RealTime IT News

AT&T Enters Set Top Fray

AT&T Broadband is joining the cable Internet set-top box race with the initial purchase of one million digital boxes from Phillips Electronics and rollout of its digital value package.

The broadband Internet arm of AT&T made the announcement Tuesday to compete with America Online, Inc.'s AOLTV in what appears to be a brewing set-top war.

AT&T hopes to snare some of its16 million analog and digital television customers through its cable Internet partner Excite@Home .

Doug Seserman, AT&T Broadband senior vice president of marketing, said the set top service brings convergent technology to the home.

"The new digital value package strategy not only simplifies our marketing operations, but it sets the stage for AT&T Broadband to deliver increasingly excellent customer value on a wide array of AT&T products and services," Seserman said. "The ability to deliver a consistent menu of digital cable products nationwide advances AT&T Broadband's plan to offer our customers one-stop-shopping for a wide variety of services including video programming, high-speed cable Internet access, as well as local telephone service."

Set top boxes are seen as the next frontier in convergent technology. Not only does it marry the abilities of digital cable television and the Internet, it makes cable voice over IP a reality, as companies in the near future will be able to provide voice communications over a coaxial cable line.

In June, AOL launched AOLTV set top service to markets in Phoenix, Sacramento, CA, and Baltimore, MD, and expect to rollout nationwide service to its 23 million subscribers in time for the Christmas shopping season. The service will be married through the Road Runner cable Internet access, pending Federal Communications Commission approval of the AOL-Time Warner merger.

The only clear winner in the set top war so far is Philips , which like the American government at the outset of World War II, is selling to both sides. By the end of summer, the set tops will also be available for sale at Circuit City stores nationwide for under $250.

Rob van Oostenbrugge, Philips Digital Networks chief executive officer, said the Internet appliance gives AT&T broadband users a valuable tool.

"Philips is excited to be working with AT&T Broadband to create an open and competitive environment," Oostenbrugge said. "World-class suppliers now have a clear entry point upon which to develop innovative new technologies. The ultimate beneficiaries of this alliance will be AT&T Broadband customers, who will soon be able to purchase digital cable set-tops just as they do other consumer electronics products, allowing them to select the services that best suit their interests and needs."

Philip's TriMedia proprietary TriMedia processor gives customers real-time streaming media, e-commerce and gaming as well as video-on-demand and personal video recording using an internal hard disk drive. Future plans include developing speech recognition devices, wireless speakers and voice and data communications.

Joyce Putscher, Cahner In-Stat consumer and converging markets and technologies group director, said in her report, "Line-Powered Internet Appliances: The New Frontier for 'Boxes' & ICs", the need for Internet appliances will increas