What AT&Ts Cooking: Managed Content, More

11/26/2000 7:00 PM Eastern

Coming soon to an AT&T Broadband 2000-series set-top near you: Video-on-demand, Internet-over-TV, managed-content areas and simple gaming applications.

Those are the four key areas of content and applications that AT&T Broadband plans to develop and deploy over the next year for its imbedded base of Motorola Broadband Communications Sector "DCT-2000" boxes.

It will also work on bringing the next-generation 5000 to market, according to Rich Fickle, AT&T Broadband's vice president of marketing and new business.

AT&T is already rolling out Diva Systems Corp.'s VOD system in Los Angeles, San Francisco, Atlanta and Pittsburgh. And AT&T is adding WorldGate Communications Inc.'s Internet-TV service in Waterloo and Cedar Rapids, Iowa, and Tacoma, Wash.

"WorldGate has done a great job," said Fickle, and AT&T will likely roll out the service in additional markets. But AT&T also is looking at other' Net-over-TV providers.

Also look for AT&T to launch "managed-content areas"-the new name for what used to be called a walled garden-and gaming applications on the 2000s.

AT&T wants 10 companies to provide information, entertainment or electronic-commerce functions to its managed-content areas. It already has deals with and The Weather Channel.

"My guess is we'll wind up in a year's time in the 30 range," Fickle said.

The managed-content area also will have an electronic-mail function, provided by AT&T. The e-mail application will be specifically designed for the TV, but users could access a pre-existing e-mail account-from, say, America Online-over the Web, he said.

The area will carry interactive advertising, including banner ads and interactive TV spots. AT&T signed a deal with RespondTV Inc., but has no deal with ad-enhancer Wink Communications Inc.

AT&T hasn't announced any e-commerce partners as such. Fickle said AT&T wants to carry economical products with price points of $50 or less.

"We'll work with well-known brands," he said. "We're not trying to get in the middle of fulfillment and order entry."

AT&T signed a deal for Qpass Inc.'s "eWallet" software, which stores customers' key information in a secure fashion and puts it on the merchant's template, Fickle said.

Fickle is also looking at gaming applications, such as strategy, trivia and parlor games. "You won't be able to do advanced twitch games," he said. "But on the 2000, you can actually download game objects into memory to play a game. You have to have a server that carousels the game down."

All that is prelude to getting a 5000-series box into the field. Liberate Technologies trials will commence before year's end, while trials with Microsoft will begin in early 2001. "We'll drive down the path to work with Microsoft and Liberate," Fickle said. "We think there's room for both in the marketplace."

He said the 5000 series' key differences are additional functionality and the user experience.

"You can do scalable video in the managed-content areas," he said. "The graphics are richer and faster. Users will find the experience quicker overall."

The 5000 also has printer capability. AT&T signed a deal with Hewlett-Packard Co. to supply printers. And Fickle is working on home networking and photo applications.

Video and audio streaming and personal video recording also are getting some attention.

"Video streaming is not unlike VOD in some ways," Fickle said. "We think the functionality is important to provide consumers more choice and more convenience. We could create new products with news providers, for instance."

But streaming raises two areas of concern for AT&T: creating a copyright-management protection system and giving parents control over what children may access through the box.

Fickel also called 5000-series functions important from a competitive standpoint. DirecTV Inc. and EchoStar Communications Corp. set-tops are available with AOL TV, WebTV, Wink and PVR functions.

AT&T recently launched a PVR test with ReplayTV Inc., but has made no final decisions, Fickle said.

A year ago, AT&T estimated it could generate $120 a month in incremental revenue from the 5000. Fickle declined to say whether that number remains AT&T's target.

"We're still pretty bullish on the business model," he said. "The issue is timing and getting advertising and e-commerce partners. You've got to have some scale to generate the high revenue growth.

"The economics are such that we can deploy interactive services and make the business model work," Fickle added. "But the 2000 is going to hit some walls on the functionality and scaling side."

That makes content portability even more crucial.

"The industry needs to pull together with common standards," Fickle said. "We need to provide guidance to content providers for the 2000 so they can get scale, then allow that content to play on the DCT 5000."

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