Glory Days of Net Growth Are Numbered

The New Communication King:
Channel Convergence

Most of us were not accessing web pages in 1994 and may not be in 2004. MWT brings you the some major findings and forecasts about the next generation of interactive options open to us.

Glory Days of Net Growth Are Numbered

A report from Inteco Corp. suggests that the days of wine and roses are numbered, as far as Internet growth are concerned.

The bottom line to the report is that the current levels of growth can only be sustained until 2003, at which stage a new dynamic will kick in, and multipoint content distribution will take over from today's Internet model.

According to the report, by 2003, Net users will be using their TV to access the Internet while watching the morning news at breakfast, and then use a personal digital assistant (PDA) or smart phone for Net access while on the way to work.

At the office, however, the office PC will continue to be used for Internet access.

Though the user will have access to the same information across the Internet, the data will be available from a variety of points, and perhaps more importantly, it will be available from almost anywhere, the report stresses.

This almost anywhere method of access is called Interactive Multi-Point Content Distribution by Inteco.

The Internet growth cycle, according to Inteco analyst Mark Snowden, is now at its peak in terms of new PC users and new Internet users, and a new era is already dawning that will focus on new services rather than new users. "The unprecedented growth rates seen at the end of 1998 simply cannot be sustained over the next five years," he said.

According to the report, household PC penetration jumped from 43 to 49 percent between June and December 1998, while household Internet access leapt from 25 to 37 percent. Inteco predicts that household PC penetration will reach 65 percent by the end of 2003, and household Internet access will hit 58 percent at that point.

"By then, just about every home that wants a PC or Internet access will have it," Snowden said.

According to the report, as the number of new PC and Internet users dwindles, technology and Internet companies will seek out new opportunities among their existing customers.

The most promising strategy will be to deliver content to customers by delivering content via every possible means, be it through the PC, digital TV or digital cellular phones.

Interestingly, Snowden cites AT&T as a prototype of the new encircling strategy, thanks to its acquisition of cable company TCI and, through TCI, the broadband Internet provider AtHome, to deliver content from its Web portal, Excite. Through its various networks, AT&T will be able to present Excite to customers on TVs, wireless devices and PCs, even in the workplace. "AT&T may be the first, but there is certainly room for more such players in this market," Snowden said.

Inteco's report suggests that broadcasters offering subscription multi-casting of local television will need a way to control access to the subscription, a way to bill for the subscription, and a back link from the customers' homes.

All three of these facilities could be offered by local phone companies as well.

"On one hand, digital satellite providers need local stations to broaden the appeal of their subscription services. On the other hand, local broadcasters need to speed development of their digital TV markets, and one way to do that would be via the decoder boxes and subscription services offered by digital satellite providers," he said.

Inteco's Web site is at http://www.inteco.com.

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Different Takes On Wedding TV To Web

Interest is growing in combining television with the Internet, but not everyone is taking the same approach. ACTV, Inc. [NASDAQ:IATV] has introduced HyperTV, which will synchronize "pushed" World Wide Web content with television programming, while US West Inc. [NYSE:USW] has signed with Network Computer Inc., to turn TV sets into Internet access devices.

US West announced that it will begin trials by mid-year of ACTV, which will use a Network Computer set-top box to let consumers browse the Web and deal with e-mail using their TV sets as displays. The service will also make it possible to make and receive telephone calls.

The ACTV service will require a telephone line for phone calls and Internet access, US West spokesman Jon Lentz said, and will be able to work with either a 56 kilobits-per-second modem or US West's Megabit Service digital subscriber line (DSL) offering. The set- top box from Network Computer will come equipped with an infrared keyboard as well as a remote control.

Pricing hasn't been determined -- that is one of the issues to be worked out in the trials US West will hold in "at least a couple" of major centers in its territory later this year, Lentz said -- but it will be competitive with other Internet service providers (ISPs).

Due for commercial availability late in 1999, the offering will be the first of Network Computer's technology in the United States, Lentz added. The company is already working with cable-television firms and others in Europe and Asia, especially in the United Kingdom where three major cable operators -- Telewest Communications, Cable and Wireless Communications, and NTL Communications -- offer the service.

ACTV's HyperTV can handle the display of Internet content on a TV set too, said Mike Rosen, a spokesman for ACTV, but the main focus of HyperTV today is synchronizing Internet content to what is on the TV screen. ACTV is launching HyperTV, which can stream uniform resource locators (URLs) and other Internet content over a video signal or a separate Internet connection, into the entertainment market.

An example might be a baseball game. When you turn on the game, you would also start up your PC and log on to the Web, where you would enter a Web address to contact the HyperTV service. Then, as you watched the game, HyperTV would automatically send related content to your PC. For instance, Rosen said, when one team sent in a new pitcher, while the TV station showed the pitcher warming up you might be able to see his season statistics and a recent newspaper article about him on your computer screen.

When the game breaks for commercials, HyperTV would provide Web content about the products and services being advertised.

ACTV believes Web-TV convergence is a major market today and will grow further. However, Jupiter Communications, released a study this morning saying few major electronic-commerce players are prepared for the coming growth in television set-top devices. According to Jupiter, such devices will bring a "sit-back" interactive experience for mass-market households, many of which still lack personal computers.

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