AT&T defends decision to scale back interactive TV plan

The Associated Press
Wednesday June 13, 2001

CHICAGO — AT&T, the nation’s largest cable business, says it’s still committed to creating new and innovative interactive services delivered to consumers by TV. 

What features it offers and when those hit the market will be driven by consumer interest and demand — not just the availability of technology, said company executives attending the National Cable & Television Association meeting here. 

Just days before the start of the industry’s major trade show, AT&T decided it would scale back its plans to distribute advanced set-top boxes to customers. Instead, the company plans to continue rolling out a simpler set-top box that’s already in use by 3.5 million cable customers. That box is geared toward making programming and entertainment interactive. It can perform such functions as allowing consumers to access movies and videos whenever they want. 

As for selling the next generation of boxes which can enable personal computer-like services, AT&T officials say that they must first gauge consumer interest and response. 

“We will move to that when we are comfortable with the operational and consumer driven aspects of that,” said Dan Somers, head of AT&T Broadband, the company’s cable TV and Internet business. “Customers right now want easy applications.” 

People are less interested in accessing the Web over television than in being able to interact more with the TV programming and video they get now, says AT&T Chairman C. Michael Armstrong. 

“What people really seem to enjoy are fuller expressions of entertainment rather than simply bringing Web sites to the television set,” Armstrong said here Monday. 

In addition, the company figured out that the existing set-top box could be used for a broader array of applications than originally anticipated. 

The “technology is allowing (consumers) to do more today than we thought we could,” Somers said Tuesday. “We’re going to exploit that.” 

AT&T’s decision has had a ripple effect at the show here, raising questions about the future of the service. 

Microsoft Corp. – which makes the interactive TV software that was to have gone in AT&T’s more advanced set-top boxes – says it still believes in the technology, even if there are some minor bumps on the road to making it a reality. 

“There has been a change of program, but we remain very much committed ... to helping interactive TV come true,” said Jon DeVaan, senior vice president of Microsoft’s TV division on Tuesday. “Microsoft is also strongly committed to the advanced set-top box.” 

AT&T’s dropping of the Microsoft-enabled cable box was seen as a blow to the software giant, which invested $5 billion in AT&T two years ago. 


DeVaan said that Microsoft has invested a lot money in the cable industry overall to help companies make the move to new, digital networks, and the final result of that still benefits his company, he said. 

“Broadband networks increase the value of software,” he said.