• FIRST CITIES GETS REAL

When the First Cities initiative was announced in October, there was a brief media feeding frenzy — it couldn’t resist the latest buzzword, “multimedia” — then the subject was promptly dropped. Though it was quite a well-kept secret, we’d known about First Cities for a long time, and we were surprised that no one looked more closely. Here’s the first real, in-depth look at a cross-industry alliance that just might change the future.

• COMPETITION REALLY DOES WORK

Who needs regulation? The staggering events in both wireless and wired communications during the past month present a solid indication of what even the threat of competition can do for innovation.

• NOT JUST ANOTHER CONSORTIUM

“No industry is an island” could be the unofficial motto of First Cities, but even more remarkable than the bridge-building the group is undertaking are the people attracted to such an ambitious project. Now 13 member companies strong (with new announcements expected any day), the various First Cities boards and committees are stacked with fascinating resumĂŠs and vast expertise.

• DIGITAL VIDEO MOVES TO INTERACTIVE

At Seybold’s Digital World conference last June, it was clear that the film industry’s creative community was becoming quite enamored of digital video and was trying to parlay it into a new interactive art form. The fruits of its labors are moving at varying speeds toward the market. One company, Digital Pictures, is already selling full-motion video titles for the Sega CD system. Another, funded by Philips, is shooting an interactive movie for CD-I. And video producer Scott Billups has started a new company called Sand Box, stacked with some of Hollywood’s best behind-the-scenes talent.

• I/O
Rob Mechaley, VP of technology for McCaw Cellular, speaks of mobile data, and where “personal assistance” is really headed.

• CABLE BEGINS DIGITAL TRANSMISSION
Viacom, PBS and TCI make big digital video announcements.

• what gives with MPEG-1 and -2?
What’s the difference between the two compression standards?

• ‘GOLDEN SPLICE’ JOINS ISDN NETS
No ponies or free beer, but the first cross-country ISDN link is our century’s “Golden Spike.”

• BRIEFS
Macromedia supports ScriptX; EO’s Comdex debut; AOL and print media; First DK title arrives; Sony’s new “eyephones”; MPEG-1 encoder; NBC Desktop News; Newsweek Interactive.

• DIGITAL WORLD 1993
Our annual “Call for Speakers” has officially commenced.

• EVENTS
What else, besides Winter CES? [[missing]]

>I/O
>READERS RESPOND
A PDA WITHOUT COMMUNICATIONS? WHY BOTHER?

Rob Mechaley is the vice president of technology development for McCaw Cellular of Kirkland, WA, the leading provider of wireless communications services in the U.S. AT&T has recently purchased a multi-billion interest in McCaw.

Personal digital assistants, picocomputers, palmtops — the mobile computer industry is running hard, fast and late to create a new consumer market for its hardware and software. Yet the first generation of these machines seems to be little more than electronic Day Timers. What will compel anyone, except hardcore gadget junkies, to pay $1,000 for an electronic replacement for a much less expensive paper system?

While the notion of a pocket-resident static repository of data that can be sliced and diced to the limits of absurdity may be appealing to the techno-elite inventing these gadgets, the appeal for end users lies in practicality. There are much stronger and more relevant signs of where the market for “personal assistance” is really heading.

A NEW COMMUNICATION TECHNOLOGY

I ask that end users and the industry widen their scope of applications for mobile computing and step up to a communications technology that will enhance our business and personal lifestyles, as well as cut the ties that bind us: cellular for wireless data transmission.

Let’s think about where all that “stuff” in our paper Day Timers comes from. Except for a woman I know who uses her organizer mostly to accumulate highly artistic doodles she makes during the course of boring meetings, most of the scribbles in our paper personal assistants are driven by our communications needs —our need to network.

We have calls to make, messages to send, places to be and people to meet. The addresses and numbers needed to communicate are recorded in those little books. Watch people at the phones in airports sometime. Propped up, balanced on knees and consuming the little private space available, the paper-bound personal assistants are virtually non-volatile (except in case of fire) and are a totally portable locus of our personal networks.

The battery eaters. How does a battery-eating, somewhat more volatile electronic version do anything better than its cheaper, more familiar paper analog? We must stretch our concept of portable communications beyond this limiting, isolated function. In addition, many folks who use paper personal assistants also have cellular phones. Many of the 10 million cellular users in the U.S. might have already defined a market that a true electronic personal assistant can serve — something that allows the personal assistant to transcend its role as a static repository and become the active center of all this personal networking.

What’s more, it is estimated that more than 33 million mobile workers across the United States are primed and ready to utilize a technology that is versatile and capable of meeting a gamut of business functions. Although many companies have this market for electronic personal assistants defined as part of their long-term vision, many seem to feel they can make the market happen and meet the various needs of these mobile workers without the communications component. They are wrong, dangerously wrong! The fate of electronic personal assistants won’t be determined by the companies developing and producing these devices. It will be decided by the availability of wide-area wireless connectivity in the mobile computing devices.

COMMUNICATION WITHOUT RESTRICTION

Why wireless communications? Who wants to confine and restrict the abilities and concepts of mobile computing? Wireless connectivity presents the freedom and accessibility that will make mobile computing truly mobile.

Now some visions of mobile computing include communications by modems connected to the public telephone network. There are at least two problems with this idea. First, this communications method relies on the availability of an analog phone jack. Except in residences, the analog phone jack is a nearly extinct species, banished long ago by the now-pervasive digital PBX.

Second, this tethered, time-insensitive idea is totally at odds with the unrestrained, time-critical needs that a personal electronic assistant must fill. More than 10 million people in the U.S. and Canada know the power of having a powerful networking tool with them in their daily activities. These 10 million communicators have discovered the power of ubiquitous, unbounded wireless communications through the huge cellular communications network.

A volume market. These people know the power, control and freedom this anywhere, anytime access brings to their lives. They represent a ready-made, multimillion-unit-volume market for an electronic digital assistant that can enhance the power of their personal network. Repositories won’t cut it with this crowd; they’ve already organized, and they want action.

A sizable proportion of these people also use pagers. Some cellular organizations report that two out of three cellular service sales include a pager. Why? A pager enhances the individual’s personal networking abilities by adding nonvoice, context-sensitive data communications.

PULL TOGETHER AND BUILD IT RIGHT

So why not pull this all together and build the killer product? Why not create personal electronic assistants that can mediate voice and data communications anytime, anywhere and in context, with the added capability to do a whole circus-load of information organizing tricks? All the necessary components are moving to the right place in time.

The challenge of those at the nexus of the computer and communications industries is to combine and converge efforts in order to build that all-encompassing product. Enter the nine biggest players in cellular. The ones who give those empowered 10 million people the ability to communicate when and where they want have been working during the past 10 months to extend the capability of the cellular infrastructure to include robust, efficient and high-speed packet data capabilities.

The enabling technology, Cellular Digital Packet Data (CDPD) applies the same cost-reduced componentry utilized to build the 14 million cellular phones sold to date. Therefore, inexpensive capabilities can be built into any electronic personal assistant. Perhaps more importantly, CDPD has been designed from the ground up to integrate transparently with any extant or future data protocol; to ensure secure communications through advanced encryption and authentication techniques; to provide both voice packet data and circuit switched data capability in the same hardware, to allow seamless anywhere, anytime access across systems and service providers; and to allow weeks of use on standard batteries.

Best of all, and unlike alternative wide-area wireless data (only) alternatives, the CDPD system specification is completely open. All functions and their interfaces are completely described so that anyone can build any compatible system component. This is the firmament upon which the wireless communications industry and the computer industry can together build a significant new market, which gives people meaningful, substantial, easy-to-use ways to enhance their lives and livelihoods through devices and capabilities that deliver truly personal “assistance.”

CDPD technology will launch the era of “mass personalization,” or the ability for individually-constructed and tailored services to be offered to millions of users. In conjunction with cellular voice, CDPD is the communications keystone that enables this new opportunity.

Rob Mechaley

>FOCUS

FIRST CITIES GETS REAL
Industry group may ‘create the future’ for multimedia services

Despite popular opinion, the First Cities initiative — a multimedia feasibility project sponsored by the MCC research cooperative — is far from being “just another industry consortium.” In fact, First Cities is not really a consortium at all. Now 13 member companies strong with some significant announcements pending (see accompanying story on First Cities members, p. 8), First Cities is a well-organized, serious joint venture into both the near- and long-term markets for multimedia technologies and services into the home.

The media had only a brief feeding frenzy over First Cities when it was announced in October, but they may have overlooked the initiative’s significance. The combined influence of the companies involved has great potential actually to do what many companies dream of — that is, to create the future.

First Cities is operated via a set of organizing principles — most central being its definition of “commitment” — which may actually allow the group to accomplish more than serving as a cross-industry tea party. And unlike most consortia in the world of technology, it’s actually designed to become a profit center.

Beyond Trial Cities. Organized by the Microelectronics and Computer Technology Corp. (MCC), an Austin, TX-based R&D cooperative founded to help the U.S. regain its competitive edge in information technology, First Cities started out as “Trial Cities” in 1988. The name change in 1991 signaled a fundamental shift in the group’s charter from lab experiments to real-world applications — especially noteworthy since the group’s original focus was the potential for interactive high-definition TV services.

As it became clear that HDTV would have no dramatic impact on consumers until at least the turn of the century, First Cities began investigating the market potential of nearer-term services that could be built on top of technologies and infrastructure already in place. It eventually decided to focus on developing a local service architecture for delivering multimedia applications that was independent from the transport mechanism (such as coax cable, copper or fiber phone lines, satellite, cellular, etc.).

The group then decided to focus on providing specific applications, including multimedia teleconferencing, interactive games, entertainment on demand, shopping and transaction services, customized multimedia information, distance learning and health care.

FIRST, LET’S FIND OUT IF THERE’S A MARKET

The project will be deployed in three phases. Phase I, just about to come to a close, was not so much designed to answer the question, “Is there a marketplace for multimedia and interactive entertainment products?” but to answer more specifically, “How can we make a business for multimedia and interactive entertainment products?”

