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Entertainment Merger Mania : Mega-Deal II : Interactive TV, 1994's Darling, Is Struggling to Survive


A bill to deregulate the telecommunications industry is close to passing. But now the phone companies are getting cold feet: Most now have plans to offer only simple cable services in the foreseeable future.

Some cable companies remain optimistic. Time Warner says its technology is working and that its suppliers, including Silicon Graphics, have promised set-top boxes at a cost of just $350 a house by next year. Other technology, including the computers in which movies will be stored in digital form, should also come down in price dramatically over the next two years.

But that remains to be seen: Time Warner's experience thus far certainly doesn't offer much reason for confidence. Its Orlando, Fla., test bed currently provides service to only about 30 homes, compared to the original plan of 4,000. Its computer room holds an unfathomable 15 terabytes of disk storage space--hardly practical for installing in dozens of cable offices across the country.

Cable and television companies insist their plans haven't slipped that much from original projections: They never expected to have true interactive applications ready for use before 1997 anyway, they say.

But there is also a flavor-of-the-day element to all this talk. Two years ago, interactive television was the hot topic. Today, it's the Internet, and everybody is eager to describe their latest acquisitions and plans to exploit excitement over on-line services.

Cable companies such as Time Warner are trumpeting the potential for using cable modems to connect computers to on-line systems at rates 1,000 times faster than current modems by the end of the year. Baby Bells such as Ameritech are investing in travel and on-line shopping systems that will give them a foothold on the net.

Still, interactive television may yet materialize in unexpected forms. Two groups of Baby Bells have joined with Hollywood companies to develop compelling programming for interactive television, and they may yet find the right formula.

"It was over-hyped early," says Pat Campbell of Chicago-based Ameritech. "We are now in a cycle of under hype."


Forum: Internet Service Providers

The Cutting Edge is preparing a readers' guide to Internet access providers in Southern California and we're interested in your input. We'd like to know the good points and the bad points of the Internet providers you've tried. Are smaller, locally based firms more attentive to your needs? Do the major commercial on-line providers offer services smaller companies can't? Who does the best job of serving the local market? Have you found some to be particularly unreliable?

Comments will not be published individually and will not have names attached. However, we ask that you include your name and telephone number so we can prevent deliberate efforts to skew the results. We have already received many responses to last week's query on this subject and we are currently planning to publish the guide toward the end of the month.

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