Seminal TV firm Sarnoff goes digital

Sarnoff, the company which spurred the development of both analog and digital television, is participating in joint ventures with Wave Systems, Mercury Computer Systems, and Fantastic Corporation to offer datacasting systems and/or services and DTV broadcast systems that would essentially allow traditional TV carriers to beam data streams to PCs via high-definition signals. The firms are calling the venture inTelecast.

Sarnoff's participation could wind up being a key factor in speeding the rollout of digital television and datacasting. For one, the company's name and technical expertise will lend significant legitimacy to the idea that broadcasters can get into the business of datacasting.

But even more intriguing, by helping these companies develop datacasting abilities, Sarnoff will be essentially setting up TV providers as competitors to America Online and other Internet Service Providers, because they will suddenly have the capabilities to provide Internet access that is potentially better that what ISPs can offer, and deliver it to a captive audience.

The networks have been losing viewers to the Internet in general, and AOL in particular, according to various studies. Being able to offer data services could stem the flow of fleeing viewers and offer several new avenues for revenue generation.

One feature sure to attract users: Sarnoff said that through the use of an add-in TV tuner card, broadcasters can offer PC users download speeds of up to 300 times faster than a standard dial-up connection. Given these capabilities, software downloading, among other services, becomes a more feasible proposition than is possible with dial-up modem service--one which could be offered for an additional fee, for instance.

"Bringing e-commerce to the PC through the use of DTV spectrum is the next-generation broadcast revenue model," said Norman Winarsky, vice president of information technologies at Sarnoff.

By charging subscription fees for broadcasting data to PCs, affiliates of the four major networks--ABC, NBC, CBS, and Fox--can finance the expensive system upgrades that can cost upwards of $5 million for each station. The cost goes up to between $8 million and $10 million if the local station wants to produce its own HDTV programming, such as a newscast.

For broadcasters, there is the chance to partner with portal companies such as Yahoo, if not become one themselves. Consider NBC and ABC's parent company, Disney, both of which own stakes in portal companies. (The Snap portal is a joint venture between NBC and CNET: The Computer Network, publisher of News.com.)

What's particularly intriguing to broadcasters is the ability to track which ads viewers watch, and better understand the effects of promoting their different properties across both the Internet and television. That information can translate into higher ad revenues, not to mention that broadcasters can start to target local businesses for Web page ad sales, too.

How inTelecast will work
In regards to the inTelecast venture, Sarnoff said it would provide "infrastructure design" for building a nationwide service that will allow the distribution of national and local content as well as the design for a DTV receiver card for PCs.

Wave Systems will contribute technology for handling the payment and secure downloading of copyrighted materials. Fantastic will provide software tools that inTelecast will use to take a variety of content types, from video and audio along to Web pages, and automate and manage the sending of information over broadband networks.

New venture inTelecast will create content for different market segments and send it via satellite to partner stations. Those stations then use an inTelecast server to embed this content into the TV broadcast over the air or even through cable networks to the PC.

Sarnoff is also creating a new company with Mercury Systems that will sell the basic building blocks that will allow broadcasters and cable operators to quickly transition to DTV. The companies said they will provide products for manipulating and transmitting the large amounts of data generated by DTV programming, engineering resources, and the ability to re-purpose content for use in datacasting.

inTelecast isn't the only game in town
General Instrument, one of the largest cable equipment vendors, is teaming up with WavePhore to enable datacasting services via digital television signals.

GI is planning to take WavePhore's Digital Broadcast Suite software for encoding, scheduling, and delivering Web pages to DTV tuner cards, and offer it as a package to broadcasters interested in quickly getting into the datacasting game. GI will aggregate content, so broadcasters do not need to search and collect general information such as stock prices or world news, while still allowing them to tailor information to their local viewing area.

Broadcasters are slated to begin digital broadcasts in America's top 30 markets by November 1999. By 2006, the FCC has mandated that no more analog television signals be broadcast. Sarnoff said the offerings from the new company will speed the transition from existing analog systems to the mandated digital television format at a lower cost than with currently available products.

The new company is expected to offer its products and services to the some 1,600 stations around the country before the end of 1999.