Anyone involved even peripherally in the digital media industry today would answer “yes” to the first question, but would likely stumble over the second. So MCC vice president and First Cities executive director Bruce Sidran says the group decided to base Phase I’s activities around the seven specific application areas mentioned above, building a business plan that included an initial outline of a delivery architecture for home multimedia. It also began the discussion of organization and operation, ownership and participation in the project as it continues.

The results of that research, he says, will be announced at a board meeting in Cupertino, CA, this month. If “all signs point to yes,” as the Magic 8 Ball says, then First Cities is in business. If the results show the time isn’t yet right to build a business on home multimedia, the project will be halted immediately. “By the end of [1992], we’ll make a decision about whether to proceed to Phase II,” says Sidran. “But so far, all signs look good.”

Next, distribute and deploy. Assuming the signs continue to look good, Sidran says Phase II will begin in early 1993 to build the system software, architecture and infrastructure for various transmission media, and will begin testing applications and services in various sites around the country as soon as possible. The idea, Sidran says, is to “allow a free flow of products and services in order to measure market response.” Once the trial sites are up and running, they will become an ongoing, living market test.

“One of our goals is to develop an architecture that accommodates lots of different technology platforms,” says Sidran, who served as the director of advanced television research for Bellcore before joining the First Cities project. “We’re including fiber, cable TV, twisted pair [standard copper phone wire] and ADSL [asymmetrical digital subscriber line, a potential video transmission protocol], terrestrial broadcast, microcellular, satellite broadcast.”

Changing old business models. Sidran is particularly interested in hybrid solutions. “You can do really interesting things from a technology point of view when there’s a lot of infrastructure already in place, if [these industries] can change the ways they do business together,” he says. Part of Phase II’s mission is to blueprint some of these business-to-business connections, such as how to marry a phone network with a cable network when one charges per transaction and the other charges a monthly fee.

After the architecture is designed, Phase III will move the project out of trial sites and into commercial operation by early 1995, with applications and services running over all transmission systems, and integrating various equipment types with the system’s infrastructure.

THE IDEA IS TO OBSOLETE YOUR OWN TECHNOLOGY

Sidran says First Cities is designed to whip together these solutions as quickly as possible; the idea is agility with a technical edge. “Technology gets you into the game,” he says. “Whether you sell hardware or software, you can always come out with it faster and cheaper and better. Reality is, the difference between the best and the worst solutions isn’t much, maybe 10 to 20 percent. But having technology is like having power in the wall. You’ve got to have it to get started.”

In the future that First Cities envisions, market staying power won’t have much to do with the lifespan of products. “If you’ve got a good idea, you’ll have competition. And competition will work to obsolete your best ideas,” says Sidran. “Those companies that will be successful will have the mechanisms in place to obsolete their own technology faster.”

Cash, and commitment. Having a detailed plan of action sets First Cities apart from most other cross-industry groups, but there are other things as well.

For example, companies are expected to contribute more than cash as part of their membership agreements. “Originally, the fee structure was set up to be commensurate with other MCC programs and reasonably priced for medium to large companies,” says Sidran. But this setup changed as the business plan began to take shape to allow smaller companies to participate more comfortably.

Create a business, not a plan. “It was very important to me to structure things in such a way that I was getting a commitment,” Sidran says. “We need some cash, but the major thing is the commitment to carry forth and do something. We’re trying to create a business, not just a plan, for companies that provide goods and services.”

Thus the cash required to join is “relatively small” (though Sidran wouldn’t say how small), more of an administrative fee. In addition, some in-kind contributions of equipment or manpower are expected.

The three most critical. But Sidran says there are three other commitments that are “absolutely most critical”: first, the services of a senior-level executive for the First Cities board of directors, each member can be assured that each company is buying in at the very highest level; second, the services of a mid-level technical manager to sit on the program technical advisory board; and third, each company must commit one employee full time to serve on the group’s various task forces. “The key thing for us is that the work be done by the member companies,” not by outsiders, Sidran says.

Interestingly, some members of First Cities don’t seem to want it known that their membership entails such a commitment. US West, for one, downplayed the significance of its membership. “We get involved in a number of interesting projects like First Cities,” says US West spokesperson Steve Holder. “Our commitment is for the initial planning stages. Depending on how things go, we may or may not continue with it.”

NOT BANKING ON BIG CHANGES IN WASHINGTON

Despite the fact that the new Clinton-Gore administration in Washington is likely to sprinkle fairy dust on high-tech, “return to competitiveness” programs such as First Cities, Corning’s David Charlton, chair of the First Cities regulatory policy task force, says none of the group’s work is predicated on changes in regulatory policy or any influx of government funds.

“There’s been no talk about politics — none at all,” says Charlton. “First Cities’ intent is to not depend on any policy change to operate. We’ll find a way to operate in whatever policies are current.”

“We decided to see if we could build a self-sustaining business plan and get the job done,” Sidran confirms. “Pragmatically, this kind of approach dramatically increases our chances for success.”

Not blind to helping hand. However, do not be lulled into thinking that First Cities is blind to the potential helping hand it could get from the U.S. government. For example, Sidran says the group has taken steps to become more involved in the development process of the National Research and Education Network (NREN) initiative, the $1 billion high-speed fiber-optic network that will link research institutions and universities by 1996 (see Vol. 1, No. 5, p. 8). And he’s already met with Ken Kay, executive director of the Computer Systems Policy Project (of which Apple is a member), an influential lobbying group comprising executives from the top U.S. computer companies.

In addition, Sidran is acquainted with the goals of the Electronic Frontier Foundation, which has proposed that government extend the NREN from these esoteric realms to the public sector. EFF cofounder Mitch Kapor has been a vocal lobbyist for this so-called National Public Network —a network that is not remarkably unlike what First Cities is proposing to create without government intervention or funds (see Vol. 1, No. 5, p. 8).

However, it certainly isn’t beyond the realm of imagination that the Federal Communications Commission (which regulates such networks) might be able to lower a few policy and/or financial barriers. A little governmental nudge could provide First Cities with sufficient impetus to connect its de facto public network with the NREN, thereby accomplishing the EFF’s and First Cities’ goals.

A CROSS-INDUSTRY PROFIT CENTER IS BORN

Probably the most significant difference between First Cities and the array of today’s technology consortia is that it is designed to become a profit center.

“First Cities is definitely a ‘non-traditional’ program within MCC,” says Sidran. “MCC’s charter is [only] to increase the competitiveness of its members. Ultimately, we’re hoping to become a commercial provider of technology.”

A catalyst and facilitator. Sidran says the group hasn’t defined all the terms of the relationships by which members will reap financial rewards from First Cities’ success, if indeed it is successful. He says there will be a variety of ways to generate revenue from the group’s collaborative work —perhaps including preferential treatment in terms of contracts — but believes that member companies didn’t join with the thought of making money off First Cities directly. “The major goal is to expand the market for their own goods and services,” he says.

Sidran says the role of First Cities is primarily as a tool company and “catalyst/facilitator” for companies that own and operate networks. “We won’t own wire or copper or glass,” he says. “Our products are goods and services, and our customers are people who own networks. If our product line is hardware and software to facilitate that, if we develop a gateway and all that goes along with it, then we’ll sell that to whoever comes along as a customer.”

Those “other customers” may end up being competitors to individual First Cities members, or they may actually become members themselves, depending on whether Sidran and/or the First Cities board deems them appropriate. “There may be good reasons to have competitors participating in First Cities,” he says. “This should not be viewed as an impediment to joining.”

It’s super network! It seems First Cities will then operate as vendor for a kind of superset of a network operating system. Its products will be specifications and interface definitions for all of today’s existing networks — fiber, cable TV, the phone system and all its various transmission protocols, terrestrial broadcast, microcellular, satellite broadcast and various combinations — which it will then freely license to anyone who wants to use them.

“Given the set of companies in First Cities, which aren’t relying on the group as a major revenue stream, there’s a good chance this will happen,” says Sidran. One of the best potential benefits of being part of First Cities is that members will get first dibs on the tools. “Time to market is the name of the game,” says Sidran. “A little advantage equals a lot of revenue.”

WHY NO CABLE OR CONTENT COMPANIES?

A glaring omission in the member lineup to date is that there are no large cable operators such as Viacom or TCI, nor are there any actual information providers (i.e., movie studios or publishing houses), video game or multimedia developers. One large cable concern said it hadn’t joined First Cities because “it’s just a phone company thing,” but Sidran says that’s absurd and that significant outreach is under way to make sure such firms are included.

“There’s lots of discussion going on,” he says. “We’ll see some significant announcements soon — it’s a little premature just yet — not just about cable, but about intellectual property companies, too. Without them, we’d only be building an elaborate store with nothing to put on the shelves.”

Protecting intellectual property. One reason for their reticence might be the lack of direct expertise in data protection on the First Cities roster, though Sidran says the group is “well aware” of the importance of that particular issue. “I realize from my days as a broadcaster that this is a sensitive topic, and we have lots of people working on the problem,” he says. “On one hand, engineers have convinced [rights owners] that digital technology allows for unlimited perfect copies. On the other hand, unless this information is cheap, quick and accessible, we won’t see widespread dissemination of this stuff on the networks.”

‘MARQUEE NAMES’ AS PHASE II BEGINS

Sidran says we should expect to see some “marquee names” in cable and content join First Cities, though what they bring to the table may not be what you’d expect.

“A company like Viacom, in particular, is interesting,” says Sidran. “We tend to think of them as a cable company, but they say they’re an intellectual property company.” He says that companies such as Apple Computer will also provide a wealth of connections into the content community, as will North American Philips, via its extensive CD-ROM and CD-I developer connections.

If Phase II gets the green light, First Cities’ new business plan will be made available to potential investors. “We think lots and lots of companies will have a reason to participate in the next phase,” Sidran says, because it will give them a place to test their ideas for goods and services in an actual user environment, something that is difficult to find today.

“As the trial sites provide a free flow of products and services, the market for them will accelerate,” says Sidran. “People will want to use them, for one thing, and a market will develop just by virtue of their participating in the trials.”

Interestingly, Sidran says it’s not yet clear whether companies must actually be First Cities members to put their services on trial networks.

