MICROSOFT deal with Charter gives software giant's TV unit a lift

Friday, November 9th 2001, 12:00 am
By: News On 6

ST. LOUIS (AP) _ Microsoft Corp.'s interactive television software will be headed for a million Charter Communications Inc. customer homes, in a deal that bolster's Microsoft's press into American living rooms.

The move, announced Wednesday, may be a lift for Microsoft in the fledgling but burgeoning interactive TV software market where the software giant has had some setbacks, including rival Liberate Technologies announcing this summer its deal to develop an interactive TV delivery system with an AT&T subsidiary.

Earlier this year, AT&T _ the nation's largest cable television provider _ dealt what was seen as a blow to Microsoft, which has invested dlrs 5 billion in the cable giant. AT&T tabled plans to deploy advanced Microsoft-enabled cable boxes, instead saying it would expand TV features for existing DCT-2000 set-top boxes made by Motorola Corp.

But under the deal announced Wednesday, St. Louis-based Charter _ the nation's fourth largest cable television company _ wants Microsoft's help in offering customers cable TV incorporated with Internet-based streaming audio and video, flash animation and other services.

Charter looks to provide the service to a million of its customers over the next seven years.

``This agreement enables us to add interactive TV services to our current business immediately,'' said Steve Silva, executive vice president and chief technical officer at Charter, which provides video, Internet and other advanced technology services to roughly seven million customers in 40 states.

Charter's interactive TV service initially will offer e-mail, Internet browsing and other content including on-demand local and national news, weather, sports, entertainment, shopping and games.

Charter has deployed the advanced interactive TV services in St. Louis as part of a field trial using Microsoft TV software. An expanded launch to customers is expected early next year.

London-based analysts Ovum Consulting has predicted that the number of households worldwide capable of receiving interactive television will grow from 62 million to 357 million by 2006, while revenue from sales made is expected to grow from about dlrs 58 million last year to dlrs 44.8 billion.

There are some 3 million interactive TV households in the United States, according to the Carmel Group research firm. By 2003, the firm predicts the number will jump past 20 million.

Microsoft has said it has spent the past six years investing in the research and development of software for interactive television in the hope of tapping that potential market.

Microsoft faces competition from rival systems developed by Liberate and OpenTV Corp., both based in California.

In August , Liberate and Headend In The Sky _ a wholly owned subsidiary of AT&T Broadband _ said they signed a multiyear, non-exclusive deal to develop and deliver a low-cost suite of interactive TV services. AT&T Broadband is the company's cable arm.

Headend In The Sky, based in Littleton, Colorado, uses a satellite distribution network to deliver digitally compressed cable TV programming to 140 cable system operators, including AT&T.

The deal opened the door for Liberate to power as many as 6 million digital set-top boxes already in the market, including those of AT&T's 3 million digital cable subscribers. And it marked a big opportunity in a highly competitive market that is expected to beef up after years of dismal consumer interest.