T R B l f 0 f [0 HT f HTS THf HfW PlAIH fHGllSH GUIOf TO TfCHHOlOGY

CH R PT f R [OHSUMfR SfRUIU IMPll[RTIOHS 1B [ompetition and Hew Seruices 1B Teleb an kingl [ommut ing Ifdu cation IMed ici neI TtCHHOlOGY TRtHO~ & Shopping 1B ~fRUlct IMPlICRTIOH~ .. TELESHOPPINC . .. 1B

.. TELEBA:\KING .. 1B IHTROOUCTIOH .. TELECOMMUTI:\IC 1B

.. TELE-EDUCATIOI\ 1g THHHOlOGY TRfHOS 2 .. TELEMEDlCINE ...... 1g .2 Online Hetworks . Interactiue Programs 1g The Internet .3 Killer Rppllcatlons 1g Uideo-On-Oemand WOOl 1g 4 IHTfRRCTIUf TflfUISIOH Hear-Uldeo-On-Oemand [HUOOJ ... 20 RBrief History of Interactiue Teleuision . . 4 Uectronic Program GUides...... 20 What is Interactiue TU7 . 5 Multimedia 20 Pseudo-Interactiue TU 5 Personalized and [ustommd Seruices 20 low-fnd Interactiue TU 6 Multiple [hannels ... 21 HigHnd Interactiue TU .. ..6 How it Works . 6 CH R PT f Hybrid Interactiue TU. 7 Technical and financial Issues . 7 COMMfRCIRl RCTIUITIt~ & Upgrades to [able Systems ...B Upgrades to Telephone Hetworks .. .10 aUf~TIOH~ fOR PUBliC TU

.. VIDEO DIALTONE 11

.. ASY!'vIMETRICAL DIGITAL SUBSCRIBER [OMMfHIRl RCTIUITItS 23

LINE (ADSL) ...... 11 Online SerUICes .... 23

.. OvERBUILDS .. 11 .. COMPCSERVE...... 23

.. WIRELESS CABLE 12 .. AMERICA O"'U:\E (AOL) ...... 23 fuolution of the Personal [omputer .. 12 .. PRoDim' 23 Oirect Broadcast Satellite 13 .. THE MICROSOFT NETWORK (MSN) 24 Oigital TU ..... 14 .. THE INTERNET AS A SUPERHIGHWAY. . .24 .. DIGITAL COMPRESSIOi'\ 15 [able Seruices &Rctiulties 24

.. HIGH DEFINITION TV (HDT\lj . 15 .. CNN & CNBC DESKTOP VIDEO .26 .. ADVANCED TELEVISIO:\l 16 .. THE DISCOVERY CHANNEL. ... 26

.. DIGITAL PRODUCTION STUDIOS .. VIACOI'v! O"iU'\E DATA AccEss.. 26

Ai'\D T10\NS:'vIITTERS . .. TIME WAR'\ER'S FULL

.. DIGITAL SET-TOP BOXES. SERVICE NETWORK ...... 26 .to. KET STAR CH.A...'\NELS SATELLITE Telephone Company Rctiuities . 20 SYSTEM... . 37 .to. BELL ATLANTIC 27 .to. NEB*SAT 38 .to. A:\1ERITECH 27 .to. SOUTH CAROLIl\"A ETV ~1l!LTICHANNEL .to. SNET (SOUTHER"i NEW E'\GIAND DIGITAL SATELLITE NETWORK... ..38 TELEPHO,\E) .' 27

.to. US WEST '. 27 Oirect 8roadcast Satellite SerUICes. 28 OHllHf SfRUIUS ]g 28 .to. PUBLIC TELEV1SIOl\' O"i THE INTERNET .3 9 .to. PBS ONLI:\IE . . .. .to. DIRECTV 28 39 .to. LEARNING LI:\'K .to. GALAXY Il\STITUTE .. 28 40 .to. CO.vIMUNITY-WIDE EDUCATION AND ~UfSTIOHS faR PU8llC TflfUISIOH INFORMATION (CWEIS)... ,. . .. 41 Home and School Rccess Cost. Desirability and Ulability of Hew HUlTIHfOlR42 Technologies and Serulces . 30 .to. PBS VIDEO. ...42 CommerCIal Oeuelopment of Hew Technologies. 30 .to. WGBH I:\ITERACTIVE PROJECTS GROUP .. 42 Rccess to Multiple Channels and Uldeo .to. NEBRASKA INTERACTIVE MEDIA. . ..43 Dialtone Serulces 30 .to. \VNET KRAVIS MULTIMEDIA Participation In Technology Trials ... 30 EDUCATION CENTER...... 43 HiSSIng Pieces in the Hew Teleulslon .to. QED INTERACTIVE. . .. 43 Harketplace . 31 .to. KUED MEDIA SOLUTIO"iS .. 43 .to. WISCONSL\ Cm,HvIUNITY Il\TORMAno:\'

PARTNERSHIP (WICIP) 43 CH R P R TflfCOHHUHICRTIOHS [[HTfRS . 43 PUBLIC TflfUISIOH TRfHOS .to. OHIO Ul\WERSITY RHO RCTIUITI[S TELECOMMU,\ICArrONS CENTER 44 .to. KVIE, SACRAME1\TO . . . 44 TflfCOMMUHICRTIOH TRfHOS IH .to. WSIU-SOCTHERN ILLINOIS punic TflfUISI~H 34 UNIVERSITY AT CARBO'\DALE (SIUC) HatlOnal Rnd State Satellite Hetworks.. 34 BROADCASTI,\G SERVICE. . . .. 44 Hybrid State Hetworks 34 Mouing Into the ~Igltal Rge.. 3~ TflfCOHHUHICRTIOHS TO SU~PORT Online Computer SerUICes. 3~ HfRGfRS RHO JOIHT UfHTUAfS .44 Producing for Multiple ~istribution ~utlets 3~ .to. TELECOM.vlCNICATIONS INFORMATION The fmergence of Telecommunications Centers and INFRASTRUCTURE ASSISTANCE 4~ Teleplexes 36 PROGRAM (TIIAP) .. . . .to. KBDI, DENVER. ... 45 TflfCOMMUHICRTIOH RCTIUITlfS 8Y .to. NArIVE A.vlERICA:\' PUBLIC BROADCASTING PU8llC TflfUISIOH 36 CO\lSORTlCM (NAPBC) .. .. 45 Hational and State Satellite Hetworks. ..37 .to. ARKANSAS EDUCATIONAL TELEVISION .to. PBS NATIONAL SATELLITE . 37 COlvl.vlISSIOl\" (AETN)... .45 .to. RHODE ISLAl'\[) NETWORK (RINET) .... 45 MUlIIC~RH~H CRBU RH~ BR~R~CRSI ISSUfS fOR PUBliC ltlfUISI~H 47 SfRUICtS 46 Public leleuislon and the Information Superhighway 47 ... KCSM-SAMNET .46 ... NEBRASKA ETV-EDCCABLE 46 ... OETA-THE LITERACY CHANNEL ... 46 1~I~KI~G RBOUT R~O PlR~~I~G fOR ... WTVS, DETROIT-COLLEGE CABLE T~f fUIURf .. 4B

CHANNEL 46 ... DISTINGUISHINC \VHAT Is REAL A.'\1D

... KVIE-CHANNEL 7 .. 46 WHAT IS :"JOT .. 4g

... WXXI, ROCHESTER--CABLE CITY 12 .. 46 ... THr"iK OUT OF THE Box... 4g ... THr"iK LIKE A BUSINESS PERSON .. 4g R~UR~CtO ltUUISIOH 47 ... Co:vm~H: .4g

... FORM PARTNERSHIPS 4g

... PREPARE FOR CHANGE .50

[H R RTS

CHRPlfR I RSnapshot of US ~ouseholds. m5 . ..1 Uldeo Smer Costs/Cost for nCube Seruers 8 fstimated Cost of a full Seruice ~etwork . g Time to lransmit a 10 Megabit file .. 10 Telephone Company fIber Oeployment .11 Projected Growth for Computer ~ouseholds, mS-mB 12 Projected Growth for CO-ROMs in ~ouseholds .. 12 Changes in Computer Cost & Processing Speed 13 Penetration of Satellite Oishes In Selected Countries-m5 14 ~OTU In Japan. 15 Rdoption of Rddressable Cable Bmsm83-mS .. 18

CHRPlfR II Projected Growth of Online Seruices In ~ouseholds 24 (Millions of ~ouseholds] ~ew Cable ~etworks Competing for Channel Space 25 Cable Channel Ruailabillty-JGG5 26 Projected Growth of Uideo Oistributlon Competitors ...... 28 Rccess to Technologies by K-12 Public Schools . 2g

CHRPlfR III Selected lelecommunication Rctluities by Public TU Stations. .... 33 What's on the PBS Satellite. .37 Selected Public TU Rddresses on the World Wide Web 40 Current PTU CWflS Partnerships 42 Public TeleuiSIOn and Its Many Partners 42 Public TU Participants in TIIRP . 45 US labor force. 1900-2000. 48 _____I---.:..g---.:..g.....:..6_-.:..f...:D~I---.:.l~I--.::..O--.:.H ~_