ENORMOUS POTENTIAL, BOTH UPSIDE AND DOWNSIDE

Sidran’s enthusiasm for creating hybrid networks is certainly compelling, and if we can trot out the well-used clichĂŠ, it’s an idea whose time has come. In many ways, what First Cities is trying to accomplish is the ultimate proof of concept of what we’ve been calling the “convergence of industries” since Seybold’s first Digital World conference in 1990.

However, let us not underestimate, first and foremost, the importance of Phase I. How First Cities comes to its conclusions about the viability of a home multimedia market will be of paramount importance as it moves into Phase II. So far, the group hasn’t said much about how it is reaching its conclusions. If it does indeed announce that it is going forward with Phase II, some hard questions should be asked.

Assuming the group does move into Phase II, the real nitty-gritty, as with any kind of collaboration, is the willingness of its members to work together. It will not be easy for First Cities members to pick their way through the regulatory, financial and competitive minefields that govern how large-scale networks, multinational corporations and media conglomerates do business together today.

Even if the members manage to succeed at that particular task, they still face the rather daunting challenge of moving their individual companies out of time-worn ways of doing business and into something completely new and very risky.

Despite the required “buy-in” by high-level executives, only a tiny percentage of each company is actually engaged in First Cities work. By the time they reach Phase III deployment, will they be able to say to their shareholders with certainty that collaboration will actually yield cash in the bank? And what about the biggest unknown: What kind of hay will their competitors be making while their work is under way?

Obviously trial sites like GTE Corp.’s Cerritos project, and alliances such as the one between Pacific Bell, Northern Telecom and IBM (to “explore information age telecommunication technologies and applications”), have already taken aim at First Cities’ territory. Though at the moment they are clearly too weighted toward the telephone network, almost all of them are pursuing partnerships in other areas (IBM with Rogers Cable in Toronto, for example). TCI’s recent announcement regarding digital video (see p. 21) may have a significant impact as well. There could be nothing more devastating to the home market than a continuation of the idiocy we see today in the “CD-ROM format wars.” A great effort must be made to be inclusive if a home market is going to flourish.

Up the variety quotient. In addition, the group absolutely must add variety to its membership outside the rather predictable genres of computers, consumer electronics and telephone companies. The addition of a major movie studio is critical, as is at least one large publishing house (more than one of each would be better) and one of the major online information providers such as America Online, CompuServe or Dow Jones. America Online could be a particularly interesting addition, as it is already addressing local markets with services such as Chicago Online (see related article, p. 24).

First Cities will also be crippled without a significant cable player and the blessing of CableLabs, the industry’s R&D consortium. It could also use a couple of wireless data consortia such as Cellular Digital Packet Data or CDPD (see I/O, p. 2) and WINForum (see Vol. 2, No. 6, p. 17), the personal communications network (PCN) group that just successfully lobbied the FCC for spectrum allocation.

Another new member should be the “winner” of the FCC’s digital HDTV proposal. In addition to encountering serious technical difficulties with signal interference, the HD folks can’t seem to “get” the benefits of cooperating, not fighting, with computers and telecom over synchronization and identification of digital data streams.

Keep an eye on the Constitution. Not to belabor the point, but we also think it would be a very, very good idea for First Cities to give a seat on the board of directors to a group such as the Electronic Frontier Foundation and/or Computer Professionals for Social Responsibility. A heterogeneous network such as the one proposed by First Cities poses enormous challenges to individual privacy, free speech and the protection of intellectual property. As the threads of technology are increasingly woven into the fabric of our daily lives, it is vital that we become even more vigilant about these issues.

If First Cities is indeed successful in getting various big cable companies and content vendors to sign on, and makes the protection of civil liberties an equal priority, not only the group but the changes it brings about may be of historic magnitude. Each member of First Cities brings a world view and perspective with potential to make the whole more significant than its individual parts.

As Apple’s Mike Liebhold says, “The interesting thing about First Cities is that you have such a diverse community, which helps us to develop a much more holographic view. Our problem set is so enormous that we all come to the table with a myopic view. We see things from the computer view, telco sees it from theirs, the information industry from theirs.”

But with time, companies will stop “protecting their own” and begin to realize that there’s a lot more money to be made — and influence to be peddled — by collaborating. “After rounds and rounds of meetings on business cases, we’re trading stories with each other to understand the larger sets of issues,” says Liebhold. “It gives us all an excellent sense of the multi-disciplinary approach and helps us understand the evolving market, even independent of the business proposition being developed.”

Denise Caruso

FIRST CITIES PLAYERS AREN’T FOOLING AROUND
It doesn’t seem to be ‘just another consortium’

Although more announcements are expected momentarily, to date, the members of First Cities are Apple Computer, Bell Communications Research (Bellcore), Corning, Bieber-Taki Associates, Eastman Kodak, Kaleida Labs, MCC, North American Philips, Southwestern Bell Technology Resources, Sutter Bay Associates, Tandem Computer and US West. The most recent addition to First Cities is COMSAT Video Enterprises. President Charlie Lyons calls the company “the most advanced on-demand video company in the world.”

It’s an impressive group, not only because of what each member brings as a company, but also because of the wide experience and expertise of the people involved. Of all the member groups, only two — Philips and US West — didn’t discuss their involvement with First Cities.

SIDRAN THE LINCHPIN, BELLCORE WAITS IN THE WINGS

For some First Cities members, the appointment of Sidran as executive director signaled the start of something big. Sidran, who is still formally a Bellcore employee, spent more than a decade as a technical manager at ABC-TV, engineering and facilitating design and operations at the broadcasting company. He left in 1989 to join Bellcore, and in September 1991 was “loaned” to MCC as a full-time assignee to the First Cities project.

Beyond Sidran’s connection, Bellcore itself is also involved in the First Cities project, which is probably one reason that those who dismiss the alliance say “it’s just a phone company thing.” But Paul Lial, assistant vice president of network systems research for Bellcore, says that even his organization is waiting to see what happens with the business plan before it commits.

If Bellcore does move into Phase II, though, he says Bellcore “would like to have a better sense, and accelerate the development, of network interface standards and specifications for multimedia.” Its contributions are most likely in the area of specifying protocols for bridging networks.

APPLE COMPUTER BRINGS INTERFACE

Apple brings its obvious expertise in human interface design and media computing to First Cities. It also brings Mike Liebhold. Liebhold, manager of media architecture research in Apple’s Advanced Technology Group (ATG), is “eyes and ears” at First Cities for Apple chairman John Sculley and ATG director David Nagel.

Probably as close as you get to a “policy wonk” in high tech, Liebhold’s been active in drafting policy recommendations on privacy, protection of copyright and equitable access to communications and computing power. He’s also been responsible for many of Apple’s strategic partnerships, as well as many of its multimedia products.

SUTTER BAY KNOWS CABLE, SITE DEVELOPMENT

Tom Reiman, a former BellSouth staffer and Pacific Bell network technology and marketing consultant, is now executive vice president of Sutter Bay Associates, a 25,000-acre housing development now in the planning stages near California’s state capital of Sacramento. Sutter Bay, at this writing, is also the only cable service franchise on the First Cities board, and Reiman is cochairing First Cities’ site development activity. He brings expertise in advanced infrastructure for new housing developments, a critical but often overlooked piece of the puzzle for providing future services.

He’s also looking at a much more complex problem — the retrofitting of existing homes with upgraded infrastructure. “Those problems relate to a lot of issues, like depreciating existing plant [wiring] and methods of delivery, whether telephone or TV or wireless,” he says. “We know that we want to be able to bring First Cities’ services into cities that already have base infrastructure in place, but we’re not sure how just yet.”

CORNING, INC. HAS THE GLASS

Corning is the world’s largest maker of fiber-optic cabling, which has exponentially more bandwidth than the existing plant of which Reiman speaks. Getting fiber into the home has been the dream of everyone who’s ever spun a fantasy about the future of multimedia and/or information services.

Though it’s been involved in discussions about multimedia and other high-bandwidth services for many years, David Charlton, program director for fiber amplifiers for the Corning, NY-based company, says Corning joined “really to learn,” since the First Cities brief isn’t directed to doing something specifically with fiber.

BIEBER-TAKI VENTURES FORTH

This “boutique venture capital company,” as it’s described by cofounder Dennis Bieber, specializes in the commercialization of intellectual property and has one of the most interesting backgrounds of any First Cities member.

Both Bieber and Tomio Taki are cofounders of Rebo, the leading high-definition TV production studio in the U.S. Taki, a “nonexecutive” partner in the firm, remains at Rebo and is a major financier.

After selling his interest in Rebo two years ago, Bieber decided that he wanted to avoid technological dead ends as well as keep track of what the “big boys” were doing, he says. He’d followed Trial Cities while part of an HDTV task force, and decided it was a good way to have the best of both worlds: “I had to find a way in which I could work within the mainstream and find out what big boys were doing, using the nimbleness of a small company to take advantage of opportunities.”

Bieber says the company holds investments in a data protection firm that’s developed a new encryption method, and one that’s developing interactive applications for use in shopping malls. In addition, he says his company specializes in taking a proprietary idea that’s worth commercializing and securing it either by patent or copyright.

TANDEM HANDLES THE BILLING, NONSTOP

The capability to process transactions accurately in real time is probably the most critical piece of technology for any system that wants to deliver commercial information services over a network. Closely related is the need for that network to stay operational at all times so that vendors don’t lose revenue and customers don’t lose the “product” they just paid for.

Both features are areas of expertise for Tandem, which builds the NonStop line of computer systems designed for continuous, no-fail usage. It’s also a leader in what’s called “online transaction processing,” or OLTP, via its message-based operating system designed to handle heavy volumes of transaction-based data.

Today, cable TV customers get bills generated by Tandem computers and phone companies run their networks on Tandems.

“We see ourselves as being in the billing business — and in the future, we’ll be able to bill per use,” says Dick Cassam, manager of new market development for Tandem. “When we started looking at multimedia as a market for Tandem about a year ago, we saw it was a perfect match for our capabilities.”

Cassam brings an impressive background to the First Cities work. Before coming to Tandem four years ago, he was the head of network system development for long-distance provider US Sprint. He’s also held positions at GTE Corp., has an MBA from Cal Berkeley, a Ph.D in engineering and computer science from Stanford, and a BS and a masters in radio physics from Cornell.

