News

IP: Gotta Have It

5/03/1998 8:00 PM Eastern

The dividing line between cable modems and digital-video
set-tops is blurring, thanks in part to the newest and hottest acronym: IP, or Internet
protocol. IP, a common language among bits, is the ticket to the industry's metamorphosis
from video to a world resplendent with revenues from datacom, telephony and interactive,
executives believe. IP is emerging as the "gotta have it" service that everybody
wants. Leslie Ellis,
Multichannel News' senior broadband editor, teleconferenced
with four broadband executives to delve into the IP world: Steve Craddock, vice president
of new media for Comcast Corp.; Tim Evard, president of Time Warner Cable's Road Runner
high-speed-data service; David Fellows, who recently left MediaOne as its senior vice
president of engineering; and Adam Grosser, vice president of product development for
@Home Network. An edited transcript follows:

MCN: It seems that this year's National Show is
different than years past, because before, there were two distinct camps -- cable modems
and digital set-tops. But this year, there seems to be a buzz about applications that will
straddle both.

Craddock: Four years ago, everybody was
trying to converge three markets: telephony, computer and TV. Nobody was really able to do
that.

What you're really seeing now, through protocols and a
ubiquity of IP, is a common denominator that will actually allow that to happen.

Each one of those three IP mediums -- communications, data
and video -- has an optimized way of presenting things. But the ability to be able to do
them all on a single platform -- that's very powerful.

We're slowly coming to the point where we can actually
provide a broadband pipe to the home and provide services ubiquitously, using IP.

Grosser:I couldn't agree more with that,
Steve. People keep trying to pigeonhole @Home as the personal computer-data-cable company.
I keep saying, 'No, it's about information to the home.'

Evard: What's happening here is that we,
the cable industry, are beginning to deploy IP networks on our upgraded physical layer.
And we're right exactly at the point where we're learning how to bring these networks up
and operate them. We're transforming ourselves from an industry that dealt with relatively
simple technology to an industry that's dealing with a far more complex networking
technology.

MCN: What are the challenges in getting there?

Grosser: One of the bigger technical
challenges for us is managing cross-platform content distribution -- doing transcoding and
transcaching, and figuring out what is good to show on TVs and PCs.

Presenting the relevant services correctly -- from a
format, color palate and design perspective -- is important. What should be TV-specific,
and what should be PC-specific? There are a lot of challenges for us at two levels: the
server level, to be able to technically do it, and the publishing-tool level, to automate
it. We're addressing those so that the cost of providing these services isn't prohibitive.

Fellows: There are obvious differences
between the TV and the PC. The PC is a one-on-one platform, not a one-on-plenty, and it
has a keyboard, and not a one-fisted remote.

Another lesson that we've learned from interactive TV and
from various attempts to launch virtual channels, such as Wink [Communications Inc.], is
that you need this to be done automatically. Any reformatting for different screen types
or interactions has to be done automatically, and not by having people generating
specialized content for the TV.

MCN: What IP services are you working on now that
will perhaps start on a PC environment, then shift to a TV?

Craddock: One of the ones that we're
working on right now is Intertainer [a Santa Monica, Calif.-based video-on-demand
provider]. That's a Java application that today gets delivered over a data platform to a
PC -- albeit more of a high-end, multimedia PC. But our view as soon as we saw this thing
-- it does everything from movies right up to e-commerce -- is that it's probably best
ported to a digital set-top.

As soon as you can run PersonalJava, which is something
that we're working on right now, this is something that will really be powerful over both
platforms.

Grosser: From our perspective, there are a
lot of fundamental things that are nicely cross-platformed. E-mail is one. Gaming is
another.

I'm also particularly bullish on the different
communications aspects. A set-top with a USB [universal serial bus] port and some cheap
peripherals will give you some interesting, inexpensive ways to do video telephony. With
television, the real opportunity is to create what I call inclusive services to the
nontechnical community.

MCN: Gaming? Like The Bingo Channel?

Grosser: I think that if you look at some
of the PC online-gaming services ...

Craddock:...Like Ultima Online, for
example ...

Grosser:... Like that, yes, or even at
some of the things that MPath [Interactive Inc.] or Microsoft [Corp.] have done with
Internet games, it's not the retail games that are the incredible usage drivers. In large
part, it's the Java games, or what I'd call parlor games, like hearts, spades and chess.
That's where you're seeing millions of hours per month.

If the industry really does deploy x million devices per
year, and they have the performance characteristics that we all think they will, you'll
also start to see the retail game industry port to the cable platform.