CR OGY TRfHOS ~ SfRUlct IMPLICRTIOHS

IHTROOHTIOH At the same time, there is a great deal of hype and pie-in-the-sky promises being gen­ erated by technology marketers. In this A fundamental shift is taking place in environment, how can public television manage­ the way that television programs and related ment come to grips with what is really video, data and text services will be delivered to happening and create a plan of action to move homes and schools. This shift has been captured forward? The New Plain English Guide to Technology in a broad metaphor: public television is becom­ addresses these issues. It does not provide a tech­ ing public telecommunications. The programs nical analysis f()r station engineers. Rather, it and services we provide are delivered bv manv provides a layman's guide to new technologies forms of electronic communication, no~ just ' and services for station managers in program­ broadcast television. ming, production, education, planning and other Behind the simple metaphor lies a nontechnical departments. dizzying array of technologies that are affecting The Guide describes major technology not just public television but commercial televi­ trends and the implications of these trends for sion, cable, computer service providers, consumer services. It also reviews new technolo­ publishers and telephone organizations. These gy activities by commercial groups such as cable technologies include digital video, online net­ operators and telephone companies as well as works and the Internet, direct broadcast how these activities may affect public television. satellites, fiber optics, video servers, and multi­ A strong emphasis is placed on the telecommu­ media computers, among others. Equally nication trends within public television and the daunting are the proposed services that will be many activities and services that are utilizing delivered to homes and schools: video programs new technologies. The Guide concludes with a retrieved from a special storage device on­ discussion of' practical and strategic issues for demand, interactive programs, 500 channels of managers as they plan felr the future. niche services, multimedia databases, and video telephone calls.

~ 11 ... r: : J 11 iJ I U L u . u LJ 'HL II J l ~ V J IIY ,J

~uerage Humber of Persons Per Household ~ 2 B Own a UCR B5% Subscribe to Cable TU 6q% Subscribe to Pay TU 2B% ~uerage Humber of TU Set s _ 2 2

Hours TU Ulewing Per UJ eek 52 B Source: A.G. Nielsen Co.; US. Cenms; SRi 1" iF

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Some of the major questions addressed available; how soon will service providers and in the Guide include: consumers adopt them; and, what will they cost? It is also useful to track the groups that are • vVhich of the new technologies and ser­ developing the technologies and services along vices are most likely to affect public with the industry convergence that is occurring television? among broadcast, cable, computing and telecommunications organizations. • How will viewers' relationship to televi­ From a public television perspective, it sion change over the next few years? is essential to follow these trends and assess their implications. What opportunities are provided • What opportunities are presented by by the new technologies? Do any of the new the emerging technologies for public technologies or services pose a competitive television to provide new or improved threat? Should public television move forward services to homes and schools? quickly and provide new services or wait a few years when more consumers and schools will be • Are stations developing new services by able to receive the new services? Different sta­ themselves or in partnerships with tions serving different types of needs are taking other organizations? \Vho are potential a number of approaches. In this sense, there is partners for joint ventures and how do no single answer to the question-what should a stations find these partners? station do? At the same time, several clear and consistent trends among stations are emerging. • '''''hat are the risks associated with To help you come to terms with tech­ developing new services and what an' nology trends and understand their implications the risks associated with doing nothing? both for public television and our audiences, this chapter will explore:

nCHHOlOG~ TRfHOS RHO TECHN()L( )(;y TRE[\])S This section treats several important SfRUICt IHPllCRTIOHS trends in telecommunication technologies­ online netv\lorks, video servers, upgrades to cable A series of technological developments systems and telephone networks, multimedia, is leading to dramatic changes in television. direct broadcast satellites and digital TV-that These include digital compression, advanced are changing the tYVes of services that broadcast­ television, fiber optics and direct broadcast satel­ ers, cable operators and telephone companies lites (DBS). Another set of technological can provide as well as how users access services. developments presents opportunities to enhance

television services or, alternatively, to compde CONSUvlER SERVICE IMPLICl\TIO:\,S with television fix the attention of audiences. This section describes some of the new These include interactive TV CD-ROM and services that can be provided in the emerging online systems. telecommunications env'ironment--teleshopping, .\ilany new services build upon these tele-education, telemedicine, interactive TV technological developments, including video-on­ programs, electronic program guides, video-on­ demand, interactive program guides, demand, personalized media and multimedia. telecommuting services, multimedia education content and electronic bulletin boards. It is important to understand the major TfCHHOlOG~ TRfHOS terms and acronyms that represent these nnv technologies and services, e.g., video servers, DBS, electronic program guides, ADSL and Online Hetworks video dialtone. It is even more important to Online networks are electronic text understand the realities behind the new tech­ information services that are usually accessed nologies-to distinguish real trends from the hyVe through a personal computer and modem that inevitably surrounds new technologies. In hooked up to a regular telephone line. Most ser­ addition, many timing and pricing issues need 10 vices available to consumers and businesses are be addressed: when will the technologies be subscription-based and provide a variety of fea- _____I_g_g----:.._....:..._=_~....:I:...... :.!---:..I---.::..~__.:. ~_

tures and topics such as news, electronic mail, instantly for anyone who is participat­ shopping and reference resources managed by ing in the chat session. While most uses an online service company. In order to access an of "chat" involve conversation and online service, a dedicated software package is socializing among people discussing generally used. The software allows you to make hobbies and general topics, there are the communication connection to the service also managed forums and "meetings" and access any of the features provided bv the which involve community, education particular company. . and entertainment themes. For exam­ The first online services (or videotext ple, a doctor, politician or TV celebrity services as they were originally known) started can be scheduled to participate online commercially in the U.S. in the late 1970s. and to "chat" in real time about a spe­ Newspaper companies were among the first cific topic. information providers to see online services as a logical new delivery vehicle for their editorial The Internet content, advertising and features such as cross­ simple terms, the Internet is a con­ word puzzles. Many new services were created In out of partnerships between news or informa­ nection among computer networks around the world. It is a "network of networks." The stan­ tion providers and communication companies. dard computer language or protocol by which Over the first decade, online services grew at a the thousands of networks and millions of com­ slow pace. The recent rapid development of the puters on the Internet are linked makes it personal computer (PC) market, combined with possible fc)r them to communicate with each lower costs for high-speed modems and the wide other. All linked networks have a unique Inter­ availability of the Internet, however, has boosted net address. By entering its address, an Internet the popularity of online services. Several compa­ user is connected to a particular network any­ nies launched new services in 1994-19~)5 as the where in the world to search through number of potential customers increased. infc)rmation, rcquest files or send messages. The Today, online services oller a wider computer networks accessed can be located vir­ variety of advanced communication ft·atures to their subscribers: tually anywhlTe in the world at a government department in the U.S. or at a universitv librarv in another country, j(Jr example. ' , .it. Electronic mail (e-mail), a traditional The Internet began in the 1960s as a online feature that originally provided military project funded by the U.S. Department communication between subscribers on of Defense. The U.S. Government wanted to the same service, can now be sent through interlinked networks to mem­ establish a system to link computers and commu­ nications together in a network with no primary bers of other online services. Individuals on any public online ser­ or central control point that could be obliterated in a nuclear attack. The set of standards and pro­ vice, therefore, are now interconnected to one another through e-mail. tocols used to link these computer net\\lorks became the basis fClr the Internet today. Through the years, several nonmilitary research organiza­ .it. Bulletin boards are a fi)rm of commu­ tions around the world, including the Kational nication for groups. Typically, bulletin Science Foundation and various universities, boards are organized around topics such as travel, parenting, investing in began to flmd extensions to the system. Today, the Internet has grown to thou­ stocks, etc. People post messages in a bulletin board for all users to read. sands of interconnected networks. There is still no ownf'rship of the Internet although most net­ Others can reply to specific messages or add new comments. works that connf'ct to or provide access to the Internet are privately owned. A vast majority of networks and businesses operating on the Inter­ .it. "Chat" is yet another form of commu­ net provide information free of charge to nication among online users. Chat is a anyone who enters thf'ir site. A few companies, real-time text conversation between two however, charge a subscription or membership or more people who log on to the same fc·e to retrieve data or search through their files. online service at the same time. .vles­ The market is wide open and the long-term sages typed on the screen appear structure of the Internet is hard to predict. _ L- Ig~6 f 0 I ! I ~ H _