NO SHORTAGE OF TELCO OPPORTUNITIES

Two regional Bell operating companies (RBOCs) are First Cities members: Southwestern Bell and US West. Although US West consistently downplays its involvement — it has said repeatedly that First Cities is just one of the many paths it is pursuing — Southwestern Bell’s director of corporate planning was more forthcoming.

Steve Dimmitt of Southwestern Bell says he’s involved because of the RBOCs’ newly granted ability to provide information services. “If there is a market, we want the ability to provide services in the markets where we compete, over whatever network — wireless, copper, fiber, or eventually over cable TV.” (Southwestern Bell also owns a cable franchise in the United Kingdom.)

Tethered by regulation. The company is still tethered by regulation, however. Because of legal restrictions, it cannot bring any internally developed hardware to the table because it isn’t allowed to manufacture equipment. This may turn out to be a kind of sticky wicket for RBOCs participating in First Cities, since Dimmit says an RBOC not only can’t own intellectual property rights to any such device, but it cannot own a company that manufactures hardware or even derive any revenue from it.

But he’s not too concerned. “Honestly, my view is that those types of revenues are going to be insignificant compared to the revenues that a site operator is going to make,” he says. “That’s where we’re going to derive the majority of our revenues, being a site operator in multiple sites.”

Dimmitt believes his company’s strength isn’t so much in producing information, but in brokering it. “We aren’t saying we don’t ever want to be producers, but we’re more competent selling various services like storage, formatting, transmission, filtering and distribution to make the process of getting the information from provider to consumer a more efficient one.”

He adds that some information services don’t necessarily include content — applications such as work-at-home teleconferencing, where customers not only consume information, but provide it as well. “There needs to be a network to bring these people together,” he says.

FORGET CHICKEN AND EGG, KALEIDA WANTS OMELETTES

Mike Bloom, director of business development for Kaleida Labs — the Mountain View, CA-based joint venture between Apple and IBM for multimedia technology — is hoping that its cross-platform scripting language, ScriptX, will “make some of these visions come true with titles and services.” So far stymied by the chicken-and-egg problem of what comes first, the network or the applications, he says Kaleida wants to be “in the omelette business. We want to help the creative community using the resources of our parents.”

That’s not all Kaleida has in mind, though. The company is also working on an operating system for a consumer device, and has also been rumored to be working on a hardware specification for some kind of consumer media player.

Get technology out of the way. He would like to see technology get out of the way of people creating and “broadcasting,” so to speak, their own information services. “When you have that kind of environment, where you have access to transportation, creation and development tools, everything changes rapidly,” he says.

The benefit of having heavy hitters in First Cities means that Kaleida won’t have to “worry about every single piece of the value chain,” as Bloom puts it, instead allowing the company to focus where it can best add value. This also means that a company can “poke around on the edges of what you’re good at,” he says.

He gives a “hypothetical” example: “If there were a market for gigantic file servers, and I believe there is, and if there were a market for medium-sized servers and I believe there is, then maybe there is a market for little teeny file servers,” he says. And if those teeny file servers might be the foundation that an entrepreneur uses to build a “garage” information services business, what might that server look like?

Once you decide what the server looks like, he says, then you have the opportunity to set up the set-top, laptop, palmtop device business, and people in the file server business have the opportunity to explore the fuzzier edges of their businesses to see if they can grow them and add value.

KODAK KEEPS PUSHING, NOW WITH IMAGES AND TELECOM

Eastman Kodak, as you might suspect, expects to bring its expertise in imaging systems to the First Cities project. “Our most interesting applications will be image intensive, whether they’re pieces of motion images or still,” says Bob Sanderson, manager of the Kodak Image Telecommunications Center in Rochester, NY.

Sanderson’s unit provides technical support to business units in the process of developing products to be used in a telecom environment. “It’s not the Kodak Telephone Network, it’s about understanding the emerging opportunities as the telecom environment becomes more image capable, with wider bandwidth and that sort of thing,” he says. They’re looking at ISDN, the switched public telephone network environment, and what cable TV and hybrid networks mean in relationship to designing new product interfaces.

He says that Photo CD, Kodak’s new consumer product that marries analog film neatly with digital imaging (see Vol. 2, No. 4, p. 5); will “certainly” be a major piece of Kodak’s First Cities work. “It’s a very significant initiative for our corporation,” says Sanderson.

Kodak has already announced a Photo CD extension called the Kodak Picture Exchange, which will eventually provide browsable online libraries. But the company’s expertise in hardware for image capture, storage, printing and output also makes it likely that Kodak could maneuver itself into the position of being a kind of information refinery for companies with large libraries of analog information, especially motion picture studios, that need to be digitized.

Sanderson also sees potential for image servers accessible over a network, as well as the Blade Runner-esque consumer application of printing a picture right off the TV screen. “If these new applications were to develop into the consumer environment, we would have interest in either the end user devices — cameras, printers, etc. — but we certainly would follow with interest what’s happening with network infrastructure, because we also serve the industries that provide information.”

COMSAT AND ON COMMAND DELIVER MOVIES HIGH AND LOW

The most recent addition to the First Cities lineup, COMSAT Video Enterprises (CVE), is part of the COMSAT Corp. formed by the U.S. Congress in 1963 to “invent” telecommunications satellites. It’s also the largest owner and user of the global Intelsat and Inmarsat communications satellite network, and has a growing business in both mobile and video communications.

CVE uses satellites and eight channels of bandwidth to deliver movies into 300,000 hotel rooms nationwide, including the Holiday Inn chain. Charlie Lyons, president of CVE, says he joined First Cities because he wants to find the leading technology in pay-per-view delivery.

“Very, very wide bandwidth.” But CVE’s subsidiary, Sunnyvale, CA-based On Command Video, doesn’t use the satellite network for delivery. Instead, it has invented what president and COO Bob Snyder calls a “very, very wide bandwidth switch” and sophisticated tracking software to allow users to immediately view the movie they want to see.

On Command was founded by Snyder and Bob Fenwick, both of whom harken from the defense electronics community. Fenwick was founder of BR Communications, which built defense communications equipment. Snyder came from Watkins Johnson, a maker of “spy equipment.”

LIKE A TELEPHONE, BUT YOU ‘CALL’ VIDEO

The system works very much like a telephone, only it connects the “caller” with a video, he says. In addition, it’s analog, not digital — each connection to the system starts a separate video cassette player or a laserdisc. “There’s nothing particularly sexy there,” says Snyder. “It’s just intended to be consistent and compliant with the existing infrastructure. Just because it’s not digital now doesn’t mean it won’t be. The switch will pass audio, video, audio and video and any digital format. We don’t send digital to the room now because no one wants to ‘look at’ CompuServe or Prodigy yet. But we could do it technically, there’s just no demand.”

In addition, he says, it doesn’t matter what the “head end” is — it could be a file server, it could be fiber optics, it could be a VCR or a satellite. “The switch itself is where the technology is,” he says. Unlike most pay-per-view systems available today, when you make an On Command selection using your remote control, the signal does not go through the telephone system. You are actually sending a signal back through the coax cable; your selection is started and is switched electronically to your room.

Snyder says they use the coax that’s already installed in the 32,000 luxury hotel rooms they now service, “which is no different than coax in the street that feeds a home.” And, he says, even though today the players, switch and all the electronics are at the hotel itself, the system could just as easily be installed at a node in a cable network. We’ll let your imagination take over from there.

Denise Caruso

LIMITATIONS DEFINE THE CHALLENGE
New genre of interactive video raises expectations, questions

You find yourself outside the mansion of the millionaire businessman who is about to announce his intention to run for president of the United States. Facing you, literally, are windows into this man’s life — his family, friends and employees, his bedrooms, living rooms and, thematically speaking, his closets, in which are probably stored numerous skeletons.

You choose a window and peek in. Then another. Soon you realize, of course, that all is not as it seems with this family. There are secrets and plots, and there will be a murder. Eventually, you have spent an entire (virtual) weekend watching the actions of this family, going from room to room and character to character.

Will you simply watch the events play out, knowing that the man about to run for president could be a liar and murderer? Do you have enough evidence to warn the police about what will happen? Can you stop the murder from happening? Or will you be discovered as you snoop around the private home of a respected citizen? And, the person you suspect in your first sitting may be completely innocent in the next.

This is the plot behind Voyeur, an interactive movie/game under production at POV Studios, a division of Philips Interactive Media of America (PIMA). “POV,” incidentally, is a film production term for a camera shot called “point of view,” in which the perspective is that of a particular character, not an objective third person.

POV is led by veteran interactive game producer David Riordan. Before taking the helm at POV, he was the president of Cinemaware, an independent CD-I producer, that specialized in titles with live actors and movie-type plots, including its most famous title, It Came From the Desert, a satire of 1950s “B” horror movies. Cinemaware closed in 1990.

Digital Media was given an exclusive opportunity to visit the Voyeur set, watching scenes for the interactive movie being taped, and talking to the director, designers, actors and writers who are searching for entertainment’s holy grail: the interactive movie.

Giving up on the killer app. The digital media industry has spent the last few years trying to determine what will drive consumers of digital media to purchase new equipment or pay for new services. After giving up on the idea of the “killer application,” that single title that would drive people like lemmings to their local consumer electronics store with checkbooks in hand, many are now focusing on the larger issue of what the new genres may look like.

The idea of an interactive movie has been floating about for a while, but there is some skepticism that these products will have (in Hollywood parlance) “legs.” Will they engage an audience enough that it will pay a premium for the experience? If a traditional movie is rarely watched even more than a handful of times, how often would someone want to participate in an interactive movie, when the surprise of what you might find with the next “click” of the remote is gone?

One skeptical studio executive postulated that since the beginning of time, there have been game players (with sticks, rocks, bones and now Nintendo) and there have been story tellers, and never the two did meet. Why should they now?

The believers, however, say that interactivity allows the audience to become more involved in the story — to be closer to the action than traditional television or movies. Many artists are now creating content specifically for audience participation and control.

