July 24, 1996

Article at The Age

FEATURE | Couch potato heaven has arrived

WebTV CEO Steve Perlman at a launch earlier this year

Interactive television will change everything from shopping to even dropping down to the local video store, as Wilson da Silva reports.

THE future of television is already here, only it doesn’t look like the television you and I know. With it you can pick the time, even the day, you want to watch a program: no more rushing home in time for Seinfeld or The X-Files.

You can flick through a selection of videos, peek at the trailers, and if you find a movie you like, watch it without having to make a trip to the video store.

Using a remote control no bigger than the one you now own, you can also balance your cheque book, order Vietnamese, check tomorrow’s weather, book tickets to the footy - all by pointing and clicking at a range of menus on the screen. 

It is couch potato heaven. It is interactive television, or iTV.

Or maybe you’ll use a computer, connected via cable modem to the super-fast optical fibre links of your pay TV service.

Juggling a mouse and pull-down menus, you surf the Net at incredible speeds, make video-telephone calls and send electronic mail. And you watch movies too: click your favorite WebTV site and order that night’s viewing or listening entertainment.

That’s nerd heaven. That’s interactive personal computing, or iPC.

Confused? So are the big guys. Whether it’s Telstra or Optus in Australia, or Ameritech and Bell Atlantic in the United States, or France Telecom in Europe, no one is quite sure what they are doing.

They’re all investing billions of dollars laying optical fibre, running pilot iTV and iPC programs, developing delivery technologies, surveying consumers. Every now and then they announce cross-industry alliances, such as that between News Corp and MCI, or “revolutionary” technologies.

Yet, in their heart of hearts, none of them seem to have a clue just where digitisation is taking them.

“There’s a lack of certainty about the right technology, and a total lack of clarity about what the consumer wants and will pay for,” says Emily Green, a senior analyst at information technology consultants Forrester Research in the United States.

Television of the future, whether iTV or iPC, is more than just about TV. In fact, it has very little to do with television at all.

It is the first truly big shakeout of the Digital Age. Technologies that emerged some 50 years apart - telephone in the 1890s, television in the 1930s, and personal computers in the 1970s - are suddenly coming together. They are being joined by radio, by recorded music and by text.

The monolithic structures that kept them apart - telecommunications companies, the TV networks, the computer industry, the publishing conglomerates - are suddenly discovering that they’re all in the same business - the Bits Business.

“The forces of digitisation act like the gravity of a wormhole in Star Trek, pulling recognisable industries through it and transforming them into something unrecognisable on the other side,” says analyst Stephen Bradley of the Harvard Business School.

Smart players in the communications, TV, computer and publishing industries have all realised that the transition process from the old business paradigm to the new is going to leave a lot of corporate casualties; some of them may establish businesses today, but might be no more than memories in a decade’s time.

So they’re all scrambling for a foothold in the new frontier.

They’re trying out more that one new technology and signing strategic deals with a number of partners in the hope that - when the smoke clears - at least one of the bets will have paid off.

The problem is this new frontier is unexplored. No one really knows where people will go and what they will want to buy, nor even how they will behave. What is known is that millions of consumers, having tasted digitisation, are ready to move. 

And they will arrive fast.

Take CD-ROMs: in 1990, they were just emerging on to the market, and investment in the business was considered risky. Buying a CD-ROM drive then was an expensive proposition. Within two years, there were an estimated 1.8 million drives installed in home and industry around the world. Another two years on, and that number had grown to more than 16 million. A whole industry worth more than a billion dollars was created from nothing within six years.

A SNEAK preview of what that future might look like can be found at the top of Collins Street. On the fourth floor of an otherwise nondescript Melbourne glass-and-steel corporate edifice is Logica’s new multimedia headquarters for the Asia- Pacific. The computer services and software company, a $500 million concern based in Britain, first opened shop in Australia in 1975.

Then, a couple of years ago, it opened a small multimedia unit and staffed it with local talent and some of the company’s bright young thinkers from Logica’s US operations.

That unit has now ballooned into a hive of baby boomers and 20-somethings in jeans and T-shirts, an infectious enthusiasm for new technology. It is here that an attractive and easy- to-use interface for pay-per-view movies was developed for iTV pilots now being trialled in the US.