\Vithin the Internet, there are a few ... JPEG Goint Photographic Experts specific features and general capabilities. A very Group)-a standardized image compres­ popular feature of the Internet is the World sion mechanism. With its ability to Wide Web (W\'V\'V). The World Wide Web is support a wider range of colors and one aspect of the Internet that is enhanced with and generally smaller fIle sizes, it has graphics and user-friendly navigation. Many begun to supplant GIF as the dominant companies and organizations that are joining Internet graphics file format. the Internet have established themselves with a WvVW presence exclusively. In addition to ... URL (Uniform Resource Locator)--the allowing colorful graphics and stylish screen address for a site, page or resource on design, \VWW pages contain "hyperlink" con­ the Internet. A typical URL is a long nections. A hyperlink is a word, phrase or image string of letters and punctuation marks, that is underlined or highlighted on your screen e.g., http://wW\v.pbs.org. to indicate that it will lead you into another area within the Internet if you use your PC mouse or A technical issue that is key to Internet keyboard to select it. By selecting the link, you usability is connection speed. A high percentage are either connected to a specific screen with of activity on the Internet involves downloading more information on the item or you are pre­ flies and viewing screens with extensive graphics. sented with a list of related Internet locations Slower speed modems, therefore, make Internet from which you may make a selection. For access prohibitively slow. As higher speed example, a paragraph on education may men­ modems become readily available at reasonable tion libraries. If the word "library" is prices, screen access and downloading time will highlighted, you may select the word to see a become less of an issue. Some online service listing of Internet sites that relate to libraries. providers are counting heavily on integrating Additional features and characteristics of the Internet features into their offerings and are Internet include: looking into ways of providing even faster access to their subscribers. One idea is to make services ... FTP (File Transfer Protocol) -a feature accessible through Integrated Services Digital that allows you to access another com­ Ketwork or ISDN (a high-speed telephone con­ puter for the purpose of downloading nection). Since ISDK requires special phone files. equipment, it may take a few years for truly fast Internet access to become commonplace among ... Csenet Newsgroups-a bulletin board­ users. like feature with thousands of topics and sub-topics. IHHRRCTIU[ Ttl[UI~IOH ... Search Tools-databases of Internet sites where you can enter a key word or phrase and be directed to a list of RBrief History of Interactiue TeleuiSIOn matching locations. Interactive television has become a popular buzzword for a futuristic television envi­ ... HTML (HyperText Markup Lan­ ronment in which people can play video games guage)- the computer language for in competition with other households, choose pages on the World Wide Web. HTML from a library of movies on demand and partici­ is what allows \\"'1;'W pages to be pate in telecourses where a teacher and students linked together. can see and hear each other. There have been many attempts to launch interactive TV services ... GIF (Graphics Interchange Format) a in the past, with mixed results; however, some widely used graphics format developed simple forms have been operating for many by CompuServe. It used to be the pri­ years. mary graphics file format supported on The earliest interactive TV program the World Wide Web. was Wink) Dink and You, a 1955 CBS cartoon program for children. In order to interact with the program, children were supposed to buy a ....-----'-9---:9---:6---:-[-=-0--:-"1--:r:--:I---::-u-::'H----_

special plastic screen and place it over their TV What Is Interactiue TU? screen. \Vhen the cartoon character ran into trouble, children were asked to draw on the TV There are many terms associated with screen to help him. Unfortunately, some children interactive television. The first important set of failed to buy the plastic screen and simply drew terms is "downstream" and "upstream." Down­ on the TV set, leading to an early demise for stream is the TV signal and anything that Winky Dink. accompanies it as it travels from the source of Interactive TV has been tried many the programming, e.g., a cable operator or a TV times over the past few decades and produced station, La users in homes or schools. Upstream mixed results. In the late 1970s, the National is the return path which allows the user to Science Foundation and other federal agencies respond to questions or ask for changes to the supported a number of trials for education and program being shown. The request for changes social services. The trials were successful in would be sent back to the TV station or cable demonstrating what could be done with interac­ svstem, or in some cases, merely provide instruc­ tive TV, but technical problems, high costs and tions to the TV set, interactive videodisc player, organizational barriers prevented most of them VCR or special purpose terminal box. It carries from becoming regular services. The trials video, audio or data as people make choices, employed many forms of interactive TV includ­ answer polling questions or talk back to the host ing two-way video between locations and of a program. With these distinctions in mind, it one-way video with a return data signal from is possible to classify interactive television sys­ end users, e.g., to answer multiple choice options tems under four categories: presented in the video. 'Warner Amex Cable also tried interac­ Pseudo-Interact,ue TU tive TV in the late 1970s and early 1980s. Their These systems include additional infor­ QUBE system was installed in Columbus (Ohio), mation within th~ downstream signals from the Pittsburgh and Dallas, among other cities. station or other delivery system. The additional QUBE employed one-way video and a return information does not show up on the screen data signal from homes: people could press one except by viewer command, and is stored in a of four buttons to vote on options in a program, local terminal device and updated by the deliv­ participate in polling and answer questions in ery system as needed. Early examples include educational programs. QUBE shared a similar teletext, which is widely used in Europe but was set of experiences as the NSF trials: high costs, never successful in the U.S. More recently, a technical problems and relatively low usage lev­ variety of specialized terminal products have els. It too was withdrawn after a few years. begun to appear in the market. These products During the 1980s, a simpler and cheap­ offer services such as viewer guides, automated er form of interactive TV began to emerge in VCR control, video games and expanded adver­ public television and other educational video. It tiser information. l\10st of these services make used one-way video and return audio (via tele­ use of the same coding structure that public phone calls) to the live host or teacher and, in television has used felr many years to provide some cases, return data. IVlany of these services closed captioning services. Public television can have been successful and are in regular use, take pride in being the champion for this tech­ although they have received little attention in nology, including recent leadership in convincing discussions about interactive television. The out­ Congress that caption decoders be built into all look for interactive television has improved more TV reccivers over 19 inches. This action has recently as many very large broadcast, cable, been responsible le)r much of the renewed com­ telephone and computer software companies mercial interest in broadcast data services. A enter the market. These companies are offering number of the new services appear to be fairly a wide range of new products and services rang­ successful. The PBS/Sony-sponsored timing sig­ ing from the simple and inexpensive to the very nals to set VCR clocks and PBS Enterprises/ complex and expensive. It is difficult to imagine National Datacast customer program guide and how some could possibly survive, yet others are games services oller some recent examples of doing quite well. services carried by many public television stations. F· --

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The National Association of Broadcast­ to the teacher. It also includes video downstream ers has sponsored testing of several approaches and upstream data. The upstream data may be to add much higher capacity data services with­ in real time, as when students answer multiple in existing television broadcast signals. The NAB choice questions using a special upstream data expects the necessary industry standards fix terminal, or it may be in non-real time, as when such a system to be completed soon. One of the students use electronic mail or computer bulletin senior NAB executives was recently appointed boards to communicate with a telecourse CEO of a new company established by a con­ instructor between televised programs. sortium of commercial television stations to exploit new services which could be carried by High-end Interactive lU this system. High-end systems allow each individual Another type of pseudo-interactivity is provided by the interactive laser disc. PBS Video end user to request different video segments and the associated producing stations have intro­ from a program provider. The video segments might include hundreds of movies, a specific duced several very successful interactive disc news story from a menu of stories in a news titles for educational use such as Eyes on the PrL~e. program, or one of several versions of a TV \Vhile most people would not include program-each with a different ending. multiple, time shifted schedules as a form of In high-end interactive TV; hundreds of interactivity, its purpose is to offer the viewer channels and potentially thousands of video seg­ more "control" of program schedules in a sim­ ments are stored on a video server or within a plified form of video on demand. The program schedule "control" device in this case is the network of linked video servers. Individual users can request one of the channels or video scg­ remote control channel selector. HBO and Cin­ m(~nts and it is delivered to their specific horne emax have found time shifting to be very or location at the time of their choosing. By successful and a cost-eHective way to improve contrast, in regular cable TV or broadcast TV, a viewership and profits in any cable operator group of prescheduled channels is transmitted who has a system capacity of at least 36 chan­ together to all homes with a TV set or all homes nels. Even more frequent schedule shifting is hooked up to cable. With high-end interactive likely to become far more common in the so­ TV, users also can play video games against called 500 channel world. Bundled sets of other households, do home banking and shop­ channels dedicated to a common theme are also ping over TV, and interact in other ways directly likely to appear. For example, in news programs. over the TV system. viewers will be able to select more in-depth cov­ erage of a few topics after the initial news program introduction rather than continuing to watch "sound byte"-style coverage of all the top­ ics covered by the standard program. Each selected topic would be covered in a style more like The }lewsHour with Jim Lehrer; in sports pro­ grams such as golf; a viewer will be able to select a channel which spends more time covering a specific player, or during the Olympics, simulta­ neous events can be covered on different channels. (This was tried unsuccessfully on pay­ per-view, but as the producer has confirmed, unacceptably high prices discouraged most interested viewers.)

low'cnd Interactive lU Low-end systems include one-way video downstream signals with upstream audio, e.g., a teacher in a telecourse provides the down­ stream video and students at a distant location provide upstream audio via a live telephone call '---- -:..-.....:g---:g--::._-.:....__=_~....:....I _!_I----=-~ ___J_