“Interactivity rings my bell loudly,” commented Robert Culp, who is one of the stars of Voyeur, when asked why he would take on such a project. He says he believes strongly that the new interactive technology is as important an advance in entertainment as that of the telephone when compared to the telegraph. “There is an immediate sense of participation which one does not get with simple signals over a wire.” Robert Weaver, the director, sees interactivity as a way to “uncover subtleties of story and character through many levels and intricacies,” which would be impossible in traditional, linear media.

Four levels and two planes. This particular “movie” was created with four levels of interactivity. First, the viewer can choose not to interact, but simply watch the action take place as if it were a traditional movie. On the second level, the viewer can choose which scenes, rooms or characters to follow. Third, the viewer can participate in the action by blowing the whistle on the murderer, calling in the police, or being discovered as a voyeur and arrested. Finally, there are four different scenarios, which will be selected at random by the CD-I player.

Technologically, Voyeur is making use of a feature unique to CD-I as a consumer multimedia playback device. Built into the box is the capability to display two independent planes of video.

POV is using this feature to create computer-generated, 3D sets in the backplane, with actors in the foreground plane. This works much the same way as traditional animation, where the backdrop art is static and animation cels are done on top, so scenery doesn’t have to be reproduced with each frame; only the elements that move are reproduced.

Impressive results. With careful planning, the results are very impressive. In one scene, for example, a man enters carrying a laptop computer. (For the curious, it’s a Macintosh PowerBook.) He sits down at a computer-generated desk, sets his computer on top of it, and begins to write. Real and synthetic images are mixed and able to interact with each other.

Riordan and his staff created 13 different rooms for the 50 to 60 scenes that will comprise the final product. Using 3D Studio from Autodesk, the sets were created, lighting was designed and camera angles and lenses were chosen. Then, using the information from the computer, the set was recreated in front of a blue screen in a film studio, with all of the set elements, like desks and chairs, replaced by blue painted boxes.

(Blue screen is a technique whereby anything in a camera shot that is a particular color of blue, or sometimes green, will be replaced by an image or graphic. It is commonly used in news broadcasts for the weatherman, who is standing in front of a blank wall, onto which the weather maps or satellite images are superimposed for the viewer. Occasionally, you will be able to catch the weather map appearing in the tie or shirt of the anchor, if he or she has not carefully chosen a wardrobe without that particular shade.)

By using computer-generated sets, Riordan was able to isolate the live action portions of the scene, while still providing rich scenic elements with which the cast can interact. Since the motion is isolated, the CD-I player is able to process more frames of video per second.

The signal from the video camera (the position of which was determined when the set was created) is superimposed, or composited, over the computer-generated set and each element is perfectly matched with its computer equivalent.

New terrain for movie makers. Director of photography for Voyeur, Mackenzie Waggaman, had it unusually easy on the set — all of his decisions were made on the computer. 3D Studio was even able to calculate candle power and wattage for the lighting elements. “This is new terrain,” he says. “We are taking old skills and reapplying them with a new twist.”

In effect, all of the camera and lighting work is done in virtual reality. The final computer set, called a reference plate, is then displayed with the video images for the director and technical crew to use while generating the live-action video.

The sets were created with the technical limitations of the CD-I player in mind. For example, when using this type of video animation, action can take place within only 30 percent of the screen, or the player cannot process the frames fast enough. While this sounds like a small amount of space, the designers at POV have taken this as a design challenge: How can you create an interface or, more appropriately, a scenic design that looks natural while only allowing action to take place in a limited area?

To this end, they have used the scenic elements themselves, including the window frames and dressing through which the user is watching the action, to define the space.

Then comes the hard part. The director and the actors, who are working with only blue cubes for a set, have to create the action for the scene, while working in the parameters of the computer set and the limits of CD-I.

The set is literally surrounded by television monitors with the composited images, and a control room houses four or five people with a battery of equipment to watch out for things like images coming through the blue screen, or body parts getting cut off by the matte background (which, of course, the actors cannot see).

It is the actors and the director who are often out of their element on this set. The cast, and the director, are experienced film and television actors. Since the camera is locked into position, and it would be far too costly and time consuming to set up multiple shots for each scene, working under these conditions is far closer to the theater than film.

Voyeur director Weaver finds these limitations both “frustrating and liberating. Most of the normal tools for the director and actor are gone: you can’t do cuts or coverage. You can’t use outtakes; you can’t move the camera. Each shot is a master.” But to Weaver, that is the challenge.

In addition to blocking the action within the confines of the set, both real and electronic, Weaver must also be able to work with the cast to make sure that the particular scene they are working on is correctly played in terms of both character and the particular story line in which that scene happens to appear. For example, a number of scenes begin with the same actions and dialogue, but end differently depending upon which of the four scenarios is followed.

“Character and story development expand exponentially” when working with multiple story lines, according to Weaver. “We are constantly checking ourselves against the logic of the game, under different circumstances, story lines and games.”

Writing a chess game. Voyeur could not be written like an ordinary screenplay. The creative staff gathered and developed the characters first, establishing all of the relationships and potential motives for murder. Everyone on the creative staff had to be satisfied with the characters and relationships before a single scene was written.

Lena Pousette, one of the co-authors of the movie, likens writing the script to a chess game. After the nine main characters were developed, the writers set out to create a master plan, under which “everything had to be true in all possible scenarios. Then it could be slanted into the four different directions” that make up the different story lines. (The CD-I box will load one of the four scenarios at random.)

Dog collars and red herrings. Since the amount of video that could be included on the disk was limited, the writers needed to focus very carefully on the important moments, or “beats,” of a scene. In addition, they wanted to add “production values” to the script, which in Hollywood generally means racy scenes or sensual situations.

This movie, which is self-rated as “R,” has some lingerie-clad women, a scene that involves a dog collar (and no dog), and some other suggestive or provocative situations. In addition, the producers decided to shoot two versions of the script: with and without four-letter words. They will decide later, with Philips’s blessing, which version to go with. There is no nudity.

Sometimes the steamy bits are red herrings, which draw the viewer away from where important clues may be revealed — remember, the viewer chooses which rooms to peek into.

Striking a deal with SAG. POV has been able to strike a deal with the Screen Actors’ Guild (SAG), which enabled high-visibility actors to work in the medium. All of Voyeur’s actors are working under the “Industrial Production Contract” which pays actors up front, but includes no residual or performance payments after the filming is done. Riordan believes that this is the current precedent for all interactive productions, at least “for the moment.”

The total production cost of Voyeur is more than $600,000 dollars. Will it make its money back? Riordan appears unconcerned. “That’s Philips’s job, not mine.” Until Philips can sell boxes, production companies like POV are still black holes for cash. Multimedia is “not about hardware, but about marketing,” believes Riordan. “Who can be the first to educate the public and convince the public that this is worth it?” Of course, for Philips to make that argument, it needs the software titles that POV and others are producing.

But if this industry is to figure out what types of interactive products people want, it is going to have to go through a period — perhaps a long period — of experimentation and investment. Says Riordan, “Thank God there are companies like Philips who are backing this kind of work.”

“Philips is determined to build a library for this platform, but it is up [a] creek until it can get the individual to see this in action,” says Culp. “How do you describe ‘interactivity’ to someone who has never experienced it?”

Perhaps Philips’s national advertising campaign will serve to educate and intrigue enough people to check it out, and perhaps Voyeur and other titles like it will make CD-I the “must have” Christmas purchase in 1993. But until then, CD-I remains an expensive toy with some great technology behind it, and limited appeal. In the meantime, Philips will continue to sing the praises, and fund much of the development, of CD-I. And Riordan and his colleagues at POV will continue to make interactive movies.

SAND BOX IS NEW, ALL-DIGITAL STUDIO FOR FILMS AND TITLES

Where Point of View’s direction has always been toward the “interactive,” traditional film and video companies often come at digital video from a production and effects angle. Technology has progressed sufficiently that some of Hollywood’s leading behind-the-scenes talent has decided to take a bit of the limelight for itself. Three independent computer graphics and special effects artists in the entertainment industry, plus a former business planner for Buena Vista Pictures, have founded Sand Box Productions, an all-digital production facility that will help produce motion pictures, commercials and music videos, as well as interactive multimedia titles.

Scott Billups is at the helm of Sand Box. A 25-year veteran of the entertainment industry, with more than 200 TV commercials, 75 industrial films, six feature documentaries and numerous other film sequences under his belt, Billups is also the founder and sole employee of Billups Communications. Work done from his computer-based production studio in Los Angeles has yielded special effects for many motion pictures as well as the original computer visualizations for Steven Spielberg’s upcoming film, Jurassic Park.

Billups, along with Kenneth and Lawrence Littleton, the creators of digital special effects in Bram Stoker’s Dracula, Toys and Robocop 2, among others, and a former senior business planner for Buena Vista Pictures, are the core management team of Sand Box.

The premiere boutique. The team has hired four specialists in graphic arts, multimedia, video and marketing, and is in the process of developing a stable of freelance artists committed to Sand Box, including Brad deGraf. DeGraf, while part of the now-defunct deGraf/Wahrman creative team, produced the first “live” computer-generated character and the first computer-generated motion platform ride.

Together, they hope they have what it takes to create “Hollywood’s premier boutique studio.”

HOLLYWOOD IS CHANGING FOREVER

Sand Box is founded on the premise that digital technology is changing the way Hollywood works forever, and that those who don’t join the ranks of the technologically savvy will be displaced by those who do.

“Just as musicians were displaced by the MIDI interface in the 1980s, graphic designers, TV imagers and post-production personnel today have become endangered species in the wake of the digital revolution,” says Billups. “Conventional productions will be displaced by digital film and video that permit low-cost, high-resolution and high-speed productions.”

An 80 percent reduction. Billups and his team claim that their digital studio setup — a $4 million configuration of Macintoshes and Silicon Graphics 3D workstations, connected to the most advanced digital film processors and digital cameras in the world, along with a good deal of proprietary technology — could reduce movie-making production costs by almost 80 percent.

