Interactivity draws viewers in (betting the farm on interactivity)

Tue, 03/31/1998 - 7:00pm
Michael Lafferty and Dana Cervenka, CED Staff

When it comes to interactivity, it seems that the old axiom of "if you wait long enough, everything comes back in style," can now be applied.

Just like the bell-bottom jeans that are flopping all over the place again, and the return of the Volkswagen Beetle, interactivity is making its comeback.

In 1992, it was just "around the corner," and then it dropped off the scene faster than a powder-blue leisure suit. And what about video on demand, the crown jewel of television interactivity? After a quick reality check, that starry-eyed technological fad faded faster than the legion of Americans who used to utter "10-4 good buddy" over CB radios in the '70s.

But this time, interactivity looks like it's here to stay.

Money, money, money...

Over the last 18 months, interactive television has been yanked out from near total obscurity by a combination of forces, including new competitive forces, amazing advances in hardware and software, and a determined set-top standardization drive, as well as corporate buyouts and acquisitions. Whether the end game is interactive video, or using the TV as a data display device, or a combination of the two, remains to be seen. But clearly, cable operators are more interested than ever.

As late as the middle of last year, says Wes Hoffman, president of ICTV, he and his co-workers were "feeling some resistance from MSOs about how effective television was in terms of viewing Internet data."

Then, says Hoffman, technology, timing and a hell of a lot of money came together to change the whole picture. "When Microsoft purchased WebTV, it brought instant validation to the concept of displaying and using Internet content on the television set. And within a month of that purchase, we stopped hearing any objections from MSOs concerning the TV's problems associated with using and displaying Internet content on TVs."

But, as operators, vendors and content providers are quick to point out, two-way network communication is no slam dunk. It takes a lot of time, money and effort to move those TVs (and their viewers) out of the sedentary and slovenly boob-tube mindset.

Making it real

The push to deliver data services via cable modem technology has given operators a jump- start of sorts on interactive television. Ultimately, the best and brightest of interactive applications will demand a clean, crisp return path. And so does high-speed data.

As a result, operators and vendors alike are learning a lot about running two-way plant. Yet, other questions remain. MSOs today are wrestling with issues related to staffing needs, network design, system reliability and more.

Figure 1: Operators report interactivity is on the rise with plans to increase the deployment of two-way plant.

The answers don't come easy, according to the MSOs surveyed for this article. While some operators were unable or unwilling to provide specific data on their two-way activation plans and progress, it was clear that most are aggressively gearing up for an interactive future, whether it was through cable modems or television set-tops and related equipment.

For example, one of the industry's most high-profile operators, Time Warner Cable, is going full-speed ahead on two-way activation (See Figure 1). Currently hovering just above the halfway mark in activated plant miles, it's pursuing an aggressive schedule not only in two-way activation, but channel capacity expansion as well. By the end of 1998 it expects to have 70 percent of its plant two-way active. That will increase to just over 80 percent by the end of 1999, and up to nearly 95 percent by the end of 2000. It also expects 71 percent of the homes it serves to have access to 80 channels of video by the end of 1998.

Cox Communications reports that two-way activated plant currently represents just over 30 percent of its total plant miles (See Figure 1). That figure is projected to jump to more than 50 percent by the end of 1998. By the end of 1999, it expects nearly 69 percent of its plant will be two-way active, and by the end of 2000, nearly 80 percent of its current total plant miles will be two-way active. When it comes to video capacity, it projects that 82 percent of its homes will have access to 80 channels of video by the end of this year.

Marcus Cable, while starting modestly, expects to end its two-way activation with a bang (See Figure 1). With just under 30 percent of its plant two-way activated currently, it expects to boost that total to nearly 50 percent by the end of this year. By the end of 1999, it's projecting nearly 80 percent of its current plant base will be two-way. Then, a year later, that category will represent more than 93 percent of its total plant miles. It also expects 63 percent of the homes it serves to have access to 80 channels of video by December.

Give 'em some space

Video ain't data, and data ain't video. But creating a clean return path is vital to both. Of course, much of that depends on an operator's individual situation.


When it comes to designing headends, operators are aiming for much greater reliability. One of the most aggressive headend rebuild projects being undertaken is by Cox Communications. "We have moved into the 21st century in terms of headend buildings," says Dick Mueller, vice president for operations engineering at Cox. "The classic cable television headend used to be a 10′× 10′ cinder block building, usually on top of a mountain somewhere. We have urban markets that are very large, so we have implemented a program where we are building what we're calling master telecommunication centers (MTCs). These are bunker-like only in terms of being storm-proof, tornado-proof, earthquake-proof, and fire-proof.

"I think we have 40-some of those built already. If you are going to go into these (new interactive) businesses, you can't have a 10′× 10′ cinder block building on top of a mountain. Those just don't work anymore."