With an average-looking remote control, you can walk through rooms in virtual department stores, order merchandise, and pay bills. “Intelligent kiosks” are also being developed for Westpac, touch-screen ATM-like units where you can model your mortgage payments on a new loan, or see how much you might make on a term deposit with different cash amounts over different lengths of time. It looks devilishly easy to use.

“This is all done here,” says Lee Dingle, general manager of Logica’s Interactive Multimedia Group. “We combine the cognitive, the creative and the technical to create the applications and the systems.”

Logica, like a growing number of companies with digital nous, see iTV as more than just television: they refer to the systems they are developing as being for “the interactive digital services market”. Techniques learnt on iTV pilots for Ameritech or Bell Atlantic are employed in the design of the Westpac kiosks or Telstra’s Internet White Pages telephone directory. For them, the delivery medium is not as important as what the consumer wants and how he or she best interacts with technology to satisfy those demands.

“We have psychologists here who pay attention to how you or I will use things, what we’re likely to adopt and what we’re not,” said the US-born Dingle. “We have creative people: the graphic artists, the multimedia developers - the look- and-feel people. And then we have the heavy-duty technologists.

But why Australia? The answer is FSN: full service network.

Nowhere else in the world is a whole country being wired up for a high-capacity, optical fibre broadband network. A network with the capacity to deliver everything from movies and videophone calls to teleconferencing and simultaneous multi-angle broadcast of live sporting events.

Both Telstra and Optus expect to reach more than two millions households by the end of the year, and three million sometime next year.

What has been holding back FSN interactive services elsewhere in the world is the cost. In the US, where a number of iTV- iPC trials are under way, it has been estimated that it would cost more than $120 billion to wire up the nation, or some $2500 per household. As of last year, broadband cable had reached barely 100,000 homes.

The other problem is the television itself: the TV set in your home was meant to receive a signal, not to send one back.

Attempts to make existing TV sets interactive have not been spectacularly successful.

Making TVs truly interactive - allowing you to order items and respond to menus and options at lightening speed - will require a new kind of TV, with a computer chip that asks questions and replies to commands. All of this technology already exists.

In both North America and Europe, it is not only the massive investment that daunts the telcos and the cable giants like TCI who have funded trials, it is also the fact that few can see a payback any time soon.

“We’re not giving up (on interactive TV),” Bruce Ravenel, senior vice-president at TCI, told Seattle’s Post-Intelligencer newspaper. “We’ve learned a lot, and in the course of learning a lot we have become a little more sober about it, and we understand better how to make it a success.”

Microsoft founder and billionaire Bill Gates believes this Catch 22 will retard the development of iTV for some years in the US, and Europe. In the meantime, consumers will use our existing computers - and new, cheap, stripped-down iPC versions soon to hit the market - to access interactive services.

It will be a kind of transitory, “mid-band” world, with services delivered over optical fibre, over coaxial lines, and over traditional copper wire telephony where nothing else is available.

“Within 10 years, we might see a big broadband base,” Gates says. “But not in five.”

The picture is different in Australia. Although both of the broadband players - Optus Vision and Foxtel - are promoting a pay television service to consumers, the capacity will be there for interactive services once the cable is laid.

Both also know the only way they will recoup their collective $8 billion-dollar investment in laying optical fibre is to eventually introduce interactive services. It seems the full potential of interactive broadband services will arrive in Australia much sooner.

“The sky’s the limit, really. The hardware’s ahead of the software at this stage,” says Optus Vision spokesman Chris Muldoon. “The network we’re building can be used for all sorts of interactive services . . . including interactive television.”

Optus Vision, in a competitive race with Telstra to lay cable, is cagey about letting too much out of the bag. “Nowhere have we said we’re going to introduce interactive television, “ says Muldoon.

Foxtel, the joint venture between News Corp and Telstra, is hedging its bets. “For the moment, we’re really focused on entertainment and TV,” says spokeswoman Nina Hill.

Telstra Multimedia, outright owner of the Foxtel broadband cable being laid, has trialled iTV and has decided to shelve it for now. “There’s a huge demand, because of the growth of the Internet, for interactive PC, so we’re concentrating on the delivering to the on-line applications market,” says Telstra Multimedia’s Myrna Van Pelt.

iTV: Video-on-demand pilot programs