According to the company’s vision of the changing entertainment industry, movies could be filmed in one room, in a couple of days or weeks, instead of months and years, with just a handful of people on staff, including the actors who would follow the script in a linear fashion. They believe all background scenes will be either computer-generated or filmed digitally prior to “shooting” the scene with the talent — no more remote location shoots and lost opportunities because of bad weather. The live action would ultimately be composited into these digital environments, or backgrounds, and the film would be printed and released in the traditional fashion.

DOES ANYONE CARE, OUTSIDE THE SAND BOX?

This technology exists today; the big question is whether anyone in the entertainment community cares, besides the people at Sand Box. The answer appears to be a resounding yes. Billups says the acting community is responding positively, motivated by the challenge of using its imagination. (This is questionable, however, considering the wide range of talent that the “acting community” represents today. Many actors are, and will continue to be, intimidated by the kind of “imagination” that will be called into play by these new technologies.)

Traditional film studios are interested, he says, in the technology and even more interested in creative individuals who understand how to use it. To date, the startup has amassed “solid production commitments totaling well over $20 million,” according to Billups.

The new ancillary markets. Already the company has inked deals to do the production work for three major motion picture projects. It has acquired digital rights for excerpts from each of the films, so that it can use the licensed footage to create products for what Billups identifies as the new entertainment ancillary markets: multimedia applications on CD, video games and arcade games. Sand Box is in negotiations to produce two additional films.

The first Sand Box production is a Philippe Mora film called Twilight of the Gods, about how U.S. industrialists such as Henry Ford helped Adolf Hitler rise to power. Billups expects that the production crew on the film will be reduced by 30 percent over the traditional size of a film crew on a motion picture of this scale.

Digital extras. In addition to a smaller crew on the set, the technology behind Sand Box is eliminating the need for thousands of extras who would have been required for the film if it were produced traditionally. Extras, under union regulations, receive about $20 an hour and must be fed while on a location. Those costs, in addition to wardrobe expenses for a period film of this type, can blow a director’s budget out of proportion.

“We are recreating the Third Reich [digitally], which is an enormous task,” says Billups, who is scanning in Albert Speer’s actual architectural renderings to create an exact digital replica of Hitler’s world for the film. Billups even has created digital texture maps from scanning the original marble samples Speer used to design Hitler’s office, for example. “We have to make a scene with 100,000 spectators for the Nuremberg rallies. We will do it all through compositing techniques and synthetic actors, and from the audience’s point of view it will look like the real thing.”

SAND BOX PROMISES MORE THAN A MOVIE

For Sand Box, Twilight of the Gods will be the first product from the entertainment side of its business to cross into the company’s interactive publishing business. The film, which incorporates never-seen-before footage of Hitler from Eva Braun’s home movies, provides the right content to produce an interactive educational title. Sand Box plans to release its first interactive CDs in 1994, first for the Macintosh and then for the PC.

Arnie worked hard. This movie, along with future film projects that wish to profit from the new ancillary markets, will have to be shot with a different sense of priority if Sand Box is to cross over successfully into the arcade, video and interactive CD markets.

Fortunately for Sand Box, the team seems to understand this. “You have to architect the production process from the beginning,” Billups says. “Can you represent Arnold Schwarzenegger in 8-bit or do you have to show him in 16-bit? He worked hard for his muscle definition.”

According to Billups, it’s “mind-boggling” how much the acting community already understands about digital and interactive technologies. It’s the studios and the bureaucrats, he says, that don’t get it. “The studios just go out and buy whatever is hot and don’t find the talent to operate it,” he says. “They get the person who was in charge of the analog equipment to operate it. I could make movies till I die using the equipment collecting dust down in the basements of most of the major studios.”

The end of the specialist. However, this lack of understanding on the side of the big studios certainly bodes well for Sand Box and other small studios that are comfortable with digital technology. “It’s a new playing field,” he says. “It’s the end of the professional specialist, and the age of the professional generalist. If I was going to give advice to anybody who wants to be in this business it would be: If you have to ask how to configure a system you probably don’t know [enough] to use it.”

Billups emphasizes that this is not a death sentence for artists interested in the field but new to technology. He advocates collaboration on the part of creators and technologists. In fact, Billups, who sees himself as a creator first and a computer specialist second, firmly believes that new media technologies and digital production will only move into the mainstream after more artists become involved.

SHOOT IT ONCE, USE IT THRICE (OR SO)

Sand Box’s second film is a Tom Walsh Productions feature called Electric Forest. It is a “hip-hop ’90s version of The Wizard of Oz,” according to Billups. All of the backgrounds for the film will be either computer-generated or digital video environments and the live action will be composited with it. According to Billups, Sand Box’s digital studio will create 100 percent of the backgrounds, except for the opening scene, which will be shot in New York’s Central Park. Sand Box is banking on Electric Forest’s future appeal as a video game and as an interactive multimedia title.

Reversal of fortune. In some cases, success in these other markets leads to the potential success of a bad film. Robocop 3 is the perfect example, according to Billups. “You go into an arcade and Robocop 3 is a big seller,” he says. “There are two different versions of the game from different manufacturers in one arcade. Now to date, the movie hasn’t been released, because — well, the truth is, it needs some more work, and it would cost more to [fix it for] release than it did to make it.”

Robocop 3 was shot with the intention of turning it into an arcade game, so it was easy to repackage. Now the games are doing so well that the studio that owns the rights to the film actually plans to reshoot some of the less-than-stellar scenes in the picture, in an attempt to improve it. It then plans to release it.

“The movie now has to live up to its success as an ancillary product,” he says. “We will see this paradigm more and more.”

WHO GETS TO PLAY IN THE SAND BOX?

Sand Box is backed by a group of entertainment and high-technology investors who, at this point, Billups wishes to remain anonymous. In addition, Sand Box is collaborating with Propaganda Films, a motion picture and music video production company in Hollywood. Sand Box provides technical support in return for a steady production stream and creative support from Propaganda. “The thing that’s so cool about Propaganda,” says Billups, “is that they have a stable of young, upcoming directors.”

Sand Box will need this new blood, since the company’s entire premise shatters traditional production concepts and defies strict union regulations governing who does what in the film industry today.

“New directors understand this paradigm. They have valid points of view and don’t often get the chance to present them in the industry as it exists today,” says Billups. “We are talking about a few people being able to make a big picture and produce movies that have the potential to go into an ancillary market such as the video arcade market or narrowcasting TV, which will be ad-driven. It makes more sense for an advertiser to spend his money in a niche. The broadcast environment is dying.”

SEA CHANGE, OR ANOTHER CHOICE?

For those of us who have lived through the promises of the paperless office for the past 15 years, and the threat that books will no longer exist in bound form, this all seems a bit hopeful.

There will always be actors and actresses — talented and not-so-talented people that audiences love to watch —who aren’t interested in performing to blank walls that a computer will later turn into a digital set. There will always be film directors who believe they can only achieve their desired reality by shooting on location; and, there will always be audiences who believe they can tell the difference between virtual and actual after they’ve paid their money at the box office. The unanswered question is what will the ratio be? Will actors, directors and audiences prefer the high-tech approach, or will they reject it?

Not a niche house. Even if they give the thumbs down, however, Sand Box is not doomed to be a niche production house. The company has all the key components to become a major player in the entertainment industry: creativity, content, capital and technical know-how.

Perhaps the only crucial element that the studio lacks is awareness of just how phobic the outside world is to technology. Unless the company truly can save 80 percent in production costs, as Billups claims — without sacrificing a bit of quality — it will not be easy to market Sand Box’s revolutionary proposals against traditional studios with proven techniques.

If, however, the team at Sand Box really can produce compelling motion pictures and commercials as quickly and as inexpensively as it claims, and can then license the content for supplementary markets, it is likely to become a force to reckon with in Hollywood, and a new role model for production houses of the 21st century.

THE FIRST TRUE ‘VIDEO’ GAME RAISES SOME IMPORTANT QUESTIONS

Now of course there’s ancillary and there’s ancillary, and what you mean by a “supplementary” market depends entirely upon which market you started out in. After all the noise that’s been made by the Big and Powerful about full-motion video changing everything up to and including the spots on a leopard, there’s a delightful irony to the fact that the new Sega Genesis CD 16-bit video game system is the first to rack up a shelf of full-motion interactive video titles.

The titles in question hail from a company called Digital Pictures, based in Menlo Park, CA, with just about as lengthy a history in interactive consumer video as you can get. Digital Pictures isn’t really concerned about what the studios do with digital video, as long as it gets what it wants from them (and it is). It has bigger fish to fry: adolescent male hunger for the latest and greatest.

President and CEO Tom Zito, as well as other team members, were part of the secret NEMO team at Hasbro in 1986, whose charter was to develop “a live-action, low-cost interactive videogame hardware/software system” that could take advantage of the already huge installed base of VCRs.

They did it in two years, but Hasbro got cold feet for a number of fairly good reasons (including the price of memory and trying to get distribution for a new consumer electronics concept) and cancelled the project.

A SWEET DEAL FOR THE NEMO FOLKS

But when CD technologies started gaining popularity, Zito started to reassemble the team and cut a rather sweet deal with his former employer. DP is now the exclusive licensee of all the NEMO products developed at Hasbro, as well as all the technology (in the process of being patented) Zito and his team developed at Hasbro.

In addition, he’s also arranged for DP to be exclusive licensor of the Hasbro technologies, so others can license the technology from his firm.

DP rejiggered many of its former NEMO titles — full-length films developed under the excellent product line name, U-Direct — as well as its Make My Video interactive music video line. DP has applied for patents for its ability to switch between video tracks instantaneously, a feature that’s the core of the Make My Video line.

What’s out there. Night Trap and Sewer Shark (both from the NEMO project) are the first two full-length, full-motion interactive film titles in the DP line for Sega CD. In four weeks, Zito says more than 100,000 units of the two games have sold for some $6 million. Night Trap, written by Esquire magazine editor Terry MCDonell, was written as an interactive movie, but plays much more like a standard “catch the vampires” game. Sewer Shark is a duck-and-shoot in a futuristic labyrinth of sewers.

For the Make My Video line, also a Hasbro concept, DP is releasing four titles with videos from popular artists Kris Kross (baby rappers in backwards pants), Marky Mark (the black-sheep brother of Donnie from New Kids on the Block, INXS (a well-known Aussie rock band) and C&C Music Factory.

