Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: John Rieman who wrote (45850)	10/6/1999 7:58:00 PM
From: DiViT	Read Replies (1) \| Respond to of 50808

NTL'S STRATEGY FOR INTERACTIVITY 02/08/1999 Inside Digital TV (c) 1999 Phillips Business Information, Inc. Following Microsoft's recent investment Barry Flynn attempts to tease out the implications of NTL's technology deals. The announcement by NTL on January 25 that Microsoft was to invest $500 million to help it build out its broadband networks is the culmination of a number of recent successive technology deals by the UK's most aggressive telecommunications company. The first was an agreement with Network Computer Inc (NCI) to use its TV Navigator client for its relaunched Web-via-TV service, NTL TV- Internet. This will run on an Acer box connected to a domestic TV receiver, with 56K modem for the return-path. This was swiftly followed by a cable modem deal with US communications technology specialist 3Com. The Microsoft announcement a few days later capped a spending spree that began last October, when UK set-top box manufacturer Pace was contracted to supply the first 100,000 digital boxes for NTL's digital cable service - due to begin rollout in April. That announcement in fact marked the creation of the Microsoft/NTL alliance: Microsoft supplies back-office servers and hosting environment for the cable platform, with ICL acting as systems integrator and PowerTV supplying the STB operating system and user interface. The only technology elements missing from NTL's multi-faceted interactive offerings are the identity of the suppliers for its putative DTT 'superbox' (NTL has a one-third stake in S4C Digital Networks (SDN), which holds the licence for the UK's multiplex A; and of the user interface for the Pace box. However, these deals serve to demonstrate how NTL is planning to segment the market in order to leverage its different types of network: cable licences due eventually to cover over five million franchise homes; a national fibre-optic telecommunications network; and a national broadcast transmission network. It appears that NTL has elected to split its potential interactive customers into two broad categories: those who lie within its cable franchise areas and those who lie outside it. Within cable, the segmentation is clearly between customers who own a PC and those who don't. The clue to this is the deal with 3Com - which is for the supply of modems using the US MCNS/DOCSIS standard. Since Pace will supply digital cable boxes which include integrated European-standard DAVIC/DVB-RC cable modems, the 3Com deal must pertain to the PC platform. This suggests the technology hierarchies laid out in Table 1 below. Outside its cable franchises, the market segmentation is between analogue and digital terrestrial homes. Does this gives us any clues about where Microsoft's products might fit in? On the cable side of things, it is tempting to suppose that WebTV might take up position as the GUI running on top of the PowerTV in the Pace box ( successfully demonstrated at the Western Cable Show). However, Pace has told Inside Digital TV that NTL's existing intention is to use the PowerTV interface on top of the PowerTV OS. That leaves terrestrial. While NTL-branded WebTV boxes could conceivably be marketed alongside the NCI Acer boxes for analogue TV homes, this would surely confuse matters at a very early stage - the NTL TV-Internet service has only just been relaunched. The only remaining candidate, then, is the DTT 'superbox'. NTL has yet to announce its technology choice: a tie-up with Microsoft makes sense for several reasons: * The second-generation version of the WebTV concept, WebTV Plus, relies on downloading extra data over-the-air to a 1Gbyte hard drive to bypass the Internet bottleneck. NTL controls a broadcast transmission system which would enable it to offer this facility. * Such functionality would make sense of the term 'superbox' - intended, in line with SDN's licence application - to offer a high- end interactive platform. * Microsoft has so far been unsuccessful in getting any other UK broadcaster to back its WebTV technology (although Carlton and Granada are trialling it). It may, however, be a mistake to assume that Microsoft's chief aim is to insert WinCE and WebTV into NTL's digital set-top box, even though NTL is far from dismissing that possibility. A more likely target for such a move is in fact United Pan-Europe Communications (UPC), the European cable concern into which Microsoft is injecting $300 million. UPC has just selected GI to supply its DVi-5000+ DVB- compliant advanced interactive digital set-top terminals for UPC networks across Europe. UPC says it chose GI "because of its open architecture, enabling a choice of advanced operating systems and interactive services; for example, Microsoft's Windows CE." Indeed, last May, GI demonstrated WebTV running on the DVi-5000+ box at the NCTA show, confirming their existing technology alliance. Another strategic possibility with respect to Microsoft/NTL is to do with the Internet itself. With both SkyDigital and ONdigital downplaying the role of the Web for content for their interactive TV services, the pro-Internet cable sector remains the last UK broadcast environment where Microsoft is able to promote HTML-authored content provided through links to the Net. This could strengthen its defences against the threat from Sun MicroSystems's Java software, rapidly positioning itself as the core technology for Europe's interactive platform for digital TV. With NTL a likely player in any further consolidation in UK cable, the investment begins to make a bit more sense. If that is the reason for the investment, however, Telewest has taken some of the shine off it with its announcement that it is opting for NCI's technology, too. Table 1: NTL cable technology platforms Technology Cable customer Cable customer platform with PC without PC Service Fast Internet access NTL digital cable offering Operating System Windows Power TV GUI Internet Explorer* Power TV Modem 3Com cable modem Cisco cable modem (MCNS/DOCSIS) (DAVIC/DVB-RC) Hardware company PC manufacturer Pace * 3Com has a technology alliance with Microsoft, which reinforces the likelihood of Windows/IE being the recommended or optimal software combination Table 2: NTL non-cable technology platforms Technology Terrestrial TV Terrestrial TV platform Home (analogue) Home (digital) Service NTL TV-Internet DTT 'Superbox' Operating System VxWorks TBA GUI TV Navigator TBA Modem 56K analogue TBA Hardware company Acer TBA