SEPTEMBER 7, 2000
SPECIAL REPORT--INTERACTIVE TV
For Wavexpress, "Datacasting" Is a Digital Stepping Stone | This Sarnoff-Wave Systems joint venture is out to use digital HDTV broadcasting to introduce viewers to interactive-TV features
| Remember hearing years ago about high-definition television? Its digital format was supposed to revolutionize broadcasting and help to prepare consumers for interactive TV.
That hasn't happened -- at least not yet. The nation's transition to digital
broadcasting has been stalled by disagreements among the key players -- station owners, Congress, the Federal Communications Commission, the networks, electronics manufacturers, and the cable industry.
But while HDTV remains mired in delays and disputes over technology, standards, and usage, several startups have embraced the concept of digital broadcasting with new technologies collectively known as "datacasting." So far, datacasting is just a slick demonstration that combines the TV with a personal computer and uses digital broadcasting to deliver loads of multimedia content over local airwaves. Still, datacasting very likely will play a key role in the future of interactive television.
VICIOUS CIRCLE. That's when -- and if -- the nation's TV stations outfit their transmitters to handle digital signals. Many have yet to comply with federal mandates that say all broadcasters must transmit in full digital by 2006. By then, all 1,600 of the nation's analog-TV broadcast frequencies are to be auctioned off by the government for other communication uses, leaving only digital-TV signals. The idea was to prepare Americans for high-definition TV, with its clear, crisp resolution and dazzling array of digital services.
But here's the rub: With HDTV sets now costing around $4,000, consumers have been in no hurry to buy them -- which makes broadcasters understandably reluctant to shell out $2 million per station to transmit a digital signal to an audience that, by and large, doesn't exist.
Enter Wavexpress. It's one company that isn't waiting for the digital-TV revolution. A joint venture of Wave Systems (WAVX) and Sarnoff Corp., it has partnered with station owners that have made the digital-conversion investment.
TUNER CARDS. As Wavexpress sees it, viewers will embrace the convenience of receiving HDTV over the airwaves along with other, on-demand digital transmissions like movies, games, software, music, or live newscasts and sporting events. This very likely would serve as a secondary feature to interactive-TV formats that rely on cable broadband or DSL connections. Wavexpress now uses the PC to receive digital broadcasting because no cost-effective set-top box exists to take its place. "There's a convergence taking place between the PC and the TV," says Stephen Carrol-Cahnmann, vice-president of Wavexpress. "Right now, our company is PC-centric, but that is changing."
Carrol-Cahnnmann figures there are 50 million PCs in U.S. homes and offices, and he points out that a digital-receiver card for a PC costs $200 or less. These cards will likely become standard hardware in PCs sold by the major computer makers in a few years, allowing consumers to get digital TV straight through their computer. In New York City, for example, viewers with a PC and the requisite tuner card can already receive WCBS and Fox affiliate WNYW.
"If I were to jump ahead a couple of years, I can imagine a box in your house
that's connected to a myriad of different information sources -- your phone
company, your cable system, or satellite, or antenna. And it manages the
systems and distributions you care about," says Bruce Anderson, head of
digital TV for Sarnoff, the former RCA research labs that are now privately owned.
"UNUSED" BITS. How does Wavexpress expect to make money? It wants to offer music, videogames, and virtually any other kind of content that can be purchased using a special e-commerce chip installed in the PC by Wave Systems, its parent company. This chip tracks viewers' program picks and records their purchases. It uses a highly secure format and is just one multimedia element of digital TV that might fit nicely with interactive TV.
"Right now, broadcasters are sending HDTV bits over the airwaves, but most of
those bits are just falling on the ground unused," says Carrol-Cahnmann. "In the meantime, many of those stations have spent a whole lot of money to convert to digital, so they're very interested in working with us to provide datacasting services as a way to earn something on their investment."
Therein lies the gaping hole: There's still no content for digital TV because no one has figured it out. "Technology is a distant second to the content. That will remain true in the data-broadcasting arena just as it has in every other arena," says Sarnoff's Anderson.
HDTV WRAPPER. "Everyone has been talking about interactive TV and combining the computer with the TV for years," says a company spokesman for iBlast Networks, a distribution company created to broadcast digital media to home PCs, game boxes, and MP3 players. iBlast was founded by investments from most of the nation's major broadcasters, including Tribune Broadcasting, Gannett, The New York Times, and the McGraw-Hill Companies, parent of Business Week Online. Just like broadcast TV, iBlast's digital signal will travel to everyone at once and would be wrapped inside the HDTV signal. While that transmission would go directly into your TV, the datacasting signal would also enter your computer or MP3 player. This could prove to be a powerful way of speeding up the download time for large files, improving video quality and the connection itself.
Because digital broadcasting is inherently a one-way transmission, it probably won't be a major part of the two-way communication at the heart of most interactive-TV ventures. But it does offer multimedia capabilities -- the ability to download music, games, and software faster than currently available over Internet connections. It also may allow viewers to replay news and sports broadcasts from different camera angles.
Most pioneers in this burgeoning industry agree that digital broadcasting will play an important role in the total interactive package. But right now, consumers seem as reluctant to embrace digital broadcasting as they have been with early interactive-TV ventures such as WebTV. But at some point, perhaps in the next 12 to 24 months, both of these very different concepts for the future of television are bound to collide. The players that can make it happen -- perhaps joint ventures such as Wavexpress -- will be ones to watch.
By David Shook in New York
Edited by Douglas Harbrecht
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Copyright 2000, Bloomberg L.P.
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