Although the set-top box has long been associated with the cable industry, the FCC mandated in the Telecommunications Act of 1996 that set-top manufacturers must separate TV tuner controls from security modules in those boxes sold at retail stores after July 1, 2000. For the most part, there aren’t any available to date. The exceptions are, of course the standalone products named earlier. Although the cable industry continues to be slow to comply, Cable Laboratories recently announced that the OpenCable initiative is now supporting the development of an open specification for an interoperable middleware platform supported by Sun’s JavaTV API, Liberate and Microsoft TV. The cable industry has until 2005 to offer their own interoperable digital set-tops that can be bought at retail outlets. In the meanwhile, those cable companies in the U.S. (and there are too many to mention) that smartly invested in new digital and two-way cable networks in the 1990s have already deployed non-commercial or are beginning to deploy trial or commercial digital set-top box networks. These deployments require the renting or distribution of the boxes for free for now until the industry evolves. Two box series that seem to be the most popular with cable providers are S-A’s Explorer 2000 and GI’s DCT 1000, 2000, and 5000+ series. Both companies are now coming out more advanced boxes, but these are still the early stages for those. All from companies such as Pace Micro, Mitsubishi, Sony, Thomson, uniView, Grundig, etc. contain video and audio microprocessors, memory, conditional access technology, a cable modem, middleware to control or to enhance their capabilities, and host of other technologies. Unfortunately, hardware inside the boxes will become obsolete - though flash downloading of software is possible to upgrade them. Some operators may elect to sidestep the box and offer ITV services over a digital video server located at the cable headend, or the central office in the case of telecommunications companies. Here, all software, games, and other resource-intensive applications can be streamed to the viewer. One company, ICTV which received an $87 million investment from Motorola, ACTV, OpenTV and others, offers such a system. It will be interesting to see if this company is able to deploy quickly and to those operators already invested heavily in digital set-top boxes. Most cable operators will continue to experiment with a variety of middleware platforms now available.

Middleware Everywhere

Today, software inside a set-top box is becoming more robust and, therefore, takes up a larger footprint inside the box. Besides managing video display or other basic television functions, middleware serves applications such as the EPG, access to the Internet, email, interactive graphical walled-garden environments, video-on-demand, and a variety of services deploying today such as multi-camera digital video switching and those yet to come. Popular middleware platforms from Liberate, OpenTV, Spyglass, Microsoft TV, MediaHighway from Canal +, and PowerTV have become the popular way to provide these services. Each company has a strategy to offer: Liberate's modular platform based on open Internet and international broadcast standards features their TV Navigator browser, which communicates with the TVConnect server at the headend. To proliferate their platform, Liberate established the PopTV and Variety Pack programs to educate and package content developers, respectively. Liberate also made strategic mergers with MoreCom (a more complex IP-over-cable middleware platform) and SourceMedia (middleware for thin set-top boxes, i.e. those with a small hardware footprint such as DCT-1200 and 2000’s) to extend capabilities. Liberate has had much success selling to cable operators who expect and prefer choice (Note: Cable operators have the privilege of buying cable franchises from local communities without facing much competition due to the fact that installing cables underneath the street, stringing cable in the air, and running a network is expensive. This allows them to deploy on their own schedule and be more cautious in their investments – a fact upon which the modular platform of Liberate is able to capitalize). OpenTV, on the other hand, has had much success installing their proprietary middleware platform on DBS networks in Europe, Latin America, and now with EchoStar in the U.S. DBS providers seem to want a range of ready-to-go applications they can deploy. OpenTV’s merger with Spyglass (develops small footprint IP-based middleware) was formed to give that company the ability to offer access to the Internet and to appliances such as set-tops and televisions like that of Telecruz. That company, in fact, recently upgraded to Spyglass’ Device Mosaic 4.1.0. Microsoft, on the other hand, has developed a complete end-to-end ITV backend architecture platform called Microsoft TV (MSTV), which incorporates Windows CE (a small device operating system) and WebTV software. To ensure deployment with a big name cable operator, Microsoft paid AT&T $5 billion and has invested in networks around the world. In September of 2000, however, Microsoft announced they were unable to deliver MSTV to AT&T or to UPC in full causing both companies to sign with Liberate. We have yet to see, though, whether many cable operators will truly buy in to this Windows-based resource-intensive system. Many integration companies are surely working hard to work with that platform. MediaHighway from Canal + and JavaTV from Sun Microsystems are having varying luck with set-top box deployments. MediaHighway has been released mostly in Europe with one U.S. site in Florida. The JavaTV API, however, has been adopted by the Digital Video Broadcasting-Multimedia Home Platform group in Europe and now providing the application development environment for OpenCable as mentioned before. PowerTV, from the company of that same name, is available primarily on S-A’s Explorer 2000 box, which has been deployed in a variety of locations. The newest middleware provider to date is WorldGate. A year in development, WorldGate’s CableWare 2000 hopes to provide the combined package deal of middleware and databroadcasting through integration with their databroadcasting service, Channel Hyperlinking and walled garden capabilities.

