MUST-CALL TV

U S West will test a set-top box that will permit cable customers with Internet access to place and receive phone calls and surf the Web over their television sets.

Named @TV, the device-which includes a speakerphone-will incorporate software from Network Computing Inc., an Oracle subsidiary. The service, which is one of the first from a big service provider to go head to head with Microsoft's WebTV, will allow users to send and receive e-mail, make voice calls and surf the Web with either a high-speed digital subscriber line connection or a 56 kb/s dial-up modem.

"With U S West @TV, households can enjoy the benefits of being connected without having to purchase a PC," said Eric Bozich, U S West's vice president for Internet applications. "We are aiming to make Web tone as common as dial tone."

US West is concluding tests of the device and will begin marketing trials in selected metropolitan areas soon. The company hopes to roll out the service to its entire 14-state market by the end of 1999 but has not yet decided whether to lease the set-tops or sell them through retail channels-reportedly at a price point of about $300.

On the carrier end, U S West will use NCI's Connect IP Suite server software for terminal management, network security and administration. The set-top box uses NCI's TV Navigator to integrate telephone and Internet functions. Customers using the box see a small phone icon on the TV screen when a call is received. They can click on that icon with a remote and pull up a branded U S West ID screen to see the caller's name and number. A similar screen with a keypad will let them dial and place phone calls.

The device will allow customers to use TV to read e-mail, access programming guides, and order caller ID and three-way calling.

"The company can tap into some new revenue with this move," said Michael Gorchow, a media analyst with Whalen, Brown Investors. "It's a chance to add incremental sales of phone services. But more important is the chance to bundle phone and Internet access for sale to households without PCs or to those that want high-speed DSL connections."

US West has announced intentions to deploy DSL lines more aggressively in the home market, though Gorchow expects pricing to keep penetration below that of cable modem-based Internet service.

Pricing will be a special concern with @TV because customers who buy or lease the set-top and want to take full advantage of it must also have Internet access and a cable TV subscription. "The total price will be more than the cost of the box, and we'll see if PC-less families decide that it's worth it," Gorchow said.

Still, @TV may be a good way for U S West to discover revenue in the growing market of interactive television. Last week, @Home announced plans to offer high-speed Internet access over television in the second half of 1999, at a price-$15 a month-aimed at targeting first-time Internet users without PCs.

The U S West service may also be a response to the competitive challenge of cable multiple systems operators offering bundled Internet access and, in some cases, phone service.

"It's an interesting twist on AT&T's entry into the home over cable," said Gorchow.