Telcos eyeball Network Computers

Oracle CEO Larry Ellison wants to make the Network Computer as ubiquitous as the telephone and he wants the telephone companies to help him do it. But so far, although some telecommunications companies are curious about the new devices, they have yet to throw their full weight behind Ellison's vision.

What Ellison wants specifically is for the telcos who offer dial-up Net access services--AT&T, Bell Atlantic, MCI, Pacific Bell, and USWest are all on the list--to offer NCs for little or no cost to all their customers, in the same way that telephones at one time were provided with telephone service.

"The goal of the NC is nothing less than universal [Internet] service in the same sense as universal telephone service," Ellison said.

Some telephone companies are intrigued by that possibility: both the Manitoba Telephone Service (MTS) and Pacific Bell are planning NC-based trials.

MTS is beginning trials in Manitoba of InBox, a service that will initially outfit 100 homes with devices for Web browsing and email through ordinary telephone lines and a TV. The homes will be supplied with set-top boxes from ViewCall that are expected to cost customers around $300, plus monthly Net access fees. MTS expects to offer InBox as a full-fledged commercial service in the fall.

"This is a natural for us. [The NC] moves the complexity of devices out of homes and onto the networks," said Bruce MacCormack, president and chief operating officer of MTS, Canada1s fifth largest telephone company. "Telcos are set up to handle this. We manage the complexity."

As for Pacific Bell, it thinks that NCs can open up schools to Net access and is planning an effort to equip San Francisco public schools with NCs by fall.

"We see a lot of potential [for NCs] because of the very small percentage of networkable computers in classrooms today," said Mike Powell, group director of education at Pacific Bell. "There is tremendous need for simple devices that provide Internet access."

But these two trials don't account for Ellison's claim that Oracle has already received orders for two million NCs from various telecommunications companies and Internet access providers. Ellison hasn't named the companies, however, an ommission that makes some analysts wonder how much support the telcos can be counted on really providing.

"As long as telcos don't buy into this idea [of the NC], it's probably not going to take off," said Margie Wylie, editor of industry newsletter Digital Media. Wylie added cable companies and Internet service providers could also help push the NCs in the consumer market, and some ISPs are planning NC pilot tests.

But it is subsidies from the powerful telcos that could really grease the way for NCs into homes. Observers point to the success of the French Minitel system, a network that connects more than 20 million users to information services and email through dumb terminals, the cost of which is subsidized by France Telecom.

Like Minitel, the subsidized delivery of NCs could open up public networks to a vast, untapped market of users who will never feel comfortable with PCs. And like the Minitel terminals, NCs will contain fewer hardware components than PCs and run simplified networked applications so that users are shielded from having to manage and update applications.

NC critics argue that the stripped-down PCs will not appeal to American consumers at the current price range of $300 to $500 price range. "This whole thing fights Moore's Law. You can't reduce functionality," said Adam Schoenfeld, an analyst at Jupiter Communications."Plus there aren't too many people buying $500 phones. You need a $100 phone. $500 is a real non-man's land."

But that's exactly why having the telecommunications companies subsidize the effort is so important. And some are considering it but no one seems ready to go beyond the curiosity stage, yet.

"Providing low cost computers is something we've thought about," said Tom Evslin, vice president of AT&T WorldNet service. "It's too soon to say whether we would use the cellular phone model and subsidize customer use of [NCs]. It's a possibility, but too soon to tell."

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