Hyorld Interactlue IU people use time offset recording, for example, the typical VCR owner cannot even remember Many interactive TV systems do not fit how to set the clock. Cost and complexity are simply into the low-end or high-end categories. the only way to explain why the general public For example, one recent unsuccessful system has not responded well to home recording or added interactivity to regular programs such as pay-per-view television but has funded the cre­ game shows or sporting events. There was noth­ ation and growth of a very large videotape ing interactive within the programs. Rather, the rental and sales industry. It is worth noting that interaction took place on a separate terminal people will overcome both cost and complexity and display screen where questions were posed barriers if they place sufficient value on the and viewers could answer. One major commer­ resulting service. For example, video games and cial broadcast network has recently launched a the Internet have fueled an explosion in sales of very successful online data business around cate­ personal computers which are not always easy to gorized news clips from its broadcast news and set up or operate and which sell at more than cable business news services. It offers these clips twice the price of television receivers. tagged with special content identification labels Clearly, the industry must continue to and content sorting software as a pay serviCt, to study and try a variety of new interactive ser­ computer terminals for industrial subscribers. vices to find its way through the unpredictable The clips can be sorted by topic, company maze of consumer attitudes. name, industry or by a variety of other means High-end interactive TV has captured decided upon by the users. The network can most of the media attention, with its promise of send alert notifications to any user terminal an almost infinite quantity of programming on about major events about to be broadcast con­ demand and two-way video. System trials in var­ cerning the user-selected categories. Videotape ious parts of the country are very impressive but copies of the program segments also are avail­ leave many unanswered questions, such as: able at extra cost. Another system one wiLh a good track record-uses four channels on a cable ... What will the equipment cost for sys­ system to provide viewers with some choices. For tem providers and end users? For example, in sports programs, viewers can pick system providers, there are many costs one of fimr camera angles by switching to one of including video servers, video switches, the channels; in news programs, viewers can new transmission lines and storage pick the order of stories they watch and get costs. These equipment costs will be more in-depth coverage of a story by picking very high in the near term, e.g., $1,000 one of the fimr channels. to S2,000 per subscriber. So, a system built fill' 50,000 users might cost $50 to lechnlcal and tlnanClallssues I 00 million. These costs are expected to drop over time and they can be fur­ There are many technical and financial issues surrounding interactive TV The most dif­ ther reduced by employing a clever ficult is in trying to predict consumer acceptance strategy in building the architecture for and response to any new service. It is clear that the network. For end users, one signifi­ there are varying limits to how much most peo­ cant cost will be the new set-top box ple are willing to pay and how much complexity that will be needed to decompress and they will tolerate in the home in order to reeeive convert digital video packets into regu­ different types of services. Caption decoders lar television signals. Estimates vary provide a good price barrier example. The por­ between $200 and $700, although early tion of the middle-income audience making use set-top boxes in trials cost considerably more. A second issue is the cost of of captioning services has grown since caption decoding receivers have entered the market. interactive TV service. This is largely This is surprising because most of us would unknown and will not be clear until after a li,w trials have determined what have characterized captioning as the type of ser­ system provider costs are and what vice which would already be available in such households. VCRs are an excellent example of users will be willing to pay. how to exceed complexity tolerance. Very fiow _ L- gg~lrl _

~ U I I t II J l H u [I' l u" J [ 0 S T f ~ R H[ 0 8 [ [ R U f R S I

lev el 1 level 2 level 3

Pric e $1 HIII I 0 n $4 Hillion $15 Hillion

Storage [apaclty HO H0ur s 885 Hours L500 Hours

Humber of Simultaneous U10 e0 Streams 1. 80 I, 20 0 28,800

Source,' Multichannel 'Jews

... \Vhat is the best system architecture for how much equipment is needed to ser­ interactive TV services? Cable opera­ vice them, is through rigorous testing in tors and telephone companies are real world trials and tests. investigating many technical options in building systems. For example, should All of the uncertainties surrounding they build new fiber optic networks that high-end interactive TV suggest that service go directly into homes and schools, rely development is likely to be slower than many on existing coaxial cable or twisted-pair companies have predicted. Further, initial costs telephone lines with more sophisticated for system providers and end users are likely to compression of signals, or create hybrid be high, These costs will drop over time and networks that mix some new fiber optic large scale manufacturing of equipment will cable with existing coaxial cable and lead to lower prices, as engineers better under­ twisted pair? Similarly, should they put stand the most efficient ways to provide services. most of the "intelligence" required to vVhile near-term interactive consumer services ofIer interactive TV in the computers are likely to be geared to more modest systems, at cable systems and telephone compa­ there arc many other applications for this tech­ nies or place more intelligence in the nology that are likely to be developed soon. set-top box? These engineering ques­ These include interactive TV for corporate tions will have significant impacts on training, fClr the purpose of ordering movies in costs and the timing of service develop­ hotels, and the use of video servers to insert ads ments. or promotional announcements in regular televi­ sion programs. These applications, in turn, will ... lVfanaging user traffic and other ne\\ help to reduce costs and increase knowledge problems. In broadcast TV, there is no about the best ways to design interactive TV question about how many people can systems. simultaneously receive a TV signal everyone within the range of a broad­ Upgrades to [able ~ystems cast transmission can receive a TV Traditional cable TV systems in the channeL In interactive television, things 1980s provided a modest number of television are very difIerent If too many people channels (10 to 35). Today, cable TV systems are simultaneously try to access an interac­ being upgraded to provide many more TV tive servicc, some may get a video channels as well as data, voice and two-way "busy signal." If an interactive TV sys­ video services. They are preparing for competi­ tem becomes overloaded in trying to tion with telephone companies and direct send the appropriate video packets to broadcast satellite services. The components in everyone, the television picture may the upgrading process include fiber optics, digi­ stop in some homes or there might be a tal compression, switched video, cable modems jump in the action. The only way to and personal communication services (PCS). resolve these issues and determine how Fiber optic cable is replacing traditional many people will do what, as well as coaxial cable in many cable systems. The advan- '-- ,_g_g_G__f_O__I_I_I_O_H _

tages of fiber optic cable include lower mainte­ some had predicted because it requires special nance costs, higher capacity and better signal equipment in homes to "de-compress" the com­ quality. Most cable operators are not replacing pressed signals and display them on regular TV all of their traditional coaxial cable. They are sets. The estimated cost of this equipment is replacing part of the older plant in order to $300 if it is in a separate box. ~fore recently; keep the cost of upgrading manageable. As a some companies have offered a set of computer result, many new terms are emerging that reflect chips that could be placed in VCRs or TV sets. where the fiber is located in the cable architec­ This would reduce the cost significantly and ture: fiber-in-the-baekbone, fiber-to-the­ may speed up the implementation of digital neighborhood, and fiber-to-the-pole. For exam­ compn'SSlon. ple, fiber-in-the-backbone means that the cable T\vo-way switched video is at the heart system has fiber in its main trunk lines only; of advanced interactive television systems or fiber-to-the-pole means that fiber lines go right "full service networks," such as Time \'Varner's to the pole outside a subscriber's home. The experimental system in Orlando. Switched video closer a cable operator brings fiber to a sub­ allows each household to receive separate video scriber, the higher the capacity of the service programming under their command and con­ and the more it is likely to cost. Also, some cable trol, e.g., to order a movie from a library of multiple system operators (MSOs) are using fiber hundreds of movies. However, switched video is to link their cable systems in a region. This very expensive. In early experimental systems allows them to share the use of some expensive such as in Orlando, the household equipment equipment and reduce the demand on the cable costs approximately $5,000; headend equipment headend of each system. costs are in the millions. Even when switched Digital compression is another tech­ video is implemented on a large scale, the cost nique to increase the capacity of a cable system. for cable operators will be significant-approxi­ By converting analog TV pictures to digital sig­ mately BBSO per subscriber. Such costs are more nals and compressing them through complex likely to be justified in a multiple service envi­ electronic processing, a cable operator can effec­ ronment where a wide variety of video, data tively squeeze more signals through the same and voice including telephone services are pipeline. The amount of compression employed offered. by a cable operator varies by the type of pro­ Cable systems are beginning to offer gramming (e.g., a talk show can be compressed data services to homes, businesses and schools, more than a football game) and the quality of e.g., access to the Internet and commercial picture that a consumer is willing to accept. online services. It is also possible to download Digital compression is a key element in video games to home game terminals. The long­ the promised "500 channel" cable environment. term advantage of cable in offering data services However, it has proceeded more slowly than is very high speed (see chart).

lechnotoG~ fstlmated Cost Per Subscriber ~~-+-~----~-- Home (qulpmenf

Cable Infrastructure S] 00

Uideo Seruers & Headend Hectronics

lotal Cost Per Subscriber $B50

Source: Multichannel ]';'ews g" _r------:-l-:-~-::-g::--o---:[---:O-I-j-I-O-H-----'

of compressed uldeo!