Data "Enhanced Broadcasting"

One of the earliest ITV data broadcasting services out the door, Wink Communications was the first to use the term "enhanced broadcasting" as a way of differentiating itself from the bad hype surrounding the term "interactive TV." Today, Wink’s services include downloadable software to a set-top, a proprietary and ATVEF-compliant data enhancement broadcasting service, and a special backend tracking and billing environment called the Wink Response Network. Allan Thygesen, senior vice president at Wink, says "this was the most difficult thing to engineer." Wink has made many partnerships with big branded media companies like MSNBC, the Discovery Channel, the Weather Channel, E! Entertainment Television, DirecTV, and others and received multi-million dollar investments from Microsoft and Paul Allen’s Vulcan Ventures. The general philosophy at Wink is to present a limited, yet interactive choice to the viewer. When the icon "i" is presented on the screen, for example, (like WebTV) the viewer can click on it to bring up the interactive enhancement from an advertiser (requests for more info, e.g.) or content providers. In a Wink environment, that might be a simple query to the viewer if they want more information on a product from the advertiser or data from the Weather Channel. In the last couple of months, Wink has been able to announce very important partnerships such as DirecTV. We will certainly be hearing more from them. A competitor in this space, WorldGate delivers a URL trigger within network broadcasts that can be clicked using the remote. Called "Channel Hyperlinking", WorldGate’s system is proprietary, although they have announced support for ATVEF. In addition to this service, however. Two other companies focus on ITV broadcasting infrastructure technologies and services such as RespondTV and Mixed Signals. RespondTV and Mixed Signals pride themselves on their broadcast servers and enabling technologies, which permit them to send out full ATVEF-compliant data broadcasts wherever the VBI and, eventually, digital signal will carry them. RespondTV has had much success signing advertisers and content providers to their services such as Bloomberg, HGTV, MSNBC, Domino’s, Purina, and others. Mixed Signals has a special arrangement with Sony’s Columbia Tri-Star and Game Show Network to present the ITV version various game shows. Both companies are working with more companies than mentioned here.

HyperVideo and SMIL

A term used by a company called Veon, hypervideo is an Internet-only technology for the moment, which enables producers to embed hotspots or links inside a streaming video. Using a combination of proprietary and standards-based protocols and display languages such as SMIL, Veon’s authoring tool enables producers to create streaming interactive "hypervideos" in real-time. Hotspots can include links to the Web, links to open another movie within that streaming video, ATVEF data triggers, links to call up graphics and data elements on a Web page in synch with the streaming video, and so on. Although other companies like SofTV and others also use SMIL to create synchronized streaming video applications on the Web, Veon’s implementation truly reinvents the concept of television as interactive. Watchpoint, a competitor still in "stealth mode" may be on its way. The paradigm shift here is that producers can look at the hypervideo as an interactive video fabric rather than television programming supporting data overlays. Rather than deploy boxes, etc., Veon has licensed its server technology to network providers such Excite@Home, AOL, Intertainer (a VOD provider), advertising agencies, and content broadcasters. Producers that want to try their hand at making hypervideos can download the authoring tool for free at the Veon site. Be aware, however, their authoring tool requires a bit of mastering. Viewing hypervideos online requires a plug-in.

Individualized TV

A term used by ACTV to describe one of their proprietary ITV solutions for multi-camera digital video switching, Individualized TV is a technology which allows the viewer to choose from four presented choices. In the case of sports and live events, the viewer can select from multiple camera views. In the case of targeted advertising or specially designed content, the viewer can select from four commercials which the software in the box remembers. ACTV formed a subsidiary called Digital ADCO to manage this software and business opportunities. Although NDS, a company owned by News Corp., does not use this term to describe their software solution, this company also offers multiple camera viewing technologies on a product called XTV. ACTV is currently testing in trial and will most likely deploy it with AT&T Broadband in the future. NDS has made many deals with companies around the world and another with Microsoft along with an investment from that company.

Synchronized TV

Synchronized TV, essentially an Internet application that receives HTML data broadcasts synchronized with television programming, has, of late, become a hot area of growth. Why? Interactive syncTV apps can easily be downloaded over a Web site. Once the relevant TV show comes on, viewers can chat in real time about the characters or topics, read factoids, click on ecommerce links provided by advertisers, play along with game contestants, and so on. Essentially, anything one can do in an Internet environment, one can do in a syncTV app while the show is on. When broadband ITV platforms are available with Internet access over one’s TV, syncTV apps will be available over that one screen display. Companies playing in this space include ACTV’s HyperTV subsidiary with Liberty Media’s Liberty Livewire, Spiderdance, and ABC. Many shows are getting this treatment such as "History IQ" from Spiderdance for The History Channel, a multiple choice game show, webRIOT on MTV also from Spiderdance, "Cyberbond" broadcasting on TBS, even the movie, "The Sixth Sense" as it broadcasts on Starz Encore, the movie packager.

