The Bell companies as innovators?

Well, here's something that will clear those post-holiday cobwebs from your head: The Bell companies are being described as innovators.

At both the upcoming International Consumer Electronics Show in Las Vegas this week and in a fascinating new report from Forrester Research, "The Battle for the Digital Home," Bell companies are getting higher marks on the innovation scale than one might expect.

SBC Communications and 2Wire landed a 2005 International CES Innovations award for the SBC Home Entertainment Service the two developed in a joint venture. The new service links TVs and PCs in a home network that combines satellite TV content, digital video recorders, video-on-demand, high-speed Internet access with new capabilities to control everything easily with a single remote.

HES is being demonstrated at CES this week, but has already made its debut in shopping malls in the SBC 13-state territory. It becomes a consumer reality later this year.

According to Ted Schadler, the Forrester vice president who penned "The Battle for the Digital Home," SBC's new service is exactly the kind of thing the Bells need to be doing -- and are starting to do.

Because they trail cable in building out a broadband infrastructure, telcos need to build a service bundle using satellite TV content and add in enough innovation to build brand loyalty among their customers in advance of getting fiber to the neighborhood or the home, says Schadler.

He admits the hardest part of creating a truly "digital home," in which the people easily control the many devices to get them to behave as desired, is making things much simpler to operate.

"That's a huge barrier," Schadler said in a telephone interview. "What any consumer is expected to be able to figure out with all the technology -- it's crazy."

Anyone who's recently gotten digital video recorder capabilities through a satellite or cable company -- as I did -- can only second that emotion. Out of sheer desperation, I tried a tactic I've rarely if ever used before -- reading the manual cover-to-cover. It didn't really help much.

Schadler believes the cable industry "is banking on the fact that" the technology to create a digital home "is so hard for the average customer that they won't be able to do it. The cable industry is feeling confident that what they have will be enough."

Though trailing in infrastructure investment, the telephone companies are actually leading cable in innovation, at least in the digital entertainment arena, he adds.

At this point, Schadler gives cable the leadership position, but says it's anyone's ballgame. So can the Bells innovate their way forward?