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THE CUTTING EDGE

Chip Seen as Major Step for Interactive TV

Cable: Broadcom's merging of digital and broadcast capabilities is expected to cut cost of home equipment, boost Web access.

November 09, 1998|P.J. HUFFSTUTTER | TIMES STAFF WRITER

In a major boost for Internet access through cable TV, Irvine-based Broadcom Corp. is expected to introduce today a single graphics chip that contains the circuitry needed to make interactive television services more attractive and easier to use, and set-top cable boxes more functional.

The chip, which works inside either a digital or an analog set-top box, lets consumers see a blend of high-resolution digital images, graphics and broadcast video.

Cable operators see the new digital boxes, which allow them to offer more channels, as a key weapon in their battle with satellite TV services. And the growing demand for the products is part of the reason Broadcom's stock has jumped more than 230% since its Wall Street debut in May.

By packing the circuitry for meshing TV signals and computer graphics onto one chip instead of several, Broadcom is expected to sharply cut the cost of home equipment for the emerging interactive TV market, according to analysts.

Broadcom's announcement feeds into an industrywide push among cable operators and the PC world to make set-top boxes smarter, faster and more powerful. For the last couple of years, the two camps have been fighting over how to give high-speed Internet access to consumers and what kind of device the public will use to take advantage of that service.

Microsoft Corp. envisions its WebTV offering as a solution for this convergence between broadcasting and interactivity, while Tele-Communications Inc. Chairman John Malone has promoted the idea of a "walled garden" of basic online information and retailing services for its cable customers.

"The more sophisticated the service, the more advanced the interface has to be," said Jonathan Cassell, analyst for research firm Dataquest. He called the Broadcom chip "a pretty big step up in the quality of graphics that can be seen on a TV set."

The new chip will also hasten the connection of phones and other devices to cable, analysts say. Traditionally, set-top boxes have been simple machines that performed simple tasks. Compared with what a personal computer could do, they were seen as "dumb" devices.

But the emergence of digital boxes, armed with computer memory and a high-speed modem, would give cable operators the ability to finally deliver on the long-promised dream of interactive digital TV. The devices would allow consumers to surf the Web, e-mail and shop online, all via TV sets.

"Today, one of the major problems is [that] the images look really bad, and until now, you couldn't have a broadcast and a Web page together on the same screen," said Gerry Kaufhold, principal analyst with Cahners In-Stat Group, a Scottsdale, Ariz.-based research group that tracks emerging high-tech markets. "This Broadcom chip lets you do that with one chip, not several."

The prospect of mass adoption of cable modems and set-top boxes was a major incentive for the development of the chip, said Tim Lindenfelser, vice president of marketing for Broadcom.

Analysts estimate that by the end of the year, 500,000 U.S. households will have Internet access through their cable operator. Sources at Comcast say the company is installing 5,000 digital set-top boxes a week and has plans to upgrade them every 18 months.

Broadcom plans to demonstrate its new chip to customers this week, Lindenfelser said. In the cable market, the firm's clientele includes device manufacturers Sony Corp., Scientific-Atlanta Inc. and General Instrument Corp.

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P.J. Huffstutter can be reached via e-mail at p.j.huffstutter@latimes.com.

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