Regular Telephone line

g 6 Ki lob Its [ Kbps] per sec 0 nd 1H min ute s 14 4 Kbps gJ min ute s 28 8 Kbps 46 minutes fnhanced Telephone lin e \ 6 Kbps 24 minutes 1ZB Kbps (ISOMl 10 minutes 1 \ 4 Hegablts [Hbps] per sec 0 nd [! 1] \2 seconds

Sy st em 4 Hbps 20 seconds 10 Hbps 8 sec 0 nds

Source: Conve~r!;ence Systems Inc. & Cahle "Vodel

In the near term, cable systems are transmitting building the new infrastructure, some cable data services at more modest speeds--closer to operators plan to form joint ventures with tele­ ISDN speed over a telephone network. Some phone companies from outside their region to early trials experienced problems in sending offer pes. data at very high speeds. In addition to these technical problems, the barriers to verv fast ~pgrades to Telephone Hetwor~s cable data services include the high co~t of early Not too long ago, the telephone net­ cable modems and a need to have a return sig­ work was used to provide plain old telephone nal from homes or schools. l\ofost current cable service (POTS) and little else. Then came faxes systems are not two-way. In order to implement electronic mail, voice mailboxes and other ser- ' data services, a cable operator has to add a vices that used the traditional telephone return signal from end users or use the tele­ network. In the near future, the telephone net­ phone network to obtain return signals. This work may provide high-speed multimedia latter hybrid arrangement of downstream data services, video telephone calls, cable TV and through cable and upstream data from end users interactive TV How can the telephone network through the telephone network requires a com­ handle all of these new services? The answer lies plex installation. in how telephone companies are upgrading their Personal communication services ~peS) traditional networks into modern telecommuni­ are a form of tefephone service. Just as tde'­ cation highways. phone companies want to offer a form of cable During the past decade, telephone TV service, many cable operators want to com­ companies have been replacing old copper tele­ pete with telephone companies in providing phone lines with fiber optic cables and telephone service. pes is actually a hvbrid tele­ introducing new digital switches that connect phone service because it uses bo~h th~ cable one household to another. Today virtually all system and some radio spectrum to provide two­ telephone transmission lines bet~~een citi~s are way audio. There are many technical issues that fiber optic; more than half of the transmission must be resolved for pes to be viable, including lines to local central offices are fiber optic; and standards, backup power supplies and interoper­ many transmission lines into local neighbor­ ability (i.e., how pes interconnects with regular hoods are fiber optic. However, to complete the telephones as well as cellular telephones). Fur­ job and bring fiber optic cables into every home ther, some question the technical skills of cable will cost $200-$300 billion and mav take anoth- operators to provide telephone senrice. In order er 20 years. ' to deal with this issue along with the high cost of ______q_g--:.6_---:....f-=-0-=-1...:!---.:.I.-..:O.-.::..H --.J_

er) as well as asynchronous transfer mode (ATM) packet switching technol­ ogy: ATMs manage digital traffic and move packets of data at very high Thousands Of fiber Miles speeds to their intended destinations where the packets are re-assembled.

\. Jn 6.8 n 8. 27 0 10.2 JO 11.~JO In addition to high cost, video dialtone has many regulatory implications for Source: FCC telephone companies and their cus­ *(Indude.\ UJng Di\tance. Local OperatinJ!, Companies tomers. Cnder video dialtone, & I [rban Fiber Sy.\tems) telephone companies are common car­ riers. This means that they must allow anyone to offer video services just as Telephone companies do not have to anyone can make a telephone call. This complete the job of wiring America with fiber lack of control is not attractive to tele­ optics before offering advanced services. The phone companies. For this reason, as infrastructure that is currently in place will sup­ well as high cost, they have been slow port many new services. Further, by adding to implement video dialtone. other components to the telephone network in selected markets, they can offer advanced ser­ • .\snl\II:TKIC\L 1lJ(;n.\L Sl:RSCRIBER vices to those markets. LI~L I.\])sq is a second option for Integrated services digital network upgrading the telephone network to (ISDN) is one example of a service that is widelv provide video service. It is much less available within the current telephone network ' costly than video dialtone but also pro­ infrastructure. ISDN is made possible by the vides a lower quality video signal. electronic digital switches that have been ADSL uses existing twisted-pair copper installed in telephone company central offices. cables in homes as well as on poles in Essentially, ISDN offers a complete digital path neighborhoods and the existing fiber from one end user to another. Basic ISDN ser­ optic backbone of the telephone net­ vice provides two moderately high speed work to deliver highly compressed voice!data channels and an additional lower digital video. ADSL requires little or no capacity data channel. These channels can be upgrading to the telephone transmis­ used separately, e.g., for two high fidelity tele­ sion lines but it does involve costs lar phone lines, or they can be combined into a video servers and requires special hard­ single 144-Kpbs data channel that will support ware in hornes. low-end video telephone service or a very high­ speed access to multimedia content such as A few telephone companies have tested photographs and sound on the Internet. ISDN ADSL (e.g., Bell Atlantic) and claim service costs $30-50 per month Jor the line plus that the "VCR quality" picture it deliv­ six to ten cents per minute of use. ers is acceptable to consumers. Some The toughest decision facing telephone critics argue that early adopters of new companies is how to offer video service. There video services will demand very high­ are four basic options. Two involve upgrading quality pictures at least as good as their the telephone network and two involve going cable TV picture. Others warn that outside the network. [why telephone wiring in many homes (often installed by consumers) will seri­ VmLO DIALro!'iE is the most sophisti­ ouslv degrade ADSL video cated and costly option. It involves signals even though it is good enough upgrading the telephone network with fiJr regular telephone service. fiber to a point close to homes (the sig­ nal going into homes can be carried by C)\ IRIH lLlJS or constructing regular fiber or a coaxial cable like the onc cable TV systems in competition with used by cable TV systems) and an existing cable TV system, are an installing video servers (discussed earli- 11" _ 1..- Igg6[OITIO~ _

option outside the telephone network. Under this scenario, a telephone com­ pany may decide that video dia!tone is too expensive and ADSL service won't Computer Householos work. Instead, it goes into the cable TV V ear [Hi III 0 ns] business in direct competition with existing cable operators. A morc fi'asi­ 1gg\ 40 0 ble alternative from a technical 1gg6 430 perspective would be to integrate the 1gg7 400 fiber optic telephone network infra­ 1ggB 4B 0 structure with existing coaxial cable networks. This was the planned Source: VeroniJ; Suhler & Associates arrangement between Bell Atlantic and TCI until the cable industry was re-reg­ ulated. This alternative continues to Two of the most significant enhance­ have appeal to both industries and may ments to the personal computer are modems re-emerge as a result of recent moves and CD-ROM drives. Modems transform the toward deregulation. PC from an information storage and data pro­ cessing device into a communication tool. ... \VIRI:U:SS C\BLF is the second option Modems link a PC to other PCs and large main­ outside the regular telephone network. frame computers over telephone lines and, in Wireless cable uses microwave trans­ some cases, cable television networks. Through mission to deliver television channels to these links, users in homes, schools and business­ homes that are equipped with special es can send electronic mail, exchange opinions receiving antennas that look like small on electronic bulletin boards, obtain information satellite dishes. \Vireless cable has been from large databases and play games with other available for a long time, although it PC users. Approximately one-third of PC has been plagued by many technical households have a modem and the percentage is problems. Recently, some advances in growing rapidly since almost all new PCs sold wireless technology along with digital are equipped with a modem. compression that greatly expands thc capacity of a wireless cable system have made the technology more attractive.

tuolutlon of the Personal Computer 1ear Hi III 0 ns of Householos The personal computer has become a mainstream consumer electronics item for the 1gg5 g home. It is estimated that by 1995 more than 40 1gg6 12 percent of the homes in the U.S. had a personal I gg7 16 computer. Further, the number of PCs sold to 1ggB 21 consumers each year has been growing rapidly. ]g gg 14 According to the Electronic Industries Associa­ tion, the amount of money spent by consumers Source: Multimedia PC A1arketing Council & Cable World on PCs in 1994 ($8.0] billion) nearly equaled the amount spent on television sets ($8.4 billion). The CD-ROM drive is a storage device When the IBM PC was first introduced in 19B I, with very high capacity. One CD-ROM can the approximate cost (monitor, keyboard and hold an encyclopedia or a large database. CD­ computer) was $3000. Today, the cost of a PC: ROMs can also store audio and some limited for the home has dropped significantly while the video segments. As CD·ROMs evolve and digi­ processing speed, memory and other features tal compression improves, video storage capacity have advanced past the levels of some main­ will expand to include movies and other full­ frame computers that were sold before I9B 1. length video programs.

"12 '------I g g 6 fDITIDH_

I :' h 11 U c ) I 11 L d M I J l H L uS; ~ PROCfSSIHG SPffD

RpproHlmate number of instructions per second Pric e

jgn IBM Mainframe 1~.~00.~00 $10.000.000 jgl6 Cray 1 16~.000.000 20.000.000 jgn ~igltal URH 1.000.000 200.000 IgBI IBM PC 250.000 1. 000 jg04 Sun Microsystems I.~OO.OOO 10. 000 IgH Pentium-Chip PC 66.000.~0~ 1. 000 1995 Sony PCH Uideo Game 500.~00.000· 5 ~ 0• Igg5 Mlcrounity 1.000.000.000' 500• Set-Top BOK

