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NCI, US West team on Net service

Network Computer and US West announce a new service that combines Internet surfing capabilities with advanced telephone services.

Network Computer and US West today announced a new service that combines Internet surfing capabilities with advanced telephone services in a move that boosts US West's efforts to compete against next-generation cable operator offerings.

NCI has hooked up with US West to provide a service called "@TV" that will allow customers to order telephony services such as caller ID and voice mail through an on-screen guide, and make telephone calls, as first reported by CNET 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.

NCI will provide the software. The decision has not been made as to who will make the actual TV set-top box.

US West will begin trial service in selected metro areas mid-year and begin launching the service throughout its 14 state region in late 1999. To get television service, a customer still needs a separate subscription to a cable operator and plug a coaxial cable into the back of the device.

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.

Furthermore, AT&T's purchase of Tele-Communications Incorporated has given a sense of urgency to the plans of both competing 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.

US West has not yet decided whether to lease the boxes to consumers or sell them through retail stores--a move that could potentially place sales of Microsoft's WebTV unit in peril in the markets where US West is offering the service.

Meanwhile, NCI gains credibility in the U.S. market with the deal. With US West as a partner, the company gains stature as a viable solutions provider, something it has so far tried in vain to do with cable operators. 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.

NCI 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, according to industry sources.

NCI 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.