All DP’s titles are distributed by Sega and/or Sony’s Imagesoft distribution arm.

LOOKS OKAY, BUT WILL IT PLAY?

Do not confuse DP’s products with “movies on CD.” This is not high-quality video, not even anywhere near VCR quality. It’s full-motion, but not full-screen. The video is indeed stored on the CD-ROM drive, and it’s being decompressed by the Motorola 68000 chip in the CD add-on to the Genesis system, but it’s very grainy. It is, however, clearly video, and that is a feat. It can also be played full screen, though that’s not advisable, quality-wise.

Zito is first to admit that DP’s video doesn’t look great, but says it’s “beyond anything available today.” The compression DP uses is proprietary, but Zito says what’s more impressive technically is what they’ve been able to do with color reduction algorithms, since the Sega Genesis can only display 32 colors at a time.

Despite quality constraints, Zito believes that producers will be increasingly attracted to titles like his, especially in the Make My Video line, because it turns music videos from “cost centers to profit centers” for big companies such as Time Warner.

Another factor Zito is banking on is that movie studios drool over the kinds of sales figures racked up every year by Nintendo and Sega. “Movie guys find the numbers staggering,” he says. “PacMan outgrossed StarWars. Super Mario Brothers outgrossed everything but ET. Once people who are used to spending money making movies see what we’re doing, they’ll want to develop these instead.”

And for titles like Make My Video, he’s probably right. There’s something compelling and fun about using this title to put together your own video with your favorite rock stars, especially when there’s some “gaming” aspects involved — the VJ comes back on after you’re done and tells you whether you made the grade, based on some editing instructions given at the beginning.

What’s likely to get as much attention, at least in the short term, is DP’s new “Virtual VCR” technology for Sega CD, what Zito calls “a way to put real video on a CD,” using DP’s compression and color reduction technologies. It’s a non-Philips version of the aborted CD+G standard that allowed a CD-I player hooked up to a TV to show rudimentary graphics while playing CD-quality audio from a compact disc, and allows relatively instaneous access to different areas on the disc, much like skipping around on a music CD is easier than scanning a cassette tape.

At January’s Consumer Electronics Show in Vegas, Zito says the company will announce and ship its first three Virtual VCR titles, including a new Prince video collage, which includes one full hour of video; a “Looney Tunes” CD; and a disc full of old “March of Time” newsreels.

NOTHING TURNS OUT THE WAY WE THINK IT WILL

Virtual VCRs are one thing, but before jumping into the interactive movie market, we must raise some serious doubts about the viability of the use of real video in games.

Games, and indeed anything that people interact with, rely on a high replay and reuse factor. Although a fascination with gaming itself keeps kids coming back to stores for more and more video game titles, they — and their parents — won’t pay $59 (standard rate for a 16-bit video game title for Nintendo or Sega) too many times for something that bores them after four or five plays.

How many times, after all, can you watch and listen to an actor say, in a voice pregnant with meaning, “Oh no, who’s at the door?” even if it’s part of the game action? At some point you’ll going to say, “Yeah, yeah, shut up already, and shoot the guy.”

Zito disagrees; he thinks the question is irrelevant, that games like Night Trap are just “PacMan with people — you go through a maze and get things into little holes and avoid monsters” — but we feel fairly certain that after the novelty of talking video wears off, players are likely to prefer a symbolic figure to a literal one.

However, it would be nice to be wrong. It would be very depressing to find that an idea that’s tickled the fancy of so many creative people for so many years — the so-called “interactive movie” — might have been ill-conceived. This new and growing genre, so obviously appealing to Hollywood’s creative community, will be where the action is, and will certainly be the most interesting to watch. It’s almost certain that what “catches on” will be very different from what we’re thinking today.

David Baron, Janice Maloney, Denise Caruso

COMPETITION REALLY WORKS

First Cities is perhaps the broadest alliance that’s attempting to pull together a new network infrastructure, but it certainly isn’t the only action in town. If anyone had doubts about the effectiveness of competitive pressures for spurring investment and innovation, just look at what has happened in the U.S. in the past month alone.

WIRED SERVICES

In wired services, Bell Atlantic demonstrated transmission of one channel of MPEG compressed digital video over an existing twisted-pair copper phone line. Northern Telecom, Pacific Bell and IBM announced a technology alliance they hope will eventually allow phone companies to transmit digital video to a subscriber’s home over existing phone lines. The hardware, they say, is available immediately. Both initiatives presume that the video service provider (who may or may not be the phone company itself) has a video “server” capable of calling up and transmitting a different video signal to each subscriber who dials in.

Then Viacom and PBS announced selection of vendors to provide them with hardware for satellite delivery of compressed digital video. TCI announced its selection of technology and partners for home delivery systems at the Western Cable Show in Anaheim.

All three expect to have systems in operation within the year. In fact, they are so concerned about getting service off the ground as quickly as possible that they are willing to start with technology that may have to be retrofitted at a later date rather than waiting for standard digital video compression technology to gel. (See related stories, starting p. 19.)

The cable industry expects to broadcast hundreds — or even thousands — of channels concurrently, with the “switching ” (program selection) most likely taking place at the subscriber end. The differences in existing infrastructure are likely to give us two very different approaches to achieving similar objectives.

No one involved in these processes has the slightest illusion that either the phone companies or the cable industry would be pushing as hard as they are without the prospect of competition from the other, as well as from direct broadcast satellite. The faster each party moves, the faster the others are compelled to move.

Equally important, if we play our cards right, we will have three or even four alternative delivery systems for video programming (broadcast, cable, telephone and direct broadcast satellite). This is how you control cable rates!

WIRELESS PHONE SERVICE

The wireless industry is moving just as fast. The biggest announcement was AT&T’s last month; it agreed to spend nearly $4 billion to purchase a one-third interest in the biggest cellular company in the U.S., McCaw Cellular.

In essence, this puts AT&T into position to move back into local phone service. Forced to divest its regional Bell operating companies by the 1984 Consent Decree, AT&T — via McCaw — gains access to a cellular network that services 40 percent of the U.S. population and the majority of its larger cities. And, the rapidly growing cellular system does not carry any obligation to serve low-volume (and mostly low-income) phone users. Its customers are the “cream” of the phone market.

Rival MCI countered almost immediately with an announcement (mostly for show, some say) that it was establishing a consortium for a nationwide PCS (Personal Communications System) which, by virtue of using much smaller cells than conventional cellular, promises smaller and cheaper phones and lower-cost service.

By Nov. 9 (the final date for submissions), the Federal Communications Commission had received more than 100 proposals for PCS systems.

The cellular industry, very concerned about impending competition from PCS services, issued a Request for Proposals for a nationwide switching system that would tie together regional cellular networks. The objective (as with both PCS and satellite-based phone systems such as Motorola’s Iridium) is to provide a transparent nationwide network that will automatically direct calls to a cellular phone no matter where in the country it happens to be.

Cable operators, too, have long been hopeful players in the PCS arena. They hope to use the cables they control as high-bandwidth backbones to link together all of an area’s PCS transmitter/receivers. The missing component is the switching logic to “hand off” a call as the device moves from one cell to the next.

Everyone we talk with tells us that they are driven to meet this or that target because of competitive pressures. Competition really works.

Jonathan Seybold

>NEWS

CABLE BEGINS DIGITAL TRANSMISSION
‘We can’t wait for standards’

Spurred on by the threat of “video dial tone” from the telephone companies, the cable industry is rushing to select and put into place compressed digital video distribution systems. CableLabs, the industry’s technology clearinghouse, put out a Request for Proposals (RFP) for digital video compression/decompression technology that would meet the requirements of the cable industry.

The signatories, or sponsors of the RFP, were TeleCommunications, Inc. (TCI), the largest cable operator in the United States; Viacom, which is both a huge operator and a program originator (MTV, Nickelodeon, etc.); and the Public Broadcasting System (PBS). This past month, two of those companies, Viacom and PBS, announced their intentions to purchase and install digital compression and delivery technology. TCI made its announcement at The Western Show in Anaheim, CA, in early December.

True to its word, CableLabs and the cable industry appear to be moving much more rapidly than anyone outside the cable industry had thought possible — certainly much more rapidly than virtually anyone in the computer industry had expected.

Different initial objectives. The initial focus of both Viacom and PBS is to use digital technology to deliver programming to cable operators, broadcasters and hotels via satellite. Digital technology will allow many more programs to be delivered over the same satellite channel. It also should be able to deliver higher quality images, and, as an interesting by-product, foil satellite viewers (at least for a while) who try to pick up the signals via the analog receivers attached to their dishes.

TCI, on the other hand, appears to be interested in moving directly to digital delivery of programs to the home.

Setting standards. CableLabs’s charter is to evaluate new technologies and help the operators implement successful technological upgrades without becoming entirely incompatible with each other. It is funded by the cable operators, and has no authority to enforce standard procedures, nor does it make any purchase decisions for its constituency.

Instead, it evaluates and leaves decision making to the individual companies. According to Mike Schwartz, vice president of communications for CableLabs, each company has its own set of criteria, market dynamics, business relationships, etc., and it would be impossible for centralized decisions of this kind to be made.

However, CableLabs understands the importance of standards, both within the cable industry and cross-industry. This is why it has been working closely with the computer industry (to increase the chances that the cable industry and the computer industry will pick the same digital video standards) and with the Japanese consumer electronics giants (to insure that the new generation of digital VCRs, due out this coming year, will be compatible with digital cable).

CableLabs would very much like the cable industry to use a widely supported digital video standard, which is why it has had a strong bias toward MPEG-2 (see accompanying story).

Different directions. Unfortunately, PBS and Viacom chose different, incompatible systems. Viacom announced its intention to purchase a system from Scientific Atlanta, which is based on the MPEG-2 compression standard. But PBS chose an implementation by General Instruments, which employs a proprietary compression algorithm.

At first glance, it would appear that the cable industry is heading for a mess of incompatible data formats and systems. This would be a disaster not only for the cable industry, but also for consumer electronics and digital communications in general. However, things are not so bleak as they seem.

