AT&T's animation gives spam a new image

Instead of simply telling you about the beaches of Bermuda, travel agencies can send the waves lapping over your laptop. AT&T officials think consumers will continue to accept or ignore unwanted advertising as a trade-off for an entertaining new service.

"To my knowledge, there is not another Internet service provider offering this," said AT&T spokeswoman Janet Wyles. "We're the only ones to offer Internet video email that doesn't require the user or receiver to load extra software."

AT&T WorldNet has stepped up its advertising lately, and sees a vast market among its 60 million long-distance customers. With AT&T's consumer division soon to split from its wireless and broadband siblings, officials are looking for ways to broaden the services menu of the dial-up service.

Under its contract with Fremont, Calif.-based Talkway Communications, AT&T is offering 60 minutes of free video email to AT&T WorldNet subscribers. While receivers need no special equipment or software, senders need only a camera and microphone, which AT&T is selling as a package for US$29.95.

In the interactive TV arena, AT&T Broadband is backing off plans to introduce the next-generation DCT 5000 set-top box with software supplied by Microsoft. Instead, the nation's largest cable operator will upgrade the three million DCT 2000 boxes already in customers' homes.

On a related front, AT&T has launched a legal battle with Microsoft over software that decodes voice signals. In the lawsuit, AT&T claims that a Microsoft program violates AT&T's patent for speech coding, which allows audio- and video conference calls over the Internet.