New ideas trigger datacasting revival

Remember ActiMates?

Six years ago, Microsoft had hopes of breaking into the educational toymarket with a line of interactive dolls based on Barney the PurpleDinosaur, Teletubbies and other popular television characters. The toys, called ActiMates, allowed children to play peek-a-boo, sing songs and even join in a show's activities while watching it live or on video.

Unfortunately for Microsoft, the dolls didn't catch on and wereeventually discontinued. But the company never lost interest in thetechnology that made them tick, particularly the use of broadcastsignals to pull a gadget's digital strings.

"The magic of software is spreading out to all different devices,"Microsoft Chairman Bill Gates beamedat the last Comdex trade show in Las Vegas. "And those devices areconnecting in different ways."

Specifically, he was talking about "datacasting"--an inexpensive,decades-old technology that delivers bits of information over radio andTV using the public broadcast spectrum. Today, after years ofneglect, datacasting is drawing unprecedented interest from powerfulplayers in the media and technology industries.

Walt Disney plans a major datacasting trial this fall. The company will test a video-on-demandservice that will use the broadcast facilities of its ABC network tosend hundreds of hours of movie programming in digital form to berecorded on hard drives for playback on TV sets.

A large consortium of media companies that includes Comcast, is backingefforts to create a national datacasting network. The group has poured some $80 million into start-upiBlast, which has inked deals with more than 250 U.S. televisionstations. The company has launched a video-game service in Los Angeles, San Francisco and a handful of other cities that charges $10 a month, and CEO Grayson Hoberg said iBlast plans to release other services in coming months.

Less-ambitious services have been appearing in limited markets over the past few years. Radio giant Clear Channel Communications announceda datacast service for consumers out of its Cincinnati WKRC TV station in late 2001. And Capital Broadcasting has provided a service called TotalCast over its WRAL television broadcasts in Raleigh, N.C., since 2000.

"Datacasting is one of those best-kept secrets in the U.S.," said JayTrager, chief operating officer of National Datacast (NDI), a subsidiary ofthe Public Broadcasting Service that has offered datacasting servicessince 1988 to Microsoft, TV Guide owner Gemstar-TV Guide International and other customers. "Wireless data broadcasting has gotten a lot of exposure in the past few years, and we're seeing the benefit of that."

The various new plans for datacasting highlight the wide range ofpotential uses for the technology, as long as some long-standing obstacles can be overcome.

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For Microsoft, datacasting could wind up as a surprise competitor to mobile wireless standards such as Wi-Fi and 3G. For Disney, it could become an alternative to cable and telephonelines, as a digital pathway for some niche services in the home.

Microsoft has announced some of the first products based on the company's new Smart Personal ObjectsTechnology (SPOT), which aims to wirelessly connect "dumb" devices suchas wristwatches and refrigerators to data networks.

A service called DirectBand due this year will connect watches to PCs so that they can calibrate themselves, download software and wirelessly receive data such as sports scores and stock prices from FM radio signals.

The watches, made by such companies as Fossil, Citizen Watch and Suunto, will include radio receiver chips developed by National Semiconductor.Similarly, Sony and other consumer-electronics companies already includedatacasting receivers in some of their products to support features such as automatic clock updates.

"It's about glanceable information," Gates said while explaining SPOT technology at the annualConsumer Electronics Show this year. "You can just set it up to sendinstant messages so it's like a paging device receiving information frompeople who want to contact you just on the device--the one device thatyou always have when you carry it around."

At present, FM radio supportsdatacasting over so-called subcarrier frequencies, which can deliverinformation at about 1.5 kilobits per second. That's sufficient forrelatively light data needs, such as displaying a radio station's numberon an LED screen or sending weather information to a digital watch--butlittle else. Yet, forthcoming digital enhancements could supercharge radio datacasting, providingfeeds of up to 300kbps.

In the last decade, technology improvements and the advent of digital TV have also boosted TV's datacasting capacity, from a few kilobits to more than 4mbps--well above the requirements needed to support Disney's envisioned video-on-demand service.

Entrepreneurs have pursued dreams of broadcasting data over television and radio waves for the better part of three decades in attempts to build a wireless data network on the cheap.