Evard:This is going to be evolutionary,
not a revolution. PCs and TVs will begin to come together, and I think that it evolves
from there. It's very difficult, and I think that it would be a mistake today to try to
leap over that evolution and invent some kind of a revolutionary paradigm change.

Grosser: One of the things that we think a
lot about here at @Home is the set-top as a way to vanquish the ghost of interactive
television. Just the ubiquity of IP and the content-creation tools associated with it
makes it a different opportunity.

Craddock: It really does. The idea of
gaming -- we've all thought about it, but when you start to put it through IP and be able
to deliver it to all of those [in-home] platforms, that stuff has really come along in the
last 12 months.

MCN: Tim, what Road Runner IP services could be
augmented with Time Warner content?

Evard: Time Warner content crosses a lot
of mediums. Time Warner is cable TV, and Sports Illustrated, and Warner Bros., and
a lot of things.

We're already beginning to see these assets work together
-- CNN/SI, for example, and CNNfn. We're beginning to see a lot of these assets come
together in what is sort of a new-media form, and I think that the opportunity that
technology presents is going to accelerate that.

Fellows: I don't have a company that is
secretly working on it. But in small start-ups that I'm now visiting, I see people looking
at streaming media -- either streaming audio or streaming audio and video, along the lines
of New England Cable News.

Grosser: David brings up an excellent
point, which is the blurring of video and data. Historically, and up until very recently,
video and data were seen as two different sides of the house.

Particularly with streaming media, you can start to see
occasions where video-over-IP is contiguous with a traditional broadcast. A good example
is doing picture-in-picture using streaming video. It's a very different mind-set for
cable companies.

Craddock: I agree that where all of this
is going will indeed be the final way to squash the old interactive-TV perceptions. Look
at interactivity the way it was: Everybody had their own proprietary ways of doing things.

IP provides you with a common way to move data around, and
information and, more important, communications. We never had that before. So it's a way
that you can actually communicate about things and to things.

I don't think that you're going to be seeing this stuff, to
use South Park's words, to be able to kill Kenny on-demand.

But it's a link to the civilized world. I'd like for people
to think that they've just got to have this link to be able to communicate on all of the
platforms in their house.

IP video and IP voice are really just the start of a whole
bunch of services that we hope will proliferate.

The old thing that we've talked about over the years --
that you can take a USB connection and plug it into your IP-compatible card and have
somebody actually run a diagnostic over a data network -- that's not unheard of.

Grosser: It's surprising, Steve. We've had
conversations that I wouldn't have thought would have happened yet in the last couple of
months.

Proctor and Gamble [Co.] was here, looking at ways to
automatically restock refrigerators. When your milk carton is empty, the fridge sends a
message to the market to add milk to your shopping list. We had a conversation with one of
the big power companies that wants to do a trial through set-tops, where it offers a 10
percent discount to the cable customer if the customer lets the power company control the
thermostat.

MCN: Rank the business cases for some of these IP
services: Which are the most lucrative?

Evard: Broadly, based on our experience --
@Home and its partner companies have the benefit of looking at, what, 90,000 customers?
And we and MediaOne have 80,000. Ours are all Americans, though. [laughs]

Craddock: Oh, that was cold. [laughs]

MCN: What, Canadians don't count?

Craddock:I guess not! [laughs]

Evard: At any rate, when you look at the
various business cases, it's the consumer market that's driving the investment and the
interest and the awareness of what we're doing.

At the same time, it's the SOHO [small-office/home-office]
market and small networks of 50 machines or less that provide the largest near-term
cash-flow potential. So we can't honestly say that one is more important than the other,
because they're highly dependent on each other over the next several years.

Grosser: It's also not the kind of
environment in which consumer focus groups are particularly accurate. These are really a
class of services that people don't know they want until they see them integrated into
their lives.

Craddock: Customers don't have a frame of
reference yet. I agree, though, that the big cash flow is going to be in the small and
medium businesses and the telecommuters. This provides those customers with a real
value-add and a huge cost savings over what they can get today in the marketplace.

MCN: Once you branch out from businesses to
residences, how would you rank the IP services in terms of which are the most profitable?

Fellows: The only generalism that I'll
throw out is that advertising revenues will be big. Advertising pays for all of video as
we know it, remember.

Grosser: The other thing that will
continue to strike a resonant chord in the consumer market is a class of applications that
I'll call community-enhancing services. Whether that's some sort of chat, telephony, or
mail -- things that bring people together. We put a lot of stock in that.

Want to read more stories like this?
Get our Free Newsletter Here!
October