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Net via TV Airwaves Is Not Clicking, Despite Big Backers

Computers: Price-conscious consumers show little interest in WaveTop, a video datacasting system.


WASHINGTON — A new technology that uses TV airwaves to send Internet data has drawn a big yawn from consumers despite being backed by two of the most powerful names in computing: Microsoft Corp. and Intel Corp.

The technology, known as video datacasting, was expected to get a big send-off this summer because a version of it known as WaveTop is built into Microsoft's Windows 98 computer operating system, which has been selling briskly.

But computer manufacturers, who say consumers are increasingly shunning high-priced PCs in favor of cheaper models, have resisted installing the critical add-on circuit board that is necessary to receive the data transmissions over the television airwaves.

Computer makers say the TV data receiving cards, which also allow consumers to watch ordinary television on their PCs, would boost the cost of a personal computer by $100 or more--a price, they say, many consumers are unwilling to pay.

Dell Computer Corp., one of the nation's biggest makers of PCs, does not offer personal computers equipped with the TV tuner cards, for example. And Compaq Computer Corp., which does offer the card, nevertheless said few consumers have been willing to pony up the extra $119 that Compaq charges for the device.

"We're finding that people are signing up for our service but not at the rate we want," conceded Jim McNeill, senior vice president of WavePhore Inc. the Phoenix-based developer of WaveTop.

The lackluster demand has walloped the stock of WavePhore, which has plummeted below $6 from a 52-week high of more than $19. That's produced millions of dollars in paper losses for Microsoft and Intel, both of whom own minority stakes in WavePhore.

WavePhore, which also operates datacasting and publishing units geared toward corporate clients, "has two other great businesses, but WaveTop has not caught on with consumers at all," said Rob Martin, a technology analyst at Friedman, Billings, Ramsey & Co. who--based on his misgivings--last month issued a "sell" recommendation that drove WavePhore's stock down nearly 30% in a single day.

"The problem is that the technology is not compelling enough" for consumers, Martin said.

Indeed, WaveTop's wireless connection to the Internet won't let users surf the Web interactively the way they can with modems or systems such as Microsoft's WebTV. But WaveTop will allow consumers to subscribe to certain sites, which will transmit their pages, including around-the-clock updates, through a wireless receiver.

By receiving data 24 hours a day, a computer user can download hundreds of megabytes of data without tying up a phone line.

What's more, users don't have to pay for the service because it is supported by advertising from content providers, including USA Today, Time Warner's New Media unit, Weather Channel, Wall Street Journal Interactive, and comic strip purveyor Universal Press Syndicate.

WavePhore has a contract with a Public Broadcasting Service spinoff to transmit its WaveTop service from 264 public TV stations. WavePhore and officials of the PBS spinoff say the service is available to more than 85 million U.S. households.

"From a consumer perspective, this technology is pretty damn impressive right now with really limited bandwidth," said Jay Trager, chief operating officer of National Datacast Inc., the spun-off PBS unit. "And the price is right: It's free. Our stations have gotten a number of calls from viewers inquiring about the technology, although I will admit for those not fully familiar with the concept of a TV tuner card" interest has been slow to develop.

Indeed, some experts think the failure of the service stems from lack of promotion, not consumer disenchantment.

"Signing up TV stations to participate was easy, but getting Microsoft to promote this has been hard; they've done almost nothing," said John D. Able, president of Datacast Corp., a Reston, Va. company seeking to compete with WavePhore in the datacasting business.

Able suggested that Microsoft could offer consumers discounts on TV tuner cards bundled with Windows 98 or even set up in-store displays promoting the technology. "You would think the sale of tuner cards would increase with the release of Windows 98 but they haven't," Able complained.

WavePhore's McNeill said the company does indeed plan to step up its marketing efforts with in-store displays at CompUSA outlets that offer demonstrations of the technology and discounts on the TV tuner cards.

"Once consumers see this in action, we think they will understand the added value" the technology offers, McNeill said.

*Times staff writer Jube Shiver Jr. can be reached via e-mail at

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