Sources: COmpal1] reports; The New York Times * Estimated

The addition of modems and CD­ networks and other distributors of TV programs ROMs as well as microphones and speakers is to reach local stations and cable headends. Pub­ rapidly changing the PC into a multimedia ter­ lic broadcasting led in the use of satellites for minal with significant new capabilities ft)r distribution of TV signals to local stations. Con­ education, entertainment and communication. sumers first became aware that they could pick This is made possible by the extraordinary up TV signals directly from satellites in the late increase in computing power over the past 1970s when Neiman l'vlarcus advertised a satel­ decade, as prices have declined. lite dish in their catalogue for over $30,000. The computing power found in PCs is There were no buyers at that price, but soon also finding its way into televisions, VCRs and companies began to ofIer TV receive-only video games. These are sometimes called "smart (TVRO) satellite dishes for a few thousand dol­ TVs" or "smart VCRs" because they can lars. The dishes were 10 to 12 feet in diameter process information much like a computer. For and could pick up dozens of TV signals (eventu­ example, computers are facilitating new combi­ ally, over 100 TV channels). A small market nations of home entertainment and information emerged during the 1980s, primarily in rural linked to TV sets. Such home information cen­ areas where there were no cable systems and rel­ ters allow viewers to use their television to atively few over-the-air broadcast channels. display interactive text versions of news, sports TVRO dishes also became popular in hotels, and weather as well as provide banking services, bars and other businesses that wanted to attract electronic mail and shopping. Also, new TV set customers by providing many TV channels. top converter boxes with computer technology In the early I 980s, several companies are being distributed by cable and direct broad­ announced plans to launch a new generation of cast satellite service providers. high-powered satellites that would serve con­ Some industry analysts believe the TV sumers directly and require much smaller dishes. and PC will merge over the next ten years. They After examining the cost of launching the satel­ argue that one device will serve both functions. lites and developing services, however, each of Others believe that the functions of TVsand the companies dropped its plans. By the early PCs will remain distinct but, at the same time, 1990s, the costs associated with launching high­ each device will share many features, i.e., TVs powered satellites had dropped and plans were will have computer power and pes will be able renewed to launch direct broadcast satellite to play video and sound. (DBS) service fiJI' consumers. These plans were helped significantly by the 1992 Cable Act that Direct Broadcast Satellite required program suppliers to sell their pro­ gramming to non-cable distributors. This Satellite transmission of TV signals prohibited cable ;\:ISOs from denying access to began in the mid 1970s as a way for broadcast their programming by satellite service providers.

IJ" _'-- g_g_6 0_1_!_I_~_H _

As plans for DBS moved forward, cable compa­ ation of digital receiving equipment will have nies attempted to beat the high-power service some interactive capabilities. providers to the punch by launching their own The disadvantages of DBS include a DBS service on a medium-powered satellite. lack of local broadcast signals-DBS provides a The medium-power service required a six-foot single national service. Consumers can subscribe receiving dish whereas the high-power services to an off-the-air alternative DBS package that could be picked up with 18-to-20-inch dishes. includes an affiliate for each of the networks as But in other respects, the services were similac well as one public TV station. Gnder current By 1995, approximately five percent of FCC rules, the DBS provider can do this with­ US. households had a satellite dish. Most of out approval of the local station so long as the these were the older and larger TVRO dishes. DBS service is blocked in any household where but approximately one-third were the new gen­ the network programming can be received from eration of DBS medium power or high-power broadcast signals from a network-afliliated sta­ dish receivers. This is low compared to some tion. It is not clear that there has been strict countries, e.g., 40 percent of homes in Ireland compliance to this rule in some DBS markets. have a satellite dish, but it is a greater percent­ Several of the high-power DBS service age than in most countries. High or Imv providers require potential subscribers to pay penetration of satellite dishes varies enormously approximately $700 for the hardware to feed and is affected by country regulations, cable one TV set and $900 for the hardware to feed penetration and the ability of households to pay two TV sets. These costs are expected to decline for the technology. in 1996 when additional manufacturers offer equipment in the marketplace. Yledium power DBS service providers currently include and install the equipment as a part of their subscrip­ tion service. In either case, program service ft'es are slightly higher than equivalent packages [ 0 untry Percentage of Households oHt:red by local cable systems. With Satellite Dish vVhen DBS services were launched in 1994, it was assumed that the early adopters US * S per cent would be people in areas with no cable service Ire l and 4D and people who were dissatisfied with their local Germany 16 cable operator. vVhile these groups have been Japan 1 g prominent among early DBS subscribers, a sur­ f ran ce I prisingly large percentage of early adopters have I ndI a I been people who also subscribe to cable. That is, 1------'------_._-- they are video aficionados who want more of Source: The New York Times & Electronic Indus/rv A.\\Ociatioll everything. * Includes TVROs, /vtedium Power alld ff~l!,h PO/{)I'( DBS Some analysts believe that DBS has a narrow window of opportunity to establish itself The advantages of DBS are that it is before cable upgrades are completed and new cheaper to build a system compared to cable wireless cable services are offered by telephone (there are no wires on streets), so a company can companies. DBS system operators argue that reach the entire US. very quickly. Also, DBS they do not require a very large number of sub­ service providers have been the first group to use scribers to be viable--five to ten percent of US. digital compression. This has increased sharply households would provide a profitable business. the number of channels they can provide and it However, it is unclear how many DBS service produces a superior picture and sound com­ providers can survive if the total audience is 5 to pared to cable. (It should be noted that some 10 percent of U.S. households. DBS customers complain that the picture call break up momentarily during fast-action sport­ Digital ru ing events.) The extra capacity has also allowed Television is about to change from ana­ some DBS operators to offer .10 chanrwls of log to digital. Our current system established by pay-per-view movies, which has been attractive the I'.'ational Television Systems Committee to many customers. In addition, the next gelHT- (NTSC) uses analog waves to capture and trans-

"14 1 ~ q 6

mit images as well as sounds. Over the next the same as an actor moves his face and decade, television will move towards a digital body. A compressed signal only trans­ system in which images and sounds are captured mits changes in the video. This sounds and transmitted as zeroes and ones-the digital simple, but it is a very complex process. code used in computers. Digital television has many advantages. It does not degrade through Digital compression has evolved slowly. many generations of editing and it also can be Many diflerent systems have been compressed to provide four, five or more chan­ introduct'd. However, it now appears nels in the same bandwidth required for one that a common standard is emerging channel of NTSC television. It also provides a fllr the television industry-MPEG II, a crystal clear, snow-free picture to all TVs that standard set by the Motion Picture can receive a minimum level signal. There are Experts Group, an industry technical limitations, however, and any TV receiving a sig­ committee. The process of digitally nal below this minimum gets no picture at all. In compressing a signal has improved sig­ this sense, pictures do not degrade with distance nificantly in the past few years. The as with NTSC television. They "drop ofr a cliff" cost of equipment to digitize and com­ when the signal does not meet the minimum press video also has come down requirements for a complete picture. Even so, significantly. field tests conducted by PBS show that the advanced television coverage provided within .. Hlt;!1 DEFI'-JITIO;\! TV (HDTV) will the service area is much greater than the cover­ provide much sharper images, better age provided by the current NTSC service. quality sound and a different picture Everyone associated with the ATV development shape (more like a wide-screen motion process was surprised by the number of loca­ picture in theaters than a traditional tions within the service areas where ref1ections TV picture) compared to the 50-year­ or interference made the over-the-air I\TSC pic­ old NTSC television system that is now ture unwatchable. Some cable subscriber drops in use. The FCC began the process of located furthest from the headend exhibited sim­ looking fllr a next generation TV sys­ ilar problems with several NTSC channels. The tem in 1987. Over the next few years, ATV services did not exhibit such problems. 23 diflerent HDTV systems were pro­ Similarl); a poorly installed coaxial cable in a posed. Most of the early proposals were home- one that would provide a ghost-filled fix ,malog HDTV The analog propos­ image of ~TSC television-might not produce als !(l!Jowed the lead set by the any picture at all with digital TV Japanese, who launched an HDTV sys­ There are several important issues asso­ tem inJapan via direct broadcast ciated with digital television, including its role in satellite in 1989. Sales inJapan have high definition TV (HDTV), how digital TV sig­ been slmv due to the high cost of nals can be compressed, what advanced HDTV sets and the lack of good television alternatives are made possible by digi­ quality HDTV programming. tal technology, how TV studios are changing to digital, and what new set-top boxes in homes are necessary to rt'ceive digital signals.

.. DI(;IT\1. c:m.IPRESSI()l'\ is a technique to Rue rag e [0 st 0 f Set s fstlmated squeeze video, audio and data signals [~S ~ollarsl ~umber Sold into a smaller transmission pipeline or storage device. It is used to store com­ I991 $21.H~ 10 ~ puter programs on a smaller number of Ign sl2.~~~ 8. ~ 0 ~ diskettes than would otherwise be ]g 9J $8. 0 ~ 0 12.~0~ required and to hold more audio on a 1994 $6. 000 30.000 compact disc. In television, digital com­ pression takes advantage of the fact Pric e of H~ TUSe t s I n I995 4. 500 that many things do not change fi-om one video frame to the next. For Sources: Wall StreetJournal; The New York Times; example, the background may remain Broadcasting & Cable 15" _ ------'lgg6fOlllOH

