A CLICK AWAY: INTERNET TV

Mark Gray thinks that the future of television lies in giving couch potatoes less, not more. "You can plug in your cable box and get 500 channels, most of which you're not interested in," he says. It's an odd thing for the CEO of a television company to say, but Gray's Silicon Valley firm, Kasenna, is deliberately trying to upset the status quo. "We want to bring one channel, and on that one channel you can get everything you want."

Promises, promises. During the dot-com bubble, the Internet was supposed to transform television into a more interactive experience. But efforts to marry the Internet with the TV set failed. Now industry insiders are once again predicting that the marriage may finally click. Microsoft and other firms have come out with platforms and easy-to-use software to support them. Telephone companies are getting onboard, hoping to tap the fat TV revenues now earned mainly by cable and satellite companies. "IPTV has been six months away for the last 10 years," says Gray. "Although I'm happy to report, about six months ago it actually started." (IP stands for Internet protocol.)

The trend is catching on overseas. Telecom firms in Switzerland, Italy and India have begun tests; Taiwan and Ireland have already signed on; even Abu Dhabi has an Internet-TV network. In the United States, small regional companies have been the first to act. Prairie Wave Communications, based in Sioux Falls, S.D., began offering television over the Internet a year ago. For $12 a month customers get a set-top box that gives them interactive TiVo-like features. Kasenna provides the platform, and soon Prairie Wave plans to expand advanced services, like online gaming. Warwick Valley Telephone in Warwick, N.Y., and Broadband Visions, an alliance of 15 smaller telecoms in Minnesota, are using the technology to offer video-on-demand services.

Analysts project that Internet-TV services are poised for take off, and will attract as many as 26 million subscribers by 2008. One reason: an obscure rule change last year removed the telephone companies' obligation to offer competitors access to their local networks at a fixed price. Suddenly it pays for them to upgrade networks for Internet television. BellSouth recently agreed to a trial of Microsoft's IPTV software in Georgia, Alabama and Florida, which would allow viewers to choose camera angles at sporting events. SBC Communications is spending more than $400 million on the technology, aiming to reach 18 million homes by 2007. But then, we have heard similar projections before.

© 2005