Interactive
Cable TV Trade
Quietly Reaching Maturity
by Ken
Freed.
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Excitement
for iTV at Cable2000 inhibited by cold market realities.
Cable faces serious competition.
One
might expect the cable industry to be thumbing its nose
at the naysayers who five years ago pronounced
interactive TV dead before arrival. Yet the mass market
rollout this year of broadband interactive cable
television services in the United States is being
downplayed somewhat at Cable 2000. Why?
Cable has bided its
time during the costly digital rebuild, now virtually
complete in the major markets. Cable has kept mum while
planning the pending retail launch of digital set-tops
and cable modems. Now that the big moment for interactive
TV is finally here, why isn't cable making a big noise
about the news?
We can attribute
cable reticence to the lessons from getting abandoned by
investors after the hype bubble burst for interactive TV
as the Internet emerged. But is that the whole
story?
Perhaps American
cable execs are holding down the hype after a prudent
assessment of the situation for interactive TV at home
and abroad. The scene is not totally rosy.
The chicken-and-egg
debate between broadband infrastructure and interactive
content is now moot. Digital cable networks are here and
online. The egg has hatched, and TV programmers must play
catch-up to feed the widening maw of broadband cable
channels.
Afraid of once
again creating a demand before there's a supply, cable
execs are asking themselves, why promote interactive
services until there's enough compelling content to make
interactive TV a truly worthwhile value proposition for
cable customers? A new chicekn and egg puzzle, each
awaiting the other before birth.
Yet there is danger
in waiting. As one executive discreetly observed, "Nobody
dares push ahead and give interactive cable the ballyhoo
it deserves until we're sure the industry is ready to
deliver on our promises. That makes sense, but we better
not wait too long, or else our competitors will leave us
in their dust."
Leading the charge
are the telephone companies with digital subscriber lines
(DSL) for high-speed data services over copper. DSL is
outpacing cable modem services in public awareness, a PR
ploy until the "telcos" can put their lines where their
ads are. As telcos expand DSL market penetration, they'll
introduce video over ADSL with interactive services. Will
cable have enough interactive TV households by then to
withstand the telco onslaught? How will this play with
AT&T owning the old TCI and AOL owning Time-Warner,
the top two cable system operators in the United
States.
The wireline
telephony industry is allied with the wireless industry
offering MMDS data services. The microwave multipoint
distribution systems are rooted in the concept of
"wireless cable," conceived to compete with coaxial
cable. As fixed digital wireless networks is built out
for local MDS Internet services, the microwave industry
will leverage it infrastructure to enter the video
market. The wireless interactive TV industry is getting
its ducks in a row.
Terrestrial
broadcast television also poses a danger to cable.
Digital broadcasters now accept the need for set-top
converters to display HDTV and SDTV on analog TV sets.
Adding a phoneline return to the box permits local
stations to offer interactive TV. American broadcasters
watch the digital terrestrial iTV service ONdigital
making money in the UK, and they aim to do
likewise.
Cable's biggest
threat in the interactive TV marketplace remains the
direct broadcast satellite industry. American DBS
operators are keenly aware of the commercial success in
the UK of SkyDigital's Open interactive TV service and
Canal+ MediaHighway system in Western Europe. With the
advent of two-way Ka-band spotbeam interactive satellite
services within five years, cable will be hard-pressed to
argue that digital cable is the only smart
choice.
And in the world
marketplace, there is concern that America is isolating
itself with reliance on the ATSC standard for digital TV
while the rest of the planet adopts the DVB standards.
How well can American equipment vendors compete outside
the USA? Other flowers in the garden are contending for
turf.
So, as interactive
cable TV quietly comes of age in the United States this
year and next, there are reasons for rejoicing at the
same time as there are reasons of sober reflection. What
does the future hold? The choices cable makes today will
decide cable's fate tomorrow. 
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