Over time, however, the advantages of NTSC channel. The broadcast industry digital HDTV became apparent and determined that it was feasible to assign most industry groups raJJied around the currently unused channels within digital HDTY. Eventuany, a "grand the existing TV broadcast band to each aJJiance" was formed at the urging of existing station to broadcast in HDTV the Technical Committee of the FCC without causing interference to existing Advisory Committee in order to com­ NTSC channels. The coverage areas of bine the best features of each of the the new channels could match the cov­ four proposed digital systems. The erage areas of existing channels in combined system has completed testing nearly an cases if a very carefuny con­ and has been judged to meet or exceed structed channel assignment plan were an industry requirements. The FCC followed. This approach was recom­ Advisory Committee Technical Com­ mended to the FCC so that the mittee has unanimously approved this industry could simultaneously transmit system and recommended that the in NTSC and HDTY. In this way, con­ grand aniance system be adopted by sumers with old NTSC TVs would not the FCC and approved the industry have to throw them away. The market­ standards describing this system. The place could slowly move over to latest FCC timetable for adoption of HDTY. After a number of years, when the ATV standards has been delayed everyone had purchased an HDTV set, through congressional action until late broadcasters would be required to give 1996 or early 1997 in order to evaluate back the extra spectrum they had the potential for carrying out an auc­ received for the transition period. The tion of the new channels. This delay proposal has met with much opposi­ should not have an impact either 011 tion, as the concept of advanced the cable or DBS industries, which are television emerged. likely to proceed with plans to intro­ duce ATV by the fan of 1997. One ... ADVANCED TELEVISIO,\ was initially preliminary estimate by Zenith is that coined by the U.S. broadcast industry early HDTV sets win cost $1 ,SOO above as a term to cover a variety of ways in the cost of a current TV set. So, a :m­ which the existing NTSC service could inch NTSC set that costs $ I,000 today be improved, added to or replaced with will cost $2,500 as an HDTV set. a separate higher quality service. At that time, it was assumed that true An encouraging development recently HDTV could not become a broadcast announced by Hitachi uses a slightly service because it contains five times expanded MPEG II decoder to filter the information of NTSC. The eventu­ the incoming HDTV signal in an inex­ al development of digital HDTV has pensive way to match the resolution of demonstrated that it is possible to pro­ pictures to smaller or existing TV sets. vide all this information within a single Such an approach could significantly broadcasting channel. This in turn has reduce the costs of more conventional highlighted the inefficiencies and waste sized ATV sets and make it practical to associated with existing broadcast chan­ upgrade existing TV sets. nels. If one digital channel can carry five times the program information, One of the problems facing the FCC in why not carry five different programs trying to implement HDTV has been of existing program quality? how to find spectrum for the high­ bandwidth signal. The original analog This recognition has led to a redefini­ HDTV proposals would have required tion of the term "advanced television" at least four times the bandwidth of to cover all the possible uses for the dig­ l\TSC TY. With digital HDTY, the ital channels and has thrown both signal can be compressed into approxi­ HDTV and the channel assignment mately the same space as a regular process into greater confusion. In theory,

"'16 L....- g_g I_T_I _

a broadcaster could offer four or five networks and by PBS. Automated digi­ channels of programming instead of tal program feed systems and the large one. Similarly, a cable operator could number of highly compressed digital significantly increase the capacity of a satellite channels form the foundation cable system and "multiplex" pay ser­ that makes the start-up of commercial vices such as HBO, i.e., transmit HBO DBS services financially feasible. on three channels so that each movie is shown several times per month. Others ... ))[(;11:\1. SET-lOP JiOXES are expected to have argued that in a digital world be introduced on a large scale in 1996­ there is no need for a single standard. 1997. Cable set-top boxes were There could be many picture resolu­ originally used to provide cable TV ser­ tions depending upon the need and vice to TVs that were not cable-ready. willingness to pay. For example, some Later, set-top boxes became addressable. extra digital channels could be trans­ This allowed cable operators to activate mitted at NTSC resolution, others channels in a home without having to could have slightly higher resolution, physically visit the home, e.g., for pay­ and still others could be transmitted per-view movies or when someone with full HDTV ordered a premium movie channel such as HBo. Recently, a new generation of ... DH;IJAI. PKOIll 'CTIO!\; sn'DlOS \~D set-top boxes has been introduced. TKJ\:\Sl\IITTEKS are likely to be com­ These accept digital signals and provide monplace early in the next decade, as a variety of sophisticated features. The stations and cable operators evolve boxes are analog devices enhanced by towards a future that is completely digi­ computer technology to provide some tal. However, it involves some very large digital processing. An important busi­ expenditures for capital equipment. ness decision facing service providers is Broadcasters estimate that the full con­ whether to use the enhanced analog version of production and transmission boxes now or wait for the next genera­ of HDTV may cost about $10 million. tion of fully digital boxes. Some of the Fortunately, the digital conversion can largest cable operators have decided enable stations to significantly improve that the risks of waiting are simply too production and broadcast quality and, great. These large operators currently at the same time, reduce some operat­ have standing orders for more than ten ing costs. In the near term, many million digital boxes. stations are moving towards a digital environment in stages. Among the first Some of the advanced features offered pieces of digital equipment that have by enhanced analog and fully digital set­ been broadly adopted are digital graph­ top boxes include graphic and text ics workstations. In addition, many display of electronic program guides and broadcast groups including PBS have tlle ability to allow various software purchased digital insertion equipment. downloads to change what the set-top Commercial stations use this equipment box can do. Fully digital boxes will sup­ to insert commercials efficiently. PBS port these functions as well as process and some public TV stations use it to digitally compressed video. They also insert promotional announcements and can be configured for interactive televi­ underwriting messages. Some new cable sion and video telephone calls over cable. net:\vorks, e.g., Home and Garden Tv, have built fully digital studios. Many One of the problems in designing a set­ groups are beginning to adopt digital lop box in today's environment is that it recorders and digital editing suites. must be flexible enough to adjust to Digital compression technology has rapid changes in technology. It must provided the foundation for the huge also be inexpensive enough-under expansion of satellite transmission $250-to be viable in the marketplace. channels by both public television state Cost can be reduced if the components

17'" _ g6 ~ '------_--..:...... --..:...... ----:-..::.....-..-[ U I I I U

technological innovation, but then failed to find a market. As in the past, it is not clear which services will become a permanent part of the landscape and which will find too little support Yea r Mill I 0 ns to become viable. Some of the services that are ~f Cable Households emerging include: IHJ 1 1g85 2 ... TELESHOPPING seems to have become a 1g87 5 4 permanent part of television program­ I g8g 1J ~ ming through QVC and HSN. Another I ggI 17 0 form of teleshopping involves the selec­ ]g gJ 2 ~ g tion and purchase of products through ]g g5 2J~ telephone-based online services such as Prodigy or America Online. Many Source: Sho1l'time Event TelevisioN groups have announced or begun online shopping services over the Inter­ net, although questions remain about of the set-top box are built into a TV the security of credit card information set or VCR. sent over the Internet. The next wave of development is teleshopping on fully interactive television systems. In these shopping services, users can control COHSUM[~ S[~UI[[ IMPllCRTIOHS what products are displayed and can place an order using a special interac­ Competition and Hew Seruices tive tdevision remote control. The communication marketplace is filled with new competitors: direct broadcast TELEBANKI:"iG or "virtual banking," also satellite is competing with cable, cable is com­ is emerging as a new consumer service. peting with tdephone companies and online Home banking has been available for services are competing with print. In an environ­ more than a decade, but it has received ment with high levels of competition, lower only modest acceptance by consumers. prices and innovations that will lead to new ser­ 1\10re recently, a number of large and vices are expected. So far, consumers have not small financial institutions have seen lower prices. DES is more expensive than announced plans to provide a new gen­ cable, and cable operators have not lowered eration of money management services their prices in the face of competition from DBS including checking accounts, money or telephone companies. Innovation also is illu­ market and mutual fund accounts, sive. Generally, new competitors have offered credit and debit cards, brokerage and consumers more of the same types of services bill payment services. These financial they already have. \Vhen examined more closely, services do not require a visit to a however, innovations are emerging. Some an' ' branch. Rather, they are available genuinely new services offered in market trials through a combination of telephone and computer-based delivery systems. and tests, others are advances to existing S(T­ vices, and still others are a new wave of sen ices Customers can choose to do their that were tried in the past but not broadly banking in conjunction with readily adopted. . available money management software for their computers or use special soft­ ware provided by the financial Teleban kIngl Commuti ngl [ducat Ion I institution. Medlcinemopping There has been an explosion of interest TELEC< ).\Il\IUTIC\lG is another concept in providing services to people who are nir fi-om that has been around for a long time. a bank, school, hospital, etc. Many of these ser­ Serious attention to telecommuting vices were touted in the past as the next wave of started in the early 1970s during the

