Charter Deal Gives ICTV Initial Digital Debut

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Charter Communications Inc. — awarding ICTV Inc. its first U.S. commercial digital rollout — will launch the company's thin-client, interactive-television platform in Kalamazoo, Mich. sometime this fall.

The Kalamazoo system is a former Bresnan Communications Inc. property that passes about 72,000 homes. Charter inherited the ICTV deal when it acquired the system in 1999.

"This was a contract that survived the acquisition and was originally slated for Bay City [another former Bresnan system in Michigan]," said Charter vice president of corporate development and technology David Housman. "We just found it easier to move this over to Kalamazoo, where we could isolate it."

Charter has deployed Motorola Broadband Communications Sector DCT-2000 digital boxes in Kalamazoo.

Bresnan originally tested ICTV's analog product in Bay City in the late 1990s.

Charter declined to disclose the financial terms of the multiyear deal.

The Charter announcement comes at a critical time for ICTV and its thin-client architecture. Rumors have swirled that the privately held company is in need of additional capital to stay alive.

Housman denounced a suggestion that Charter's deal with ICTV may be an aberration because it came attached to the MSO's acquisition of Bresnan systems.

"If [ICTV's digital platform] proves to be stable, there's potential long-term opportunity," he said. "We never trial anything just to trial. We trial only to deploy. If we're going to deploy, we see it as a strategy for several years."

Although Charter Communications Inc. will give ICTV an opportunity to prove the stability of its thin-client architecture in at least one system, the MSO remains committed to its strategy of rolling out thick-client boxes — including Motorola's new line of 5000-class set-tops — for enhanced ITV services and applications, Housman said.

"From Charter's standpoint, with [applications] that are robust, we do not believe that the processing should be done at the headend," Housman said. "If you're going to get into streaming and [multiple] applications, there's got to be some intelligence on the box side. You can't do all of that at the headend."

After a battery of technical tests and software-integration procedures, Charter plans a commercial launch of ICTV's headend-centered platform sometime this fall. It will offer electronic-mail and Web-browsing applications to its digital customers in Kalamazoo.

"At this point, we have not added a lot of other features [to the ICTV platform]," Housman said. "We're trying to keep it very simple, scalable and to keep it clean.

"We're more concerned about making sure customers have a really good basic experience before we really try to stress it," he added.

On the integration front, Charter will attempt to make ICTV compatible with the system's existing interactive program guide, TV Gateway.

Ironically, the TV Gateway consortium is backed by an ICTV competitor, WorldGate Communications Inc. TV Gateway's MSO consortium members are Charter, Adelphia Communications Corp., Comcast Corp. and Cox Communications Inc.

ICTV president Wes Hoffman, who also wears the president and CEO hat at HighSpeed Surfing Inc., said Charter's thick-client mentality will actually accelerate the deployment of some rich-media services, because the big box would work cooperatively with a headend client.

"We think, ultimately, the MSOs and the subscribers are going to be well-served by this change of focus, because it could accelerate the integration time if there is a dual-client approach to this," Hoffman said.

In September, ICTV and Cox inked a letter of intent to test the company's digital platform in a "large Cox market," but that trial hasn't materialized. Although ICTV has maintained that Cox broke that agreement, Cox officials have noted that the deal is nonbinding.

Hoffman said ICTV will start to see revenue from the Kalamazoo deployment this year. He also reiterated that the company is in the midst of final approval for a new round of funding and expressed hope that it would announce more cable deployments in the next 30 to 60 days.

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