Paul Gemme, vice president for plant engineering at Time Warner, says the evolution of technology has already helped conserve headend space. Early on, he notes, return receivers were about one rack unit wide, and only one receiver was placed in a single unit. When 40 of them were packed in a hub, that created a space pinch. Working with vendors, they've been able to improve that ratio so that now, they can usually get six to eight receivers in a three-rack unit.

"Our philosophy," says Gemme, "is to begin with a hub site that's probably about a 20′× 20′ building, or approximately 400 square feet. We think that's plenty to house enough lasers, optical receivers, optical lasers, the transport equipment and whatever kind of channels we need to add at that particular hub site.

"Now, the key is our upgrade guidelines that encourage purchasing property for hub sites, if at all possible. That means purchasing enough property so that we can grow that 400-square-foot building to about 900 square feet in the future. Initially, 400 square feet is plenty. But, as the business grows, as we add more services, and as we push the servers and file servers and what-not deeper into the plant, then we'll have to grow those hub sites."

A fiber-rich diet?

When it comes to determining the amount of fiber an operator should deploy when going two-way, it's not an exact science. In most cases, it seems when operators consider the cost of fiber and the cost of labor to install it, they're inclined to err on the side of installing more fiber now.

"We have been very liberal with fiber all along in our architecture," says Gemme. "And it's always because we have weighed the cost of fiber vs. the labor to put it in. Certainly the labor to put fiber in is much more per mile than what it is for the fiber itself. So we have typically run six fibers per node. Our architecture allows us a lot of flexibility.

"In addition, we keep node sizes, on average around 500 homes passed, so we have a lot of bandwidth for the present time. Now, if a node is very successful in a particular (two-way) business, it may require more bandwidth per subscriber. We'd simply halve the node. Or, we can cut it in thirds. Or we could just do return if that's what's lacking, or we could just do forward, if that's what's lacking."

Farther down the road, Gemme thinks his company may have to address one network design aspect where their fiber may come up short.

"The one area we may have to revisit, possibly in the distant future," says Gemme, "is the rings to the hub sites which are obviously redundant. However, with wave division multiplexing (WDM) prices coming down the way they are, I suspect that by the time we need additional fiber capacity in those rings, that it may be less costly to do it using electronics rather than adding fiber."

People who need people

All of these new services mean a lot of new people, right? Not necessarily. Because interactive services affect so many areas of operations, personnel gains in one area may offset staff reductions in another area. At least that's what Joe Wetzel, vice president of technology for MediaOne, thinks. But real life in the cable industry often blows theories out of the water.

ACTV and Fox Sports are teaming together to launch an interactive service targeted at fans who love stats.

"Staffing will go up," says Wetzel, "but here's the trade. I've got a more reliable plant. Therefore, the staffing should go down with the upgrade. Yet, on the whole, I think that the numbers are, depending upon the system and where they were before the upgrade, either flat or up a little. I have seen numbers anywhere from flat to an increase by 50 percent, and even a decrease in some instances. I mean, they're all over the map."

Cox, on the other hand, has developed a formula for adding new personnel when its plant goes interactive. "We have given our systems a guideline," says Cox' Mueller. "We had to develop some standards based on calculations we did and some discussions with a few people who were doing two-way active plant back two or three years ago. The target we have given them for maintaining the reverse plant is an incremental technician per 200 miles of plant. They have implemented that, and I have not heard anybody complain."

Managed care

Two-way plant, by its very nature, demands a high degree of reliability. That's where network management or operational support systems come in. Yet it doesn't come cheap, and operators, like many others, are loathe to spend money before they make it.

The Interactive Channel's digital platform will be configured as a "zero-cost download" which provides Internet access.

For MediaOne, implementing a network management system is a matter of setting operational and financial priorities. "We are in the midst of rolling out network management," says Wetzel. "We are using surveillance devices at the fiber nodes and power supplies in the hubs and the headends. And we are combining that with intelligent devices with telephony and high-speed data, and bringing all that into a network management system.

"We know we can handle smaller scale deployments without having to have every big system in place. And that's what we've done so far.

"If you have 100 interactive subscribers, do you need some fancy network management platform? No. Brute force would be fine. It's only as you start to scale that you need greater sophistication in the tools you use. I think we are going through a natural progression from a kind of brute force management to more sophisticated management of these interactive networks."

Content is still king

It's a proverbial question. Which comes first? The chicken or the egg? With interactivity, the query is: Which comes first? The two-way plant or the interactive content? Both have come a long way, and they're getting closer everyday.

According to David Reese, president of ACTV, there's an important distinction to be made about interactive television. "The reason so many of the earlier forays into interactivity failed," says Reese, "was because they required significant equipment. I think it's a death knell if you don't incorporate the functionality into the basic set-top.

