May 15, 1995 in Nation/World

Cable Firms Branching Out With Services Industry Executives Experimenting With Interactive Technologies

Jeannine Aversa Associated Press
 

By 2001, you might be able to call your local cable company and order fax service for the weekend, buy a cellular phone and sign up for local telephone and long-distance services.

Top cable company executives offered this vision of one-stop shopping in a discussion last week at the National Cable Television Association’s convention.

“I think you want to go with a full basket of fruit,” said Continental Cablevision chairman Amos Hostetter.

Cable companies are already making moves to branch out beyond their traditional businesses and are trying to get Congress to pass legislation to make this expansion easier.

They also are experimenting with interactive technology that would permit people to order movies and merchandise on demand as well as send and receive vast amounts of information through their TV sets.

Time Warner Chairman Gerald Levin, responding to skepticism about consumers’ appetite for interactive services, predicted demand would be driven by people under age 16.

They grew up on computers and communicate in ways considerably different than their parents, he said.

They also use their TV sets differently, Hostetter said, referring to sets being used to display video and games.

“A revolution is taking place right under our nose,” said Levin, who also is enthusiastic about cable companies using their systems and high-powered modems to deliver computer services to people cheaper and faster than over existing telephone lines.

So confident is Levin about people’s appetites for new services, he said, that Time Warner would begin to charge this month for an array of interactive services - including movies on demand and home shopping - that it has been delivering on an experimental basis to five homes in Orlando, Fla. The system also provides local phone service.

Levin said later he did not know how much the company would charge for the services or how many people are willing to buy them.

Cable and telephone companies, which are also interested in interactive services, are closely watching the Orlando project.

Consumer demand will be sufficient to drive down the prices of expensive technology needed for interactive services, Levin said.

Time Warner, he said, lost $3 million on a digital switch used to route video and data over the network in Orlando. The same switch the company bought three years ago can now be bought for $100,000.

He also predicted that the next generation of computer-like set-top boxes, which will enable people to receive interactive, digital services on their TV sets, would eventually sell for $300 each.

Under most scenarios, the boxes’ initial price would be more than triple that.


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