AT&T;, Liberate in Deal to Deliver Interactive TV

AT&T; Corp., the nation’s largest cable TV operator, is taking another cautious step into interactive TV without Microsoft Corp., once the preeminent partner in AT&T;’s advanced TV efforts.

The move by AT&T; won’t necessarily affect its 13.8 million customers. Instead, the main target is other cable companies that receive digital programming through AT&T;’s Headend In The Sky satellite service, also known by the acronym HITS.

In a deal announced Wednesday, HITS and San Carlos, Calif.-based Liberate Technologies will develop basic interactive TV services that can be delivered via satellite. HITS supplies digital cable channels to about 140 cable operators, including AT&T;, reaching 6 million consumers in 2,000 communities.

About half of those customers are on AT&T;’s cable systems, but spokeswoman Tracy Baumgartner said the company isn’t committed to offering the new interactive service to AT&T; cable customers. She also said the deal isn’t exclusive, and HITS may develop interactive services with other software companies.

AT&T; has introduced a few interactive services to a handful of markets, but has yet to launch commercially any of the technology it has been testing with Microsoft. The two companies announced in May 1999 a sweeping deal that was supposed to produce millions of advanced, Microsoft-powered set-top boxes, but software problems and changing AT&T; priorities have kept those boxes from reaching consumers.

The new HITS services, by contrast, will work on the millions of basic digital converter boxes that are already deployed. Liberate and HITS are trying out the technology with AT&T; employees in Cheyenne, Wyo., and more trials are expected later this year.

Ed Graczyk, marketing director for Microsoft’s interactive TV unit, said Microsoft’s software for the advanced digital boxes is ready to go. As far as the basic boxes are concerned, he said, Microsoft and AT&T; still are discussing what the software will be expected to do.

“We are confident we have the range of software that they need, but it’s really a matter of AT&T; defining what the requirements are,” he said.

Rich Fickle, senior vice president of HITS, said the Liberate-powered services will include personalized news and weather, electronic games, virtual channels and pop-up enhancements to programming. Financial terms of the deal were not disclosed.