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NCI to debut set-top with phone features

Network Computer and US West will announce a new service that combines an Internet set-top box with advanced phone services.

Network Computer and US West are set to announce next week a new service that combines an Internet set-top box with advanced telephone services.

NCI, desirous of a deal with a U.S. company to validate its strategy to provide software for network-centric information appliances, will link up with US West to show a device that combines "Internet-television" and telephony service, industry sources said.

The device will allow customers to access and order telephony services such as caller ID and voice mail through an on-screen guide, and act as a speakerphone. Additionally, the box could connect to the Internet either through a regular 56-kbps dial up modem or through a high-speed digital subscriber line (DSL) connection, sources said. To get television service, a customer would likely still need a separate subscription to a cable operator and plug a coaxial cable into the back of the device.

Mitchell Kertzman, CEO of Network Computer, will make the announcement at the Jupiter Consumer Online Forum in New York, hosted by Jupiter Communications.

Internet TV devices such as WebTV have been slow to gain mainstream acceptance. NCI's first foray into the market for Internet set-tops failed when the service provider folded and RCA decided to end its experiment with the devices. If the set-top was sold as something akin to an enhanced telephone instead of a PC-like device, customers may be more inclined to use them and perhaps later upgrade to enhanced services such as email and Internet access.

A successful launch of the device would put an interesting twist on the notion of interactive television. To date, cable operators have been particularly active in talking up plans to offer electronic programming guides, video on demand, and eventually, telephone service through the cable set-top converter.

AT&T's purchase of Tele-Communications Incorporated has given a sense of urgency to the plans of both other cable operators and RBOCs such as US West.

With a number of failed experiments to do video both over wireline and wireless networks, the RBOCs may now have a way to sidestep the issue of delivering video to customers while still offering revenue-enhancing services. They can gain revenue from new areas such as high speed Internet access while boosting revenues in its stronghold of telephony services by allowing customers to easily pick and choose service packages on demand.

US West, analysts say, has been one of the more aggressive RBOCs in terms of rolling out DSL service, although the number of subscribers is still small due to the relatively high cost of the service.

Meanwhile, NCI gains credibility in the U.S. market. With US West as a partner, the company gains stature as a viable solutions provider, something that competitor Microsoft has not had to worry about. In fact, sources said they expect several more RBOCs to join NCI in deals similar to the one with US West in the coming months.

The company is also continuing to work on a device with AOL that would allow television users to access AOL's services. However, those efforts have taken a back seat at AOL as the company works to ensure that it even has access to broadband pipes of the cable operators.

Network Computer is the brainchild of Oracle chairman Larry Ellison, who has long touted the concept of the network computer, a stripped-down PC that relies on powerful computer servers for its data and software programs.

But NCI's attempts to gain a foothold in the corporate world did not take off, so the company turned to creating software for Internet and cable set-top boxes, devices that let consumers surf the Web, pay bills, and do email through their televisions.

Last year, NCI scored several overseas deals for this software. One of the biggest was with Big Globe, an Internet service owned by the Japanese conglomerate NEC. It has about three million customers, making it one of the highest-profile deals NCI has struck yet.

In another deal last year, NCI beat archrival Microsoft for a deal to provide set-top box software to Belgium's telephone company, Belgacom, for its new CyberTV service.

NCI declined to comment.