Video-on-demand

Surely to become one of the most popular ITV solutions, video-on-demand (VOD) simply provides the viewer with access to movies when they want them and a robust billing backend. A more advanced version of what the industry calls Near Video-on-Demand (NVOD or Pay-Per View), VOD is enabled by digital video servers from companies such as DIVA, C-Cube, nCUBE, Concurrent, SeaChange, and several others. Cable operators are especially interested in buying these servers, and have already. Complete services such as DIVA and Intertainer which have partnered with Hollywood content providers provide an "end-to-end solution." Some cable companies like the idea of outsourcing that service without troubling themselves with licensing issues. Others that want a greater share of tcommerce revenues, are setting up their own VOD service within the walled-garden.

Below is a chart of various ITV solutions:

IRRESOLUTION

The Issue of Privacy

ITV presents new opportunities and risks for the producer and viewer, respectively, concerning the matter of privacy now that middleware, servers, and databases can be linked in a common digital environment. For example, it is easy to combine the data tracked from viewing habits (of an individual or members of an entire household) with the data collected from interactive clicks and tcommerce selections. This kind of data is very valuable and advertisers are salivating at the potential. Is this what is actually driving development and investment? Questions like this and others remain unresolved. For example: How will the producer provide the kind of application content with data feedback advertisers want and at the same time ensure their viewers their privacy? Will existing cable regulations which protect data collected from viewing habits from being distributed or sold continue to apply? This last question has been the subject of recent attempts to extend this regulation to emerging video devices and delivery options currently not covered. California State Senator Debra Bowen, a Democrat from Redondo Beach, believed such regulation was needed. Over this last year, Bowen introduced a bill into the State Legislature. After passing several committees, the bill was defeated. Most likely due to strong pressure from ISPs, Microsoft and AOL lobbying against it and the fact that it was trying to regulate an undeveloped and Internet-related industry and on a statewide basis, this bill has now been put in cold storage. One company, Metabyte, wants to provide advertisers with the data they so crave, but has a unique solution. Their smart platform sits on the digital set-top box where it collects information about selected choices, but never reveals that information through the back channel. IN fact, that information is primarily used to create a special profile for the user which filters incoming information. Any data tracked is collected as aggregated data. Regardless of industry solutions that may emerge to solve this touchy situation, the need to ensure viewers’ privacy is essential.

Open Access vs. Forced Access

An important issue still unresolved is called "Open Access", or as opponents are calling it, "Forced Access." In short, this controversial issue pits old foes (telecommunications and cable providers) against each other as each seeks to protect new markets important to it. The controversy stems from the fact that cable companies want the right to make back their money from the multi-millions they invested in advanced digital cable networks they built over public cable franchises in local communities. To do that, cable companies want to provide people with high speed Internet access via cable modem and they want to have the right to select a cable technology ISP partner to provide that service. AT&T, for example, chose a company in which they were heavily invested: Excite@Home. Local telecommunications providers and ISPs, on the other hand, want the cable providers to open their franchises to competitive IP-based< services. This, they claim, is in line with the FCC mandate in the Telecommunications Act of 1996 for choice in the industry and open access to Internet content. Cable companies claim enabling multiple ISP access, at the moment, is not technologically feasible and would deteriorate services. All these differences of opinion have spawned a series of legal battles stemming from an original ruling in Portland, Oregon. There, a local court ruled that local cable franchise authorities could demand that AT&T had to open their networks if AT&T wanted to successfully transfer the TCI franchise to their ownership. Of course, AT&T sued and aggressively. This act and the battles that have proliferated around the country have caused much discussion in the press. Only in late June in an case made to the 9^th Circuit Court of Appeals, the presiding judge ruled Portland, Oregon did not have the right to regulate whether a cable operator should open its networks. The judge did rule, however, that cable networks were, in effect, a telecommunications service causing another ripple to spread. This complex series of events has encouraged the FCC, usually hesitant to regulate, to take a closer look – now superheated because of the impending AOL-Time Warner merger. The end result may influence the new media landscape for years to come. AT&T and AOL, the most prominent opponents in this struggle, have modulated their diametrically opposed positions over this last year, not unsurprisingly, to appease FCC inquiries during their respective mergers. Specifically, AT&T said it would open its networks to ISP, Mindspring (bought by Earthlink), on a partnership basis and open their networks to others after they had concluded their arrangement with Excite@Home in 2002. AOL, post-merger announcement with cable operator, Time Warner, pulled back their position saying "let the market decide." These days, as the FCC deliberates whether AOL’s merger with Time Warner can go through, the online service provider is stepping up appearances, but demanding that Open Access not be applied to set-top boxes, only to ISP offerings. Currently, AT&T is holding a trial now in Boulder, Colorado and Time Warner is doing the same in Columbus, Ohio. Everything regarding this issue is still up in the air and may continue to be so irrespective of AOL-Time Warner until the new U.S. Administration is installed says the FCC.