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OPEC oil embargo, but the cost of a mystery program will end, participating in telecommuting technology was prohibi­ game shows from home or competing in a TV tive 20 years ago. Telecommuting has game of chess against someone in another gained momentum recently because of household. Interactive TV also is likely to the increased penetration of personal include many commercial applications such as computers in homes and lower costs f()r home shopping shows in which a viewer can devices such as fax machines..rhe choose which products will be shown and the availability of low-cost office equipment ability to select what version of a commercial for homes has transformed working will be shown, c:.g., a commercial for a station remotely from an exotic activity to a wagon, sports utility vehicle or an economy natural extension of the ollice. sedan. Ylost of these applications of interactive programming are still in market trials or ... TELE-EDUCATION has been part of the trade show cit'monstrations. The most common technology and media environment for form of interactive programming in the market­ more than SO years, beginning with the place is c'ducational, c'.g., live telecourses in use of radio for distance learning in which students at a distant site can communicate rural areas during the 1930s. It gained with the instructor. Some interactive program­ some momentum in the late IQ70s ming in education also allows teachers to give when satellite technology made it possi­ exams OVtT TV (students answer questions with ble to distribute live video instruction special data terminals), poll student opinions and almost anywhere in the U.S. and fur­ even see the students at remote sites. ther momentum in the 19S0s when low-cost computers and modems were Killer Rppllcatlons adopted by many schools. It also has There is much talk ahout "killer appli­ established a good track record. There cations" for interactive TV and other advanced is now renewed interest in sharing communication services. This refers to a service scarce teaching resources through or program offtTing which is so compelling and telecommunications not just in rural profitable that it renders the entire service a suc­ areas but in all school districts and col­ cess. In the cable industry, some argue that lege campuses. HBO was a "killer application." When cable was entning major cities in the mid-1970s, ... TELE\IEDlCI'\E continues to hold the HBO was a very compelling offer that led many promise of easier access to scarce to adopt cable. Today; there is much debate resources-both medical specialists and about what might be a killer application for expensive diagnostic equipment at a interactive e.g., interactive games, home site that is remote from the patient who '1'\: shopping or movies-on-demand. It is also possi­ is being treated. As with tele-education, ble that there is no killer application. Often, new economic pressure is creating a bvor­ services win accc'ptanee in the marketplace by able atmosphere for using telecom­ oflering a broad collection of reasonably attrac­ munications to give doctors and patients access to expensive resources tive' services at a moderate price. Jocatt'd at a distance. The increased use of visiting nurses to care for patients in Uideo-on-Oemand [UOOJ their homes also has created new appli­ Video-on-demand is a potential "killer cations of telephone-based support f()r application" in the minds of some. \Vith VOD, a health care professionals. large selection of movies or television programs is stored on a video server. Users can order a Inleractlue Programs specific mmie or video program and see it The promise of interactive program­ immediately. VOD can accommodate many users at the same time-the actual number ming is to place video under the complete depends on the capacity of the video server. control of viewers. This might include choosing Further, many people can watch the same movie which segments in a news program to watch first or TV program, each starting at a diflerent time. and the ability to call up extra video segments Some systems also provide VCR functions about a story. It also could include choosing how von _ ------gg6 { D I 1 I D H

for end users. They can stop, rewind and fast EPG service providers has narrowed forward through content on the video server. recently and is likely to narrow even more. W'inners and losers may be sort­ Hear-Uldeo-on-Oemand [HUOO] ed out more by marketing alliances than by who offers the best service. Near-video-on-demand is a less expen­ sive alternative to von With NVOD, a ... The way EPGs present program choic­ moderate number of movies are carried on spe­ es could have a significant impact on cial pay-per-view channels. Each movie is program providers. An EPG can carried on three or four channels, with starting "steer" viewers toward certain pro­ times 10 or 15 minutes apart. As a result, each grams and highlight or promote movie is available "nearly" on demand it will specific programs. Marketing affIlia­ always be starting within a few minutes. A large tions may affect who receives prime capacity cable system (or a moderate capacity shelf space in the program guides. system with digital compression) might assign 60 Also, EPGs are likely to encourage channels to NVOD and carry 15 movies, each more program viewing by content cate­ on four channels. gory. For example, sports fans could program their guide so that they see flectronlc Program GUides UPG] sports programs predominantly. With the promise of cable systems offering hundreds of channels to their cus­ Multimedia tomers, a variety of EPG services are moving 'vVhat does the term "multimedia" into the marketplace. Electronic program guides mean? It implies that two or more forms of provide viewers with listings of TV shows for media are used in a service or device. Television the current day and several days ahead. The on­ and films have pictures and sound, but are not screen guides can custom-sort programs by called "multimedia." The term has become an themes and subjects. This feature may be used all purpose descriptor for new combinations of to sort a day or week's worth of programs into sound, pictures, text and data. Often, "multime­ specific categories such as "sports" or "movies." dia" is used to describe an enhancement to a In addition, some of the more sophisticated familiar medium, e.g., a computer that can play functions provided by EPG services include sound and video is called a multimedia comput­ point-and-click VCR recording, program er. As these enhancements become more searches by title and features that allow the common or popular, the new combination may viewer to sample segments of movies and shows come to be known by a unique name or simply prior to making a selection. be integrated under the old name. The program guide field is crowded and very competitive. Several companies are try­ ~ersonallZed ing to win acceptance; only a few are likely to and Customized SerUICes succeed. Delays in the roll-out of digital set-top In the same way that telemarketing boxes recently have prompted a few aspiring ser­ personalizes a sales presentation ("Good evening vice providers to drop out of competition. Mr. Burns, I'm calling you tonight because....") There are three critical issues associat­ and direct marketing customizes advertisements ed with electronic program guides: by including your name in the text of a letter, new media are providing many ways to person­ ... How many consumers will be willing to alize and customize their services. For example, pay $50 per year (the subscription cost online services encourage users to set up their for some on-screen TV guides) plus the own "path" to go to the services and content initial cost of hardware to receive the areas that interest them. \Vith games and other service? participatory activities, the names of partici­ pants and the winning scores are posted and ... There are many companies competing shared with other players. Channel selection on for this market and many complex TV systems also can be customized so users can marketing arrangements. The field of surf through their favorite channels and skip ______g__~ f_O_I_j_I_O_H _

over channels they do not like. Over the next few years, there will be many new ways to per­ sonalize and customize media.

Multiple Channels Video compression technology enables more than one channel to be broadcast within the same bandwidth. Broadcasters are beginning to think about expanding their franchise by sup­ plementing their prime feed with additional channels. For example, a public TV station could take its existing content and create three or four services, e.g., an education service, a chil­ dren's service, a news and documentaries service and a nature service, each broadcast on a sepa­ rate digitally compressed channel. The proper extent of and mix of such services will represent a major challenge to the station programming organizations. Ylultiple channels-even if origi­ nated from the same public television station­ can compete with each other for the same audi­ ence if they have similar audience appeal. The acquisition of more programs can complicate an already difficult problem of obtaining high qual­ ity primetime programming. Even so, a well-organized schedule containing a variety of properly selected standard resolution programs, combined with some high-quality single channel primetime programs offered in HDTY, might prove to become a very successful broadcast ser­ vice for many public television stations. In a cable or telephone environment supported by video servers, some channels could be created temporarily. For example, if a major news story broke during coverage of a sporting event, a sta­ tion could create a temporary second channel and provide the news story for those who want­ ed to view it, while others could continue to watch the sporting event.

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C HAP T C TIUITlfS & ~UfSTIOHS fOR PUBliC TO

COHHtRCIRl RCTIUITlfS providers. The JVew York Times, Omni l magazine, Scholastic and American Express are a few of the companies J Online SerUICes that have established feature sections on Dozens of commercial online services America Online. Such an arrangement oller access to large information databases, elec­ is mutually beneficial fClr the sponsoring tronic mail, games, education services, shopping, company and AOL. That is, this type banking, bulletin boards on special interest top­ of participation allows a company or ics and live chat sessions. After growing slowly organization to control content and during the 1980s, they expanded rapidly in 1994 promotions within its unique section as and 199.1. They have benefited from the if it had its own online service. increased number of homes with PCs and faster Through this, AOL has been able to speed modems as well as lower costs for comput­ provide a larger variety of features to ing equipment. Over the next few years, users its subscribers without having to create will be able to access online services at even the content. Like other major online faster speeds via ISDN (a high-speed data ser­ services, AOL recognized the growing vice over the telephone network) and through popularity of the World Wide Web and broadband cable networks. Some of the major began to olllT vVeb access to its cus­ services and their focus of activities include: tomers in 199:1.

• CO!VIPt 'SERVE-The oldest of the main • PRl)[lIl;Y -Prodigy, an online service online services, CompuServe, an H&R owned jointly by IBM and Sears, began Block company, began in the early in the mid 1980s. It started as an infor­ 1980s. It was established originally to mation and entertainment service make use of the spare capacity of a targeted to a wide audience of adults, large computer system during off­ teens and children. For this reason, it hours. CompuSerV{' quickly established adopted a strong graphics look and feel itself as a service fc)r working proft's­ from the beginning. Prodigy has sionals to share information about expanded some of its content areas topics of interest to specialized groups. through partnerships with third party Employing a bare bones, text-only for­ inf()rmation providers. Companies such mat and an emphasis on as ESPN and CBS now sponsor and communication, CompuServe grew at a update featured sections within Prodigy. moderate pace and was one of the first services to become profitable. Later, it Prodigy also became the first major ser­ added graphics capability and began to vice to provide a fully operational provide access to the World vVide Web. World \Vide Web browser to its sub­ scribers. vVith increasing interest in the • A~IERICA O\lLl'\E (AOL) Started in Internet, the Prodigy vVeb browser 1989, America Online grew rapidly to attracted a large number of new users become the most popular online service who wished to explore the rapidly in the U.S. It accomplished this through growing number of graphics-oriented lower pricing and strong marketing that vVeo sites. Prodigy also moved rapidly placed AOL in the basic software pack­ to increase access speeds, including age of many PCs sold to businesses and access via high speed ISDK The consumers. AOL also established rela­ biggest need for ISDN lines comes tionships with many strong infc>rJnation from customers who are interested in

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