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

To: DiViT who wrote (40917)	5/12/1999 3:09:00 PM
From: Maya	Respond to of 50808

Industry Analysis May 12, 1999 Telecom: Will the DirecTV/AOL Deal Lift Satellite Operators? Analyst: Bob Hirschfeld On May 11th, the boundaries between TV and PC grew less visible. America Online (NYSE:AOL - news) said it will develop its Internet television services with Royal Philips Electronics, Network Computer, and two units of Hughes Network Systems and DirecTV. Under the deal, consumers will be able to tune in Hughes Electronics' (NYSE:GMH - news) DirecTV and surf the web with AOL from the same box. The service, called AOL TV, will use DirecTV's digital satellite television programming, TV set-top boxes from Hughes and Philips, and software from Oracle's (NASDAQ:ORCL - news) Network Computer. The boxes will work either through phone lines or DSL, digital subscriber lines, both of which are available through local phone companies. AOL is fighting for share against cable-TV companies, which can offer faster Internet access but aren't required to let services like AOL use their lines. AOL is making its DSL offerings appealing and is trying to adapt to the new playing field, which was redrawn a week ago when long distance phone company AT&T (NYSE:T - news) announced plans to purchase cable operator MediaOne (NYSE:UMX - news) . AT&T, soon to be the number one cable company, is also developing ties with Microsoft (NASDAQ:MSFT - news) , which already offers an Internet TV service. The interest was reciprocated last week as Microsoft agreed to invest $5 billion in AT&T to secure the right to install its software in AT&T's set-top boxes. From AOL's perspective, that changed the competitive picture in a big way. AOL has been working on AOL TV since buying NetChannel, an Internet TV service, last year, and plans to offer the service to its more than 17 million subscribers. For AOL, the Hughes deal provides access to the "electronic hearth" as well as a counter-thrust to rival Microsoft, which purchased WebTV in 1996. AOL's Vision What will the interactive future look like? According to Barry Schuler, president of AOL's Interactive Services Group, the TV service "isn't about taking your TV and making it an Internet access device," but offering a combination of functions. In Schuler's words, "people will turn on the AOL TV to watch the football game, check out if their friends are also watching, then chat via e-mail during the game." The AOL/DirecTV deal, which provides TV programming via satellite along with interactive Internet traffic on phone lines, marks the beginning of a more interactive electronic hearth. Though the combination of satellite and phone lines lacks the simplicity of cable modems and the ease of broadband over phone lines, the new offer will be a tempting for those homes lacking upgraded cable and telecom, which is a whole lot of homes. Hughes' partnership with AOL, the world's leading online service, will allow DirecTV to offer its subscribers connected interactivity, a benefit that "gives them a far more enriched television experience and access to a wealth of information," says Michael Smith, CEO of Hughes Electronics. Bottom Line: DirecTV will have a broader list of benefits to offer subscribers as it continues to poach new subscribers from cable operators. And the move gives Hughes a riposte to arch-rival Echostar (NASDAQ:DISH - news) , which last January licensed Microsoft's WebTV technology to provide interactive television via satellite. DirecTV and Echostar should both benefit from this endorsement of the satellite platform. -------------------------------------------------------------------------------- fnews.yahoo.com