Industry bigwigs near interactive TV deal

Microsoft Corp., Intel Corp., and Network Computer Inc. are working with other computer and cable players on a new standard for delivering interactive content over broadcast channels.

"This technology is a great step forward," said a source close to the discussions. "Instead of having three major players going in different directions, we have a concerted effort."

The platform, to be called the common content framework, or CCF, will bring together parts of Microsoft's WebTV technology with Intel's Intercast technology and some aspects of NCI's enhanced TV platform. Exactly which components will make the final cut, however, is still under discussion, said a source at one of the companies.

It is likely that any final specification would include WebTV's TV crossover links for linking icons on a TV screen with Web content, as well as industry standards such as HTML, dynamic HTML, and Java. In addition, Intel's Intercast technology for sending interactive data over both digital and analog broadcast networks is a good candidate for the foundation of the future specification.

Spokespersons for Microsoft, Intel, and NCI declined comment.

NCI could push components of its DTV Navigator set-top software and its Custom Connect server software. The two components aid cable companies in delivering interactive TV content to home viewers.

A common standard would mean that content providers such as the Weather Channel, Lifetime Television, and CNN -- currently on board with Intel's Intercast technology -- could make one set of interactive content that would work with any platform, be it from NCI, WebTV, or some other player.

"Right now this space is very young and there is little definite direction," said Ron Rappaport, industry analyst with Internet watch group Zona Research. "It's the right time for a proposed standard like CCF to be introduced."

Ceo Hindery Jr., president of Tele-Communications Inc. (TCICP), agrees. "Interactive content will be a smashing part of the cable offering in the future," he said. "Provided the proposal is done under a common standard, we would support the effort." Hindery made his comments after a speech to the Bay Area Cable Club in Burlingame, Calif., on Thursday.

Yet collaboration between even these three major industry players does not ensure success. The cable industry has always been wary of interlopers, and especially when Microsoft (MSFT) is involved.

"They worry about the computer companies taking their profit," said David Card, new-media analyst at market researcher International Data Corp. In December, the TV industry refused to play ball with Microsoft and Intel ( INTC), and rejected the companies' digital TV proposal. Shortly after, Intel revamped its strategy to be more TV-friendly.

In fact, competing visions for the space could still scuttle the project. Originally, the new framework was to be announced at the National Association of Television Programming Executives in New Orleans next week. Now, those plans seem to be on hold, say sources.

For Microsoft, the deal would mean that its substantial pride had been swallowed, and success took precedence over owning the industry, according to one analyst.

"Not everyone would have adopted WebTV," said Deborah Coplin, cable TV analyst with new-media researcher Jupiter Communications Inc. The resulting set-top situation would be like needing a separate TV to watch the content broadcast on HBO and NBC, she added. "Of course, Microsoft would rather have everyone do it their way, but by teaming up, they have a much better chance of selling it to the industry."

For the three companies, the stakes are high. According to Jupiter estimates, only a modest 1 million interactive TV boxes will be sold this year, but that should grow to 7.7 million by 2002. If the set-top boxes provided by cable companies are included, that number should quadruple.

To get that tasty piece of the pie, any endeavor needs the blessing of the cable industry's joint laboratory, CableLabs, and its OpenCable initiative. The project is being worked on furiously to create an overall specification for interoperable digital cable boxes. The delivery of interactive content is one facet of the effort.

If CCF doesn't meet the OpenCable initiative's requirements, it could get shot down. "I don't know if we would want to incorporate a proprietary piece of work," said Don Dulchinos, project manager for the OpenCable initiative at CableLabs. "If they published openly and royalty-free, [then we would consider it]," he said.

Another problem: Selling content producers on the switching to the new format. Until the loose consortium hammers out the details, several TV channels carrying Intercast content have only agreed to "evaluate" the technology.

"We talked to them about it," said one channel exec. "But we just got up and running [with Intel's Intercast]. We're going to wait on implementing any new technology."

Until these difficulties are worked out, even a major joint effort between computer companies is no sure thing.

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