Who's going interactive?

When news broke in December that Bell Atlantic, Nynex and Pacific Telesis were scaling back their Tele-TV venture, shivers must have run down the spine of the interactive television industry. After two years and roughly half a billion dollars invested, the venture seems destined for the uncertain fate that was met by many of its predecessors. And although Tele-TV has not been completely abandoned, its woes are symptomatic of an industry plagued with flash fever-hot one minute, cold the next.

Back in the good old days of 1993, interactive TV seemed to be well on its way to connecting American households to a smorgasbord of two-way services delivered at broadband speeds. From coast to coast, a slew of field trials examined electronic banking, educational services and video-on-demand (VOD). But those were not commercial deployments.

At the same time, the little-known Internet was about to steal the thunder of interactive TV and become a household name. Home computer sales were skyrocketing, along with on-line service subscriptions. Companies such as America Online had tapped into the elusive mass market, luring millions with e-mail and the wealth of information available through the World Wide Web.

While the on-line market thrived, interactive TV was squelched-in part because of difficulties with two-way transmission over cable. Service providers could not justify the investment required to upgrade their networks for two-way transmission-or the accompanying customer premises equipment. Thus was spawned the debate of PC vs. TV and the race to determine which would be the big winner in these multibillion-dollar interactive ventures.

Products with a punch If Internet service providers bested the cable TV industry in bringing a compelling product to market, the cable TV industry still holds a few trump cards of its own. The cable industry has a two-fisted punch of incredibly high penetration and wide bandwidth. Cable is currently available in 92% of U.S. households, and its broad bandwidth is essential to support truly interactive services.

While the term is stretched and used to include pay-per-view movies that actually only require a very narrow upstream path, the best interactive products are those built around a continuous two-way exchange between the subscriber and the program.

In 1995, the Los Angeles-based company ACTV launched what it called the first interactive television network in Ventura County. The trial initially came to market in an alliance with Cable News Network and Turner Educational Services Inc., delivering programming for distance learning. Since then, ACTV has aligned with Prime Sports-West to enhance broadcasts of the California Angels home games.

ACTV works by broadcasting the output from several different cameras on different channels. Viewers can then choose the camera angle they prefer. Although it is invisible to viewers, what they are really doing when they request a different camera angle is changing channels. If viewers disagree with an umpire's ruling, they can call up instant replays, also broadcast on a separate channel.

The Game Show Network, part of Sony Pictures Entertainment, has joined the ACTV team with its interactive game shows. And for the day's news, subscribers can tune in to CNN's Prime News and select on-screen prompts that switch to extended coverage of current events. In December, ACTV signed a deal with Fox Sports Net to add interactivity to that network's sports programming.

The ACTV network transmits both downstream and upstream signals over the existing cable TV infrastructure. Alternatively, it can run downstream over cable and upstream over POTS.

Another interactive programming option, Source Media's Interactive Channel, also uses either two-way cable TV transmission or an upstream POTS connection combined with cable transmission downstream (Figure 1). Launched last fall, the Interactive Channel provides localized programming, including an interactive TV version of the local newspaper and a service that provides parents with a child's homework assignments.

In December, Source Media announced plans for ChannelLink, a new service that will offer interactive capability on every channel. An icon will appear during regular programming that has interactive content associated with it, and viewers will click on the icon to access the interactive programming. If viewers using POTS for the upstream connection see a product they want to order, they will have the option of clicking on an icon to automatically dial the supplier's phone number.

While both ACTV and Source Media use the TV as the delivery mechanism, another interactive service, @Home, is delivered directly to the PC desktop. With potentially the broadest interactive content on the market, @Home is backed by cable perennials Tele-Communications Inc., Comcast Corp. and Cox Communications.

Not surprisingly, @Home is transmitted completely over cable. Its very deep bench of content providers resembles a who's who in entertainment.

A high-speed cable modem links subscribers to CNN Interactive, which also has aligned with PageInternet to deliver breaking news through an alphanumeric pager.

E! Online brings its interactive games of Paparazzi and Matchmania to the @Home Network. Extended movie advertisements from recent hits are shown next to parts of the original script. The Weather Channel also tossed its hat into the ring with satellite images of local and national weather patterns.

To date, @Home is commercially available through TCI in Fremont, Calif., through Comcast in Baltimore and, most recently, through Cox in Mission Viejo, Calif.

Another interactive offering, accessible through the Internet, is VDOnet, which has attracted the likes of Microsoft and U S West Interactive as investors. Its two flagship products are unique because they are scalable to the amount of available bandwidth. Both VDOLive-a video broadcasting application-and VDOPhone-for desktop videoconferencing-operate over standard telephone modems as well as over the cable TV network.

