EchoStar (DISH).
While these digital TV offerings differ slightly in their
features, all share the same mission: getting broadband
Internet service out to the masses who are unlikely to
buy PCs.
TALKING TO YOUR TV
NCI, a private company in which Oracle (ORCL) is a
majority stockholder, announced that it would provide
software to operate a US West-branded Internet access
service. Running in conjunction with a TV signal from
cable, antenna, or satellite systems, the service would
offer a TV programming guide and other enhancements,
access to Web sites and email, and, more notably,
telephone service.
Robin Tidwell, a US West product developer, said that
the system was in testing now, would enter into trials in
US West-served cities like Denver, Minneapolis, or
Phoenix this summer, and would be widely deployed by
the end of the year.
The service allows US West to market its Internet
access and high-speed digital subscriber lines (DSL) to
families without PCs in their local service area in the
northwestern United States. Unlike other offerings, US
West's product would simply use local phone lines to
turn customers' TVs into a giant speakerphone; while
US West officials didn't comment specifically on plans
for videoconferencing, the set-top box has hook-ups for
digital camcorders.
The deal is a big win for NCI, with US West its first
telco customer in the U.S. Under new leadership by
former Sybase chief Mitchell Kertzmann, the company
has inked deals with European cable providers, but is
still looking to sign up its first U.S. cable customer.
DEATH OF BROADCAST, FILM AT 11
Meanwhile, WebTV's Mr. Perlman touted his latest
product, due out this spring: a set-top box with an
unusually large hard drive, capable of recording signals
from EchoStar's satellite broadcast network.
"That 8.9-gigabyte hard drive allows us to record about
eight hours of digital video," said Mr. Perlman. That, and
the deal with EchoStar, changes everything, he argues,
as consumers will be able to view television programs
and video selected from a vast array of channels and
Internet servers at times of their choosing.
"Years from now, it's going to be looked at as a
watershed event. You'll have virtual channels. Prime time
is what you make it."
WebTV has competition from startups like Replay
Networks and TiVo, both of which make surprisingly
similar set-top boxes that record and play back TV
signals from large hard drives. Mr. Perlman gave a nod
in their direction: "What Replay and TiVo are doing is
great, but we think that you need something with more
interactivity."
DIGGING A CHANNEL
While WebTV and US West look to phone lines and
satellites to reach consumers, @Home is staying the
course on its cable-modem strategy. As cable operators
upgrade their systems, however, it's looking beyond
PCs for growth, according to CEO Tom Jermoluk.
"One of the nice things for us is that plant upgrades let us
offer a variety of services, from digital TV to telephony
to digital data," said Mr. Jermoluk. "And when I bring
someone to our service, they may not have been a cable
customer." While 98 percent of U.S. homes have cable
wiring installed, penetration of cable systems has stalled
in recent years at just over 60 percent of U.S.
households.
@Home's goal is both to grow from cable's customer
base and expand cable systems' reach: "It's absolutely
our policy to have us pull cable and cable pull us."
Mr. Jermoluk admits that his company's growth will be
constrained by cable's upgrade path for the next five
years, but noted that cable operators were upgrading
about 10 million homes a year for digital services.
"Broadband is going as fast as it can," he said. "This is
not a trivial task."
In the meantime, he added, "You do things like Excite so
you can give them a seamless broadband experience
they can access at work." @Home recently announced
plans to merge with Internet portal Excite (XCIT).
But @Home still needs to find an interim access
strategy. Before Mr. Jermoluk's keynote, Jupiter
Communications researcher Mark Mooradian predicted
that in 2002, 78 percent of Internet users would still rely
on slow modem links. One possibility for @Home will
be to fold in the operations of WorldNet, an Internet
service provider operated by AT&T (T) -- which itself
is in the middle of acquiring @Home's majority
shareholder, cable operator TCI.
THE TROJAN HORSE
As they outlined their product plans, the assembled
executives were not hiding their agendas.
"What looks like a thin client today could be the first
step to a home server," said NCI chief Mitchell
Kertzmann. In other words, a set-top box connected at
high speeds to the Internet could run not just a television
set, but a variety of home appliances and communication
devices.
Mr. Jermoluk said one goal of his company's merger
with Excite was to get its hands on Excite subsidiary
MatchLogic, which offers technology for tracking user
behavior both on Web sites and on cable systems.
"For us, it's all about being able to follow the clickstream
up and down" as well as provide precise targeting for
advertisers, he said.
And according to Mr. Perlman, WebTV's early
products were a bit of a technological ruse.
"We kind of pulled a fast one when we first launched this
thing," he said. "We took content that had been
prepared for the PC and repurposed it for the TV."
"The Internet is a means to an end," Mr. Perlman added.
And that end -- true interactive television -- has been a
long time coming.
"This dream goes back almost 30 years to experiments
by newspapers and telecom companies in Europe to
deliver videotext to the television set," said Gary Arlen,
president of research firm Arlen Communications.
Companies chasing after convergence -- the confluence
of PCs and consumer electronics -- will continue to
flock to new platforms like the television, he said:
"They've covered all their bases. This is about getting
ready for whatever the consumer wants."
If the consumer wants interactive television, the industry
may finally be ready in 1999. |
