AT&T Scales Back Plans for Interactive TV

As Microsoft prepares to roll out interactive television software with selected partners, AT&T recently announced that it is scaling back its commitment to the technology. Citing that customers were not ready to accept the advanced features included in high-end set top boxes, the cable giant has re-evaluated its plans. This move strikes a blow to Microsoft's attempt to gain a foothold in interactive TV services, after having invested five billion dollars in AT&T and spending over six years experimenting with the technology.



According to Reuters, Microsoft encountered difficulty while porting its Windows-based technology to the set top boxes, which include far less processing power than PCs. These setbacks resulted in Microsoft missing key deadlines to make its software available to partners – incidentally making room for competitors. If things went according to plan, Microsoft would have been in the living rooms of over 10 million AT&T customers. Meanwhile, the Redmond giant announced that Portugal's TV Cabo, Mexico's Cablevision, and Israel's Matav Cable Systems Media have begun critical market trials of Microsoft solutions.



As a direct result of Microsoft's tardiness, AT&T went forward with consumer testing using advanced software developed by California based Liberate Technologies. Due to feedback from these trials, AT&T altered its strategy and decided against shipping out high-end products with advanced features to customers.



First reported by The Wall Street Journal, AT&T has asked both Liberate and Microsoft to slim down their products to accommodate less sophisticated hardware. Although, both companies claim to already have versions compatible with low-end devices. The cable giant has plans for three different models, and intentions to eventually phase in more advanced features, but a specific timeframe is yet to be announced.



The DCT-2000 is the basic model currently offered by AT&T, and is already in use by nearly 3 million consumers. A software upgrade will extend the lifespan of this series as higher end models are gradually phased in. The DCT-2000 is running Liberate software exclusively while AT&T was conducting market research.

As interactive TV continues to evolve, the DCT-5000 will be released. It will feature many of the basic model's services, but also may include the capability to record digital video. The DCT-5000 may initially ship with the same software as its less sophisticated cousin, the DCT-2000. Microsoft's Ultimate TV service is rumored to fulfill many of the requisites desired for this upgrade.

An advanced model will include more costly hardware, such as a cable modem for high speed Internet access. In an attempt to contain rising debts, the telecommunications giant is not expected to ship costly, high-end devices until it can realize revenue from existing offerings.

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