The southern showcase GTE came to Clearwater, Fla., with a 78-channel cable TV offering under the GTEamericast label. The company is one of the most aggressive members of the Americast family, a consortium that was created to serve the video programming niche, and includes Ameritech, BellSouth, SBC Communications and Disney.

In addition to a conventional cable TV program package that includes HBO and the Disney Channel, GTEamericast offers GTE's mainStreet, which is free to premium channel subscribers and costs around $10 a month for basic cable subscribers. GTE mainStreet consists of 80 different modules, from original interactive programming for children called Virtuality to an interactive prelude to the Academy Awards in which viewers chose their own winners.

The Clearwater mainStreet network is the only GTE trial that currently uses the cable system in both transmission directions. Other tests in California and Massachusetts run downstream over the cable network and upstream over POTS lines, although these tests are expected to convert to cable for both directions.

"We license original content from outside providers, we produce original content in-house with a staff of 35, and we also repurpose some of television's best shows into interactive shows," says Robert Regan, senior vice president of programming and content for GTE mainStreet. For example, viewers can play along with repurposed episodes of Jeopardy from the 1970s and 1980s.

"Some of the content you can get from the Internet such as news, weather and sports. But we produce it so that you can see it on your TV up to 12 feet away vs. sitting [directly in front of] a computer," says Regan. "We also make our service original by producing content that is interactive for television, not for the computer. So we're really producing content that is exclusively mainStreet.

In Orlando, Time Warner has begun to expand the offerings available through its Full Service Network, one of the first interactive cable TV networks.

Full Service Network joined with Barnett Bank to test interactive banking from the television set in 4000 local homes. Nearly every service offered at a branch is also found on the Barnett Bank's channel, including paying bills, reviewing statements and making account transfers. With finances in order, visitors can leave the animated virtual bank and tour the surrounding neighborhood. All the elements are rich with Claymation graphics produced by Gorilla Systems Corp. of Tampa.

Vehicle of choice Exploration has been the watchword for interactivity. Not only have carriers sampled many different products for the new medium, they've also tested different platforms for its delivery. The first commercial deployment of fiber to the curb (FTTC) began with a peripheral application of interactivity. FutureVision was the product named by founding corporation Digital Broadband Application. That company had a contract with Bell Atlantic to deliver FTTC services, including VOD, to nearly 5000 households in Toms River, N.J., and to expand the interactive base of the product. It proved to be a formidable challenge in an untested market.

"This is distributed intelligence in a broadband network, and what's new about that is everything," says Marty Lafferty, president of TelQuest Ventures and former head of FutureVision. "The complexity of building these platforms is like putting a very large local area network into an entire community.

"Everything about it has to be developed from scratch because it just doesn't exist," Lafferty says. "The file servers that carry content and process content from other sources didn't exist. The various kinds of switches throughout the network and the customer premises equipment all had to be created, and so did the software to get it all to work together. It is a huge amount of work.

After bringing FutureVision to about 3000 homes in Toms River, the venture was sold to Bell Atlantic, which promises to breathe new life into the effort in 1997. In the meantime, Lafferty has started another interactive venture, this time using a hybrid form of direct broadcast satellite and multichannel multipoint distribution service as the transmission of choice.

While the cable TV and POTS systems are tried and true avenues, there are advantages in molding newer technologies to support interactivity. Much hope is pinned on the advent of asymmetrical digital subscriber line (ADSL) because it allows both the transmission of digital broadband signals and POTS simultaneously over the same twisted copper pair.

"What we're seeing come on-line are newer technologies such as ADSL, which will support video and data as well as allow telcos to maintain their existing business and revenues from voice calls," says Wen Liao, senior analyst with Jupiter Communications. "It allows them to experiment with the newer interactive features of video, but it also enables them to use the existing telephone wires to transport their calls more efficiently and with better sound quality because it will be digital.

"That's a better business case for the interactive technology, but then again, that technology is a couple of years away. It's a more viable solution because it enables them to get more out of their system with less risk," Liao says.

While there is much activity in the interactive arena, the market remains very young. Trials are conducted on a limited scale and commercial deployment appears painfully slow. There has yet to be that singular, magnetic application that draws consumers in droves and propels widespread adoption. But carriers are positioning themselves to jump on the bandwagon when it does arrive by sampling this preliminary stage of interactive products and making critical adjustments early on.

Convergence, too, will change the nature of the offerings. Today, the lines are clearly drawn between delivering interactive applications through the PC and through the TV. As the technology matures, that line will blur and products may intelligently adapt to either format. The sure bet is that the good old days of interactivity lie ahead and not in the rubble of a disappointing past.

Pat Blake is a freelance writer based in Cedar Rapids, Iowa.