Charter Looking Ahead With Rollout of Interactive TV
By DARRELL SATZMAN
Staff Reporter
Getting a jump on its cable industry rivals, Charter Communications Corp. has become the first operator to offer interactive TV to customers in the Los Angeles area.
The service is available at no extra charge to digital cable subscribers in Glendale, Burbank, La Crescenta and La Canada Flintridge. Charter says it will introduce the fledgling six-channel interactive service to almost all its Southern California digital households by the end of February.
It remains to be seen if St. Louis-based Charter, controlled by Microsoft co-founder Paul Allen, can find a profitable model for a system that offers the same information that is readily available in other forms.
Interactive TV has been slow to catch on in the United States, even after decades of development and billions of dollars in investment by telecommunications companies.
One basic problem is that the term has been used in so many contexts that many people don’t know exactly what interactive TV means. Charter, for example, has been offering a separate video on demand service to its digital customers who are charged from $1 to $3.99 for movies that can be seen over a 48-hour period with pause, fast forward and rewind features.
Unlike its video on demand service, Charter’s six virtual “i-channels” are run by Digeo Inc., another Paul Allen company, and they focus on news, weather, sports, money, entertainment and shopping.
Using the up-and-down and side-to-side buttons on a remote, users can navigate channels to search for stock quotes, get ball scores, shop for a CD, or check out the four-day temperature outlook for Anchorage, Alaska all during a commercial break.
“The next step from here will be video streaming with sound, which will be very exciting. I think we’re about a year away,” said Charter Group Vice President Tom Belcher.
More to come
Right now, what subscribers get is fairly basic. “It’s really handy. It’s such a pain to go through the paper looking for your movie and then turn to another page for the times,” said Burbank resident Donna Huffaker. “With this, it’s all there in just a few clicks.”
Even so, Charter has taken an almost stealth approach to its limited launch last month. Although the company notified customers that the service was available and faxed out a press release, some of the 35,000 or so digital subscribers who currently get the service are not even aware it exists.
“It’s been a quiet rollout. Whenever you rollout a system there always might be something,” said Tom Schaeffer, Charter’s senior vice president of operations for its Western region. “We wanted to make sure we didn’t have any problems and so far it’s all been very positive.”
For Allen and Charter, pushing interactive TV is a way to directly reach the 40 percent of American households that don’t have personal computers and Internet access, said Jason Bazinet, a senior analyst for J.P. Morgan Securities.
“If you see PC (sales) percentages stall, then you want to capture a larger share of the market that doesn’t have PCs,” Bazinet said. “The question for them is how do you leverage that two-way communication platform to make more money or increase your competitiveness versus satellite.”
The best way do that is to create a product and test it on the public, said Jim Stroud, senior analyst for the Carmel Group. “It’s important in the early days of interactive TV to see what works and what doesn’t work,” Stroud said. “I think this type of service will be standard in five years as cable operators move all their customers to digital.”
Like other communication companies, Charter has been going through difficult times. Charter’s stock ended trading at $16.04 on Dec. 5, down from its 52-week high of $24.45 on July 2. Last month, its earnings forecast was cut for the remainder of the year.
For the third quarter ended Sept. 30, it reported a net loss of $872 million ($1.08 per share), compared with a loss of $588 million (95 cents) for the like period a year ago.
But while other cable companies such as AT & T; Corp. have substantially reduced their investment in interactive TV, Charter officials without saying how much they have spent insist that the company is moving forward.
“We think this is going to be an important addition to our digital service,” said Gina Newland, director of advanced services for Charter. This is the first launch of Charter Interactive nationwide. At the beginning of the year the company will be promoting it with its other digital services like video on demand and its interactive TV guide.
Getting its interactive service out to the public makes sense for Charter, even if what it is offering is not terribly compelling at this point, said Sean Wargo, senior analyst for the Arlington, Va.-based Consumer Electronics Association.
“There is an interest in being first. They are starting to create a brand name,” Wargo said. “But we haven’t seen anything that really inspires the consumer at this point.”
