ORLANDO, Fla. — When Time Warner Inc. chose this hotbed of entertainment diversions to launch the world's most advanced interactive cable TV system in 1994, executives predicted residents would quickly become hooked playing the system's video games and movies and shopping electronically from their living rooms.
But as Time Warner this year undertakes a $1-billion upgrade of its cable systems across the country, none of the entertainment giant's cable outlets will be remade in the mold of this flashy project, known as the Full Service Network, acknowledged Joe Collins, chairman of Time Warner Cable.
With a string of missed deadlines, red ink and failure to deliver promised goods such as residential phone service over its cable lines, experts say Time Warner's ambitious project has become a costly dinosaur that is rapidly being overtaken by a simpler but vastly more popular interactive network: the Internet. Time Warner executives have already largely consigned some FSN services, such as home shopping, to the Internet because the global network is better suited to transactional business.
As a result, there is fear among the Full Service Network's 180 employees that Time Warner, struggling with an $18-billion debt load, will jettison the entire interactive system and downgrade it to a fancy digital production facility for other Time Warner cable systems.
"It's been a disappointment from the standpoint that there is no conceivable level of consumer spending that would financially justify this system being rolled out nationwide," said Tom Adams, president of Adams Media Research, a Carmel Valley, Calif., consulting firm.
"Cable operators shot themselves in the foot by bragging about what they were going to be able to do" with interactive services and then not delivering because of high costs and technical obstacles. Meanwhile, Adams said, "interactive programming has found another pipeline to the home, and that pipeline is the Internet."
Lured by predictions that Americans would spend tens of billions of dollars annually to watch movies, tap into databanks and shop electronically from home, Time Warner and scores of other entrepreneurs began experimenting with interactive networks earlier this decade--promising consumers an era of 500-channel, two-way cable systems that would let them interact with schools, government and industry and sample entertainment fare and information databases from around the globe.
