Northern California's CableData Gets Slice of Interactive TV Industry
If the future of home entertainment revolves around interactive television, CableData is hoping to be the one turning the crank.
The Rancho Cordova company, which has built its business on providing billing services for the cable and cellular phone industries, has signed on as a partner in an interactive TV test scheduled to begin in May in an Atlanta suburb.
The trial, being funded by BellSouth, one of the seven regional Bell operating companies, will offer movies on demand, video games where subscribers can download games or play against others on the network, and access to the Internet and other computer services.
CableData will provide subscriber management services, meaning its software will track customer orders and provide billing, collections, financial reporting and marketing services.
The company had established a new unit - its Convergence Technologies Group - to develop systems that would allow it to coordinate subscriber services for a variety of technologies such as interactive TV, telephones and computer systems.
It already has such systems operating in 12 foreign countries, but the deal with BellSouth is its first in the United States -considered to be the most lucrative market in the world, said Bob Crowley, senior vice president of U.S. Computer Services, CableData's parent company.
``This is a bellwether. It turns the corner for us into a whole new world,'' Crowley said.
Revenue from the venture will be several million dollars, Crowley said, but the real payoff will be in the experience CableData will gain in managing such systems and being able to adapt them to new services.
Crowley estimated that its potential revenues from interactive television are 10 times greater than its core business of billing for cable and telephone systems.
But that payoff may be pretty far down the road. While about 60 percent of the nation's households subscribe to cable, only half that number use any more than the most basic cable package, meaning they may be reluctant to pay for glitzy new services, said Anthony Lazarus,
editorial assistant at Digital Media, a San Francisco-based newsletter.
The sophisticated computers, software, cable boxes and wiring needed to service interactive television will cost hundreds of millions of dollars, and if consumers are reluctant to spend for the services, cable companies may take a go-slow approach.
``Our view is that the whole digital matzo ball will take a long time ...there has to be an economically sound way to justify it,'' Lazarus said.
The 18-month test in the Atlanta suburb of Chamblee is designed to see what services consumers want and how much they are willing to pay. About 12,000 homes will have access to 200 channels of interactive programming,
including movies on demand, video games, interactive home shopping and computer services such as America Online and the Internet.
Crowley said that some of the big players in the business, including the regional Bell companies, might start handing out contracts for full interactive systems by 1996, but that it would take five to seven years before they are fully deployed. CableData already has an agreement with one such company for a full interactive system, but declined to name the company or the area where the system would be installed.
In the mean time, CableData is moving some software developers from other departments into its Convergence group, but is not planning any major hiring.
END!H$8?SA-CABLEDATA AP-NY-03-12-95 1925EST
This material is copyrighted and may not be republished without permission of the originating newspaper or wire service. NewsHound is a service of the San Jose Mercury News. For more information call 1-800-818-NEWS.