After a sluggish start, leaders in the Internet and software
industries continued this week to prod cable broadcast executives
about adopting new technology for the television.
Microsoft president and chief operating officer Rick Belluzzo
yesterday outlined the company's broadband initiatives at a
broadband conference, promoting its network and system software as
a way for cable operators and content providers to digitise the
broadcast industry.
Walk on the Wired Side, the conference sponsored by CTAM, a trade
group for the cable television industry, is promoting a number of
new technologies for cable broadcasters including the
long-anticipated interactive television, video on demand and home
networking.
Belluzzo demonstrated Microsoft's Interactive television platform,
the forthcoming XBox video game console and the Windows XP
operating system. Each of the technologies has been built with
broadband in mind, he said.
At launch, the XBox will be broadband-ready, although the company
will not have any services to offer right away. The company's new
desktop operating system, which will include new instant messaging
technology and a beefed up media player, will also include
functions to make use of high-speed Internet access. It is built
with home networking capabilities and related security functions.
Belluzzo promoted the developing products and Microsoft's .Net
initiative as drivers for new partnerships with cable operators.
"Broadband has really played an important role in our business," he
said. "And we're trying to put our money where our mouth is in
terms of developing products."
On Monday, Barry Schuler, president and chief executive of the
online arm of AOL Time Warner, pitched his ideas at cable
executives in search of similar partnerships in the high-speed
Internet market.
"We've got all these assets but we need partners," he said. "The
companies that will win will be the ones that sit down and work
together."
AOL Time Warner has technology and services in the Interactive
television market with its AOLTV. The company announced last week
that it planned to incorporate digital video recorder technology
from TiVo into its next-generation set-top box, as well as
satellite television services from Hughes Electronic subsidiary
DirecTV. The AOL Internet service is already the most widely used
with more than 30 million paying subscribers.
Now the company is looking for partners in the cable industry to
expand its reach into the coveted living room. Schuler signalled
that AOL Time Warner was pushing to reach the customer base of
local cable operators.
"They are the ones with the infrastructure and the assets," he
said. "They are in a position to become a supplier of our
services."
Local cable operators also have access to a huge install base, and
have the workers in place to install complex home networks and
broadband technology in peoples' homes.
Looking beyond the current cable modem, cable operators potentially
will have the opportunity to host more extensive services such as
the ability to send voice data, and offer expanded media services
such as videos on demand and digital music. Schuler positioned home
networks as a promising technology that will host such
services.
Home networks, which route one high-speed Internet connection to
multiple computers and Internet-enabled devices throughout a house,
are still complex systems to set up, however, especially for the
average consumer.
Similar to Microsoft and other small software vendors, AOL Time
Warner is competing to become the software du jour for these home
networks as well as for set-top boxes.
But continued pitfalls stand in the way of quick adoption.
AT&T is slowing its efforts to upgrade its cable subscribers to
the next generation of digital broadband services. The company
cancelled plans this month to roll out next-generation set-top
boxes from Microsoft.
"The roll-out of the advanced set-top boxes have been slower than
anyone has liked," Belluzzo told reporters, noting AT&T's
scaled-back offering. "We're staying with our vision. We've always
played these markets with the long term in mind."
That long-term outlook, however, has come with some steep
investments in hardware and software development. With commitments
from cable operators around the world to roll out about 50 million
of its set-top boxes worldwide, Microsoft continues to compete for
new partners, especially in the young US market, which has been
slower to develop than other regions of the world such as
Europe.
AOL Time Warner also faces its own problems as it struggles to make
deals with competing Internet service providers (ISPs) such as
Earthlink. The company has to work with rival ISPs before it can
roll out advanced services on its own Time Warner Cable
service.
While the market for high-speed Internet and digital television
services has been slow to take off, a ripe market is imminent, the
executives said. AOL and Microsoft are struggling to be in the fore
when the market takes hold.
"Broadband is going to be as fundamental as electricity or
plumbing," Schuler said. "I won't tell you when, but it's coming."