Cable Industry Will Lead Net TV, SRI Study Says

Currently, a relative handful of people worldwide subscribe to Internet-on-TV services. However, according to a recent study by SRI Consulting, a research firm based in Menlo Park, California, the number of Net-TV subscribers will mushroom to over 12 million in less than four years, and the cable industry is in the best position to serve these new customers.

Cable's strong market penetration, connection to program providers, and wide transmission bandwidth are all big factors in its favor. Most of the world's Internet-on-TV customers---about 500,000 total---are American subscribers to WebTV who gain access through 56 kbps modems.

SRI Consulting predicts an Internet land-rush by consumers as access becomes easier and the Internet becomes a bigger part of everyday life. Some figures indicate that the rush is already on, with the number of Internet users doubling every 100 days.

Newcomers without much computer experience will expect the Internet to resemble television more than it does today, with instant, glitch-free channel changes. They aren’t likely to tolerate long download times, which is where the cable industry has an advantage over other delivery systems. Cable's wide bandwidth enables faster download times than almost every other technology (except satellite transmission). According to SRI senior consultant David Rader, who headed the Internet on Television study, "using the Internet is not about work; it's about relaxing and having fun, even for consumers who already use a PC online service.

"Although cable is getting a late start in this market," Rader notes, "it has quite a few competitive advantages over other network services that will give it a boost in the long run." Among these advantages are multiple revenue streams, including digital TV and pay-per-view, and strong connections with program providers, who have the ability to re-format Web pages into more dynamic content that is more akin to infomercials than Yellow Pages ads. Users are likely to filter both TV programs and Internet content to fit their particular interests, as will service providers in an attempt to distinguish themselves from one another.

The study acknowledges that bandwidth is cable's greatest asset. The cable system is designed to carry multiple channels of analog video at radio frequencies well into the hundreds of megahertz, which means it can be adapted to transmit digital data at 10-100 Mbps or better. Like satellite broadcasting, however, the primary difficulty with cable is that it's configured as a one-way delivery system, without much provision for uploads from consumers. This will change as cable subscribers become more interactive.

According to the study, countries with extensive existing cable systems---the US, Canada, France, Denmark, Belgium, and the UK---will enjoy the benefits of Net TV first. Low dial-up costs also figure into the potential success of the developing medium.

The Internet on TV study is part of SRI Consulting's Media Futures Program, which examines the commercial implications of media technologies. The consulting division is a subsidiary of SRI International, which was founded as the Stanford Research Institute in 1946. SRI International is one of the world's largest technology development and research firms.