"The Time Warner Full Service Network basically put an aircraft carrier on top of the television. It's just not practical. You don't want to be in the consumer electronics business. You want to be in the programming business. People don't turn their TVs on to satisfy some obscure technology need. They turn a TV set on to be entertained. And if you can efficiently and simplistically entertain them, you've got a fighting shot at success."

Simply put, ACTV provides proprietary programming software on the digital platform that creates individualized programming services that viewers can activate with their remote control. The launch of the service will debut with regional Fox Sports programming. ACTV's first master control facility, where the specialized programming is created and tagged to the actual programs themselves, was completed in Dallas in February.

"We send viewers alternative video, audio or graphic programming, with all of the regular production elements of a broadcast," says Reese. "With a sports program, that may be a starcam on a specific player. It could be a 5-, 7- or 10-second delay of the main action that will augment the replay the network traditionally supplies.

"The point is, there is a menu on the screen that can prompt the viewer. If the information is of interest, he or she pushes the appropriate number on the remote and then the box grabs that particular feature and displays it on the screen along with the broadcast show." ACTV's interactive programming has wide-ranging applications with all types of programming, advertising and educational services.

The Interactive Channel (IC) has spent the last 18 months in Colorado Springs, Colo. with a Century Communications Corp. system proving there's an audience for interactive television. "What we found in the Springs," says Tom Peters, senior vice president for the Interactive Channel, "was that people are definitely ready for interactivity. Twenty percent of our customers used the IC on a weekly basis. The average usage was 2.5 times a day for probably 10 to 12 minutes at a time. So the usage numbers are just unbelievable."

While the Colorado Springs trial dealt with an analog system configuration, next-generation versions of the service operate on either a digital two-way telephone return or a two-way RF return platform. The service offers such things as on-demand local and national news, weather and sports; interactive classified ads; interactive games; interactive TV programming guides; catalog shopping; interactive traffic update capabilities; and Internet access. The Channel has corporate carriage agreements with Cablevision Corp., Marcus Cable and Century Communications Corp.

OpenTV's interactive platform serves more than 300,000 subs in Europe.

A six-month trial with Cox Communications in Santa Barbara, Calif. has put ICTV on the interactivity map. ICTV provides an enabling platform that is headend-based and delivers interactive services to cable TV subs without any electronics required for the distribution of the content to the TV. Subscribers get a keyboard (usually an IR) in the home and a keyboard modem to send the keystrokes up to the headend either over the telephone plant or the cable plant, if it's two way.

Having achieved a penetration of up to nine percent within nine weeks of its introduction in Santa Barbara, ICTV's Hoffman says Internet access seems to have been a key hook for consumers. "Typically," says Hoffman, "when the service is installed, Internet access represents about 80 percent of the usage associated with the service, e-mail is about 10 percent, and games are about 10 percent. Then, over time, we see game access increase to about 25 percent of the on-line time, e-mail represents about 15 percent, and then Internet access gets the remaining 60 percent."

OpenTV, another purveyor of interactive content, provides its services via an application program interface (API) to the set-top. It currently serves over 300,000 subscribers in Europe and Scandinavia, yet hopes to attract U.S.-based operators after reaching an agreement to work with Sun Microsystems Inc. to develop advanced set-top box reference designs based on OpenTV's operating environment and Sun's microSPARC and JavaChip processors.

"What's unique about OpenTV," says Jon Haass, vice president of marketing for the company, "is that we have an API that enables people to create their own services. For example, an icon will appear, and they can find additional information about the sports show that's on. Or perhaps they are watching a talk show and up comes information overlaid on top of the video about the talk show host or guest."

Remember VOD? Well, it's back, too, and this time, it looks like it actually works. Diva Systems Corporation has been taking its OnSet VOD service on the road—literally. Loaded on a slickly outfitted semi-truck trailer, the OnSet show has been visiting (and wowing) operators all over the country for the past few months. At the heart of this VOD service is a powerful video-streaming computer called the Sarnoff Server, a massive parallel processor designed specifically to send video signals at unprecedented speeds. The server can send hundreds of movies to thousands of households simultaneously, with each household exercising complete VCR functionality.

In December of last year, Suburban Cable, a division of Lenfest Communications Inc. in suburban Philadelphia, was the first cable system to launch the OnSet service commercially. Then, last month, it began rolling out in northern Philadelphia with Adelphia Corporation's Lansdale system. Could it be that Wayne Huzienga got out of Blockbuster just in time?

The second time's the charm

American cable television isn't going to go interactive overnight. Never was. Never will.

But, the process has begun. Operators are slowly firing up two-way plant all around the country, promising to accelerate upgrades to break-neck speeds later this year and into next. Standards are being hammered out and refined with surprising speed and cooperation. Technological leaps in both hardware and software are creating new shortcuts for interactivity. And content, finally, is finding a customer base willing to buy on an ever-widening basis.

Don't look now...but it looks like the cable industry has traveled back to the future and is creating a box office hit of its own. Let's just hope the disco era truly is dead and gone.



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