3-Way Venture Will Develop Decoder Box for Digital TV

Two computer industry powerhouses and a major supplier of cable television equipment have agreed to cooperate in developing a computerized TV converter that will give viewers access to forthcoming digital services such as “interactive” TV.

Intel Corp., Microsoft Corp. and General Instruments are expected to announce this week that they are working together to design such a device. They thus join a race that eventually will include most of the big names in computers and consumer electronics.

Cable television companies and others are planning a new generation of digital TV that will offer hundreds of channels and advanced interactive services such as home shopping, instant movie selections from an electronic “library” and on-line electronic games.

Tele-Communications Inc., the nation’s largest cable operator, has said it will begin offering digital services. Time Warner and other major cable companies are moving aggressively, and telephone companies and several start-up firms that use over-the-air signals also plan to offer interactive TV.

A critical component of any such service will be a set-top box that decodes the signals and allows the viewer to choose among the various services. The decoder boxes will probably cost between $300 and $350 each. They might be purchased directly or leased from cable operators, as conventional cable boxes are today.

General Instruments has an agreement to supply digital boxes to TCI’s digital cable service. Microsoft is eager to provide a version of its popular Windows PC software for the devices, and Intel wants them to use its 386 PC chips. American Telephone & Telegraph has also agreed to work with General Instruments on the TCI project.

Many other companies, including start-up 3DO Co. (whose backers include AT&T;, Matsushita and Time Warner), Apple Computer, Hewlett-Packard, Sony, Nintendo and Sega also aim to play a major role in providing digital TV boxes. Analysts say it will be several years before clear winners emerge.