A high price for pizza

Time Warner winds down its bank-breaking interactive experiment Time Warner's Full Service Network, once touted by Time Warner Chairman Gerald Levin as a turning point for the cable industry, has begun drawing its shades and boarding up its doors as it prepares to shut down by the end of the year.

The Orlando project, which required more computer code than it took to put a man on the moon, is being scrapped to make way for Time Warner's Pegasus digital video system and Road Runner cable modem service.

Time Warner objects to media reports that it is abandoning its interactive video networks, characterizing the FSN as simply a testbed that has run its course.

"We're winding down our R&D efforts," said a Time Warner spokeswoman. "It started out as a technical trial, then moved into a marketing trial to determine what customers were willing to pay for."

If Time Warner has indeed always considered the FSN a trial, it's likely the most expensive trial that the telecommunications industry has ever seen. The cable operator has refused to divulge the system's price tag, but industry experts estimate that Time Warner has spent millions of dollars on the system, with the set-top boxes alone costing thousands of dollars each.

But while the FSN may not have proved to be technically viable on a commercial basis, it yielded some valuable marketing information, said John Aronsohn, senior analyst at The Yankee Group, Boston.

"I don't think it was a waste," Aronsohn said. "I think Time Warner gained some very valuable information on the marketing of interactive services that nobody else has--in fact, they probably have more information on consumer usage of video-on-demand than any other company in the world."

Time Warner has been tight-lipped about the results of the FSN, saying only that movies were the most popular service, followed by home banking and food delivery services provided in conjunction with Barnett Bank and Pizza Hut, respectively.

Many of the FSN services, which also included customized TV shows, news on demand, interactive video games and home shopping, will be incorporated into Time Warner's Pegasus digital video system, the spokeswoman said. The cable operator named Scientific-Atlanta, Toshiba and Pioneer as the vendors for its digital set-top box late last year, and it recently issued requests for proposal for hardware and software that will enable the delivery of the Road Runner high-speed data service to the television.

Meanwhile, the 4000 Orlando households that have gotten used to ordering pizza over their television sets and other advanced services will be switched back to ordinary cable service by the end of the year, the spokeswoman said. Most of the 160 FSN employees will be moved elsewhere in Time Warner, and the equipment will be either used in other Time Warner operations or sold, she added.