Datacasting would seem to be the perfect solution, as it requires only minorupgrades to existing broadcast facilities at a cost of several million dollars,as opposed to the billions required to build new wireless and broadbandinfrastructure, and to purchase spectrum licenses.

In essence, the technology involves inserting a data stream into aTV or radio broadcast and receiving it in a way that does notinterfere with the primary audio-visual signal. The data can be combinedwith the audiovisual signal or sent along as a separate part of thespectrum, then transmitted to a special receiver tuned to capture thebits.

The economics seem irresistible: Transmissions can reach millions ofpeople as easily as one, and provide steadily increasing margins as theviewership grows. Internet and cellular phone technologies, by contrast,create additional costs for every new connection.

If datacasting is easy, however, finding a killer application for it hasbeen a conundrum. The technology has been available in the United Statesfor at least 15 years through such PBS services as closed-captionbroadcasts for the hearing impaired, but no large-scale commercialapplications have ever been built around it.

One reason, according to some industry veterans, is that datacasting cancarry hidden costs for equipment such as special receivers. In addition,as a one-way form of communication, it lacks the interactivity andflexibility of today's wireless technologies.

John Abel, former chief executive of failed datacasting start-up Geocast Network Systems and now a senior vice president at lobby group the U.S. Telecom Association, said the technology's lures are dangerously misleading. "I don't think it's much of a technology issue; it's a business issue and a consumer acceptance issue," he said.

He and others note that datacasting's advantages of scale are fast beingeclipsed in the mass market by competing technologies, namely thehigh-speed Internet. In recent months, the number of broadband Netconnections to the home have grown quickly in the United States, fuelingnew, instant information services and high-bandwidth offers such asvideo.

That success, particularly in digital cable services, may be preciselywhy Disney is so interested in datacasting. The company has long soughtdigital alternatives to cable distribution--which is dominated by archenemy AOL Time Warner--that would allow Disney to keep its contentfirmly under its control.

"Disney has three big advantages in going this direction," Abel said."One, they have a huge catalog. Two, they don't like the cablecompanies. Three, they own ABC."

Disney has disclosed few details about its video-on-demand project,dubbed Movie Beam. But at a National Association of Broadcasters lunchthis month, where the project was announced, Disney CEO Michael Eisnersaid the company was planning trials that would deliver video on demand using leftover broadcast bits to deliver up to 100 movies to a set-top box connected to a television set.

Movie Beam, which will be tested this fall in Salt Lake City, isexpected to use technology from Dotcast, a company that has worked withPBS's NDI subsidiary. In addition to its efficiencies, Eisner citedMovie Beam's importance in the fight against digital piracy.

"To be blunt, if we don't provide consumers with our product in a timelymanner, the pirates will," he said. "But, if we manage this businessintelligently, the immediacy and lower cost-base of digital deliverywill open up vast new markets here in the U.S. and, especiallyimportant, around the world."

Disney's move marks a break with the movie industry, which has beententatively looking to the Internet to test video-on-demand services.Sony and five other studios launched Movielink last year, aiming to giveconsumers a way to download movies for playback on PCs. News Corp.'s20th Century Fox studio, meanwhile, signed a deal with Internet movieservice CinemaNow to license part of its catalog for onlinedistribution.

But the success of datacasting video on demand is hardly guaranteed, inno small part because of the additional equipment required to receiveits signals. The price of datacast receivers can range anywhere from $50to $500, depending on who is doing the estimating and whether the movieswill be viewed on a PC or TV.

"Distributing receivers is a huge marketing challenge, even with theclout and glow of Disney or ABC behind it," said Gary Arlen, presidentof Arlen Communications, a research company in Bethesda, Md. "A lot ofcompanies have had ideas of how to try to monetize digital bandwidth forproducts and services other than TV, but no one has solved how to dothat."

Nevertheless, those on all sides of the debate agree that Disney willbring immediate credibility to datacasting and offer the most ambitiousattempt ever to harness broadcast spectrum for digital media delivery.Even skeptics of the technology are anticipating Disney's move with keeninterest.

"I think it's the right content for datacasting," Abel said. "It's atechnology searching for the killer app. Maybe movies are it."