Continuing Challenges, Problems, and Risks

Regardless of the developments and improvements over the year, there are still many challenges and risks, which still plague the producers of ITV applications and content. Many issues need attention, which perhaps can be addressed by the current AFI-Intel Enhanced TV Workshop. It will be interesting to see the progress made when we meet again in 2001. Please support this wonderful, productive, and essential program by sponsoring its efforts through corporate relationships or private gifts.

Following, please read a short list of these issues and observations below collected from several professionals working in the industry regarding needed developments during 2000. Just beyond those, are a few gathered from 1999.

Content

*Lack of funding for ITV projects.

*ITV services are not getting repeat viewers. Is ITV purely a novelty?

* Not enough compelling content available.

*Producers and tcommerce retailers need to do more research and on the kinds of products

and services that work best in an ITV environment. This is, often, not the same as on the Internet.

*Producers need to create ITV content that is more emotive, less purely like a Web page.

*Broadcasters seem hesitant to launch programming.

Production

*Production processes need to be worked out.

*Standards still up in the air.

*Confusing whether to work with NTSC, ATSC, DVB, or?

*The ITV industry needs to become more "open source."

*Industry needs single middleware platform common to delivery platforms.

*Need for a database technology that connects seamlessly to ITV broadcasts.

*Lack of power and support in set-tops for important IP plug-ins.

*Producing ITV over VBI boxes still requires a knowledge of extensions per box.

*Business models are still unformed.

*Bandwidth problems persist, but not as important.

Advertising

*Advertisers have a lack of knowledge about what ITV is and what platforms are available.

*Advertisers want to start testing but resist due to low installed base of boxes.

*Advertisers are unhappy with L-shaped interface, downsized video, overlapping
experience on top of other commercials, and possible complaints from talen in video programming.

*Advertisers and video producers which spend millions on ads are concerned their commercials will be "polluted" by enhancements. If interactive enhancement are designed to be extremely integrated into the commercial, will viewers know what to do?

*Ad agencies are slow to experiment with new technologies even though advertisers are interested.

*Ad agencies need to communicate more with their new media divisions.

*What does the ITV rate card look like?

*Problems with time to act when rotating "i" is seen.

*Lack of numbers regarding participation with ITV commercials.

*Can lengthy ITV participatory advertising work or deliver branding effectively within :30 or :60 commercial? Will viewers get that same "feeling?"

*DVR technologies will throw advertising models out the window

General

*Not enough is being done to inform the consumer about ITV.

*Lack of research data into what people want from ITV.

1999

*Need a wider deployments of interactiveTV software and enabled set-top boxes.

*Better marketing of ITV to potential viewers/subscribers to get word out.

*Need to adopt and advance the ATVEF specification.

*Need more relationships with collaborators and business partners to build access and revenue.

*Need improvement of the development of successful business models.

*Need tools and services for advertisers, content producers, and broadcasters.

*Lack of production methodology necessitates training and higher budgets.

*Budgets for video/enhanced data programming can be bigger than expected.

*Can't predict the presentation of the show until produced.

*Challenge to create billing system - too much focus on set-top.

*Clicking to the Web takes viewers away from shows and advertising.

*Producers must spend a disproportionate amount of time on technology tools.

*Not enough people have all production skills necessary.

*People may still remain passive.

*Some platforms still require big facility upgrades.

*Overly complex enhancement programming may overwhelm the user and show.

*Size of video window and screen presentation always a challenge.

*Too few options for interactivity at the moment.

*Bandwidth still a problem.

Special thanks to Nick DeMartino, Anna Marie Piersimoni, Susan Bukowski, and Erin Flood and:

Cynthia Spence, Intel
Chris Swain, Spiderdance
Cathie Fredricksen, Intel
Tracy Shea, ACTV
Rob Henderson, NDS UK
Dave Hughes, TwoWayTV
Kirsten Jansen, Cylo
John Gilles, TechTV
Mark Johnson, Liberate
Cindy Johanson, PBS
Larry Namer, Television.com
Phillip Hoschka, W3C
Rick Portin, Steeplechase
Carl Smith, AT&T Broadband
Daniel Levy, RespondTV
Ken Papagan, iXL
Robert Tercek, PacketVideo
Alan Thygesen, Wink Communications
Tammy Weisz