HOW THEY’LL USE THE DIFFERENT SPECS

The MPEG-2 specification is almost, but not quite, complete. According to David Taylor, director of marketing for communications products at CCube Microsystems, the MPEG2 spec will be finalized in March, and the first chips won’t be appearing until later in the year.

C-Cube has been a leader in the MPEG-1 and MPEG-2 standards-setting process and is the primary manufacturer of the chips that compress and decompress the video signal. However, the company has been manufacturing chips that are compatible with the latest specs of the MPEG committee, and will continue to update its chips as the latest developments occur. Scientific Atlanta’s implementation will be installed in stages, with the capability simply to swap cards in the hardware at each site as the new MPEG-1-compliant chips become available.

Hotels and motels. Viacom will first use the digital video system in 3,000 hotel and motel sites with satellite downlinks. Each downlink location will have a receiver and decoder/decryption unit. According to Bob Meyers, vice president of corporate communications for Scientific Atlanta, the first products will be available this December, and the entire network will be in place by the end of the first quarter of 1993. Soon after will follow the “backyard market,” or home satellite dishes, and ultimately television set-top decoder boxes.

General Instruments, which is a major player in cable and broadcast delivery systems, had developed its own, proprietary algorithm for encoding and compressing digital video. Recently, however, the company became very involved in the activities of the MPEG committee, and is trying to make its technology comply with MPEG. In fact, according to C-Cube’s Taylor, the MPEG committee is “just converging outstanding issues of technical diligence,” including some proposals from GI that might move its technology toward that of the MPEG standard.

Wake-up call. Other satellite and cable suppliers have now awakened to the importance of standards. Both Hughes’ DirecTV and its rival in direct broadcast satellite, PrimeStar, have become participants in the MPEG-2 process. Both products are MPEG compatible, if not quite compliant, and both Meyers and Taylor see the rest of the industry following suit.

So the questions remain: Why did PBS choose a system that was not already MPEG-compliant? Why is Scientific Atlanta installing systems that will have to be upgraded almost immediately?

Shoot first, ask questions later. The reason, according to Schwartz, is that “the cable industry can’t wait for the standard process to play out.” Viacom and PBS made their announcements immediately after the FCC hosted a technology demonstration of video over telephone lines, and Bell Atlantic demonstrated its version of the video dial tone. With competition from the telephone companies heating up fast, the cable industry will not be waiting for the MPEG committee to finish its work.

We can expect to see the first implementations of digital video compression and delivery systems in 1993. In the meantime, manufacturers and suppliers will develop more extensive systems, including digital video to the home, which will, or should, follow cross-industry standards and guidelines.

TCI MOVES TO THE SET-TOP

In an announcement made just before Digital Media went to press, cable vendor TeleCommunications, Inc. (TCI) announced its plans for digital compression and delivery. As expected, the announcement included plans for delivery of digital information directly to the home. What was not as expected was the scope and speed with which TCI is planning to implement such a system.

The company’s partners and suppliers of the compression technology are General Instruments and AT&T, using the same technology chosen by PBS. However, the announcement explicitly states that TCI’s new technology will be MPEG-2 compliant by the time it is deployed.

In addition, TCI, General Instruments and AT&T will license parts of their technology to other cable television suppliers, like Scientific Atlanta. In this way, their technology may become the standard of the entire cable industry. The concept is not out of the question: TCI has more than 10 million subscribers in the United States, and is the largest of the nation’s multiple service operators, or MSOs.

The agreements (in the form of letters of intent) with GI and AT&T call for the purchase of one million TV set-top decoder boxes. TCI also said it will be negotiating with other vendors for additional purchases. It will begin digital satellite delivery in mid-1993, and digital home delivery, via fiber and coaxial cable, by January 1994.

TCI made no announcement about the deployment of fiber optic systems, or the upgrade of its infrastructure. However, the compression and transmission technology it announced will ultimately be able to acheive a compression ratio of 10:1.

That means that for most of TCI’s customers, who have 54 channel systems, the new technology will provide the potential for 540 channels. TCI is already entertaining proposals for new services outside the realm of traditional cable television broadcasting, such as interactive video, information and data services and personal communications and voice services.

David Baron, Jonathan Seybold

‘GOLDEN SPLICE’ LINKS ISDN NETS
Analogy to railroads apt in many ways

Although there weren’t any ponies or free beer, the ceremonial cross-country ISDN link-up at TRIP ‘92 near Washington, DC, had everything else: famous men, politicians and schoolchildren. Bob Metcalfe, the inventor of Ethernet, served as the event’s master of ceremonies. The U.S. Commerce Secretary and Virginia’s lieutenant governor made speeches that were more-or-less focused on the subject at hand. The kids showed their drawings depicting various benefits of ISDN and spoke their well-memorized lines.

The occasion was the first public transcontinental voice-and-picture phone call over ISDN basic-rate lines. From a Hyatt Regency hotel ballroom in Reston, VA, ISDN calls quartered the nation to Redstone Arsenal (Huntsville, AL), Jet Propulsion Laboratory (Pasadena, CA) and the Ameritech Center (Chicago, IL). In a reference to the driving of the Golden Spike linking the transcontinental railroad in 1869, this symbolic linking of the heretofore separate central switches was designated the “Golden Splice.”

The ceremony was marred by technical difficulties; during the first half of the presentation, the audio kept breaking up. After a while, technicians tracked the problem — not to the ISDN hookup, but to an intermittent ground connection in the hotel’s wiring closet. Metcalfe reminded the audience that the Golden Spike Ceremony had its glitches too: The ceremony was delayed two days because of rain, and the first dignitary to swing a sledgehammer missed the spike entirely.

WHAT EXACTLY IS ISDN, ANYHOW?

ISDN, which stands for Integrated Services Digital Network, provides several independent 64-Kbps data channels, along with a digital control channel that handles call setup and takedown, over a single physical connection between the phone company and the subscriber. The phone company’s switching gear can connect each channel to a different destination. A channel can carry computer data, digitized voice, fax transmissions, video or any other digital data.

A standard voice line (POTS, for Plain Old Telephone Service) usually carries analog signals. Transmission quality varies widely depending on the distance the signal must travel and the number of intermediate central switches it must cross. However, the typical quality is usually equivalent to a bandwidth of 10 Kbps or so. On long-distance calls, echo-canceling filters limit the audio bandwidth to about 3 Kbps for each direction, or 6 Kbps for the conversation. (Modems and fax machines emit tones that suppress the echo-canceling mechanism, because they only transmit one way at a time.)

APPLICATION DEMOS COVER A BROAD RANGE

On the trade show floor adjoining the ceremony, two dozen vendors touted equipment and software to take advantage of ISDN lines. Common applications included:

• Home office. Telecommuting is being touted as one way to meet commuter-restriction laws by having staffers work at home a few days each week. The at-home office needs a voice line (probably with call-waiting features), a fax line and a computer link to the corporate LAN. Fortunately, most workers don’t use all of these services all the time, so they can share a low-bandwidth 2½-channel ISDN line. The telephone receiver contains the logic to route the data and fax calls appropriately.

In one press kit, we saw a detailed cost comparison between an ISDN-equipped office and a POTS-equipped office. The total costs of equipment and operation are remarkably similar.

• Wide-area networks. By joining several 64-kilobit channels together, you can obtain greater bandwidth. Note, though, that there is no standard protocol for interleaving the data across the channels, so you must use the same brand of router at both ends. A standard, known as H0, has been proposed but is far from adoption.

We saw the same technique of linking several channels being used for video conferencing. By combining moderate frame rates, modest amounts of on-the-fly compression and multiple ISDN lines, a fairly credible moving image can be presented.

• Graphic image databases. Kodak showed its Photo CD image library concept (see Vol. 2, No. 4, p. 5), pointing out that an ISDN link would obviously be better than a slow 9,600-bps link for sending pictures.

• Remote medical consultations. This would enable doctors to simultaneously talk and view diagnostic images in real time across a phone connection. The best specialists in the land would be available to small-town GPs everywhere (for a nominal fee, no doubt).

Conference attendees were told that 22 central offices in the U.S. have interLATA (i.e., long distance) ISDN connections. Another 84 exchanges have installed ISDN-capable gear and will shortly be linking them to the national network. By the end of 1993, Bellcore estimates that 1,700 exchanges will be ISDN-equipped, and by the end of 1994, half of the exchanges in the land will be able to offer the service.

The service that Bellcore is talking about is the Basic Rate Interface, which provides two 64-Kbps signal channels plus one 16-Kbps control channel. (The control channel can also carry a 9,600-bps fax or data link.) Together with a limited set of central office features such as billing and the conversion to and from ordinary analog lines, it makes up the National ISDN-1 (NI-1) standard. NI-1 also allows some optional features, such as caller identification, call waiting and call forwarding.

From the user’s perspective, NI-1 has two advantages. First, it can be carried on the copper pairs that are already installed; no need to run new, expensive fiber or dedicated wires. Second, all conforming equipment is interoperable throughout the U.S. You will be able to buy telephones, Group IV faxes, computer interfaces and so on from many vendors and simply plug them in, no matter what kind of switchgear your local phone company has installed.

A GLOBAL MARKET IN A YEAR OR TWO …

Waiting in the wings is the proposed NI-2 standard, which will be upward compatible with NI-1. The principle reason that NI-2 has not already been promulgated is that its sponsors are coordinating its development with CCITT, the organization that sets the international standards for telecommunication.

Thus, when NI-2 is adopted, conforming equipment will plug in anywhere in the world — which means a global market and global competition among vendors.

NI-2 also standardizes the Primary Rate Interface, which provides 23 64-Kbps signal channels and one 64-Kbps control channel. This is equivalent to today’s T1 service (the same 1.5 Mbps total bandwidth), except that it is divided into independent channels. American businesses cannot get Primary Rate service from their local phone companies today, but they can buy it directly from Bell, MCI and Sprint. However, customers must verify that their equipment is compatible with the central switch that serves their location.

WHEN IS A STANDARD NOT A STANDARD?

One up-and-coming alternative to ISDN, called Asynchronous Transfer Mode or ATM, is something that no one at the TRIP ‘92 conference wanted to discuss, presumably because that’s not what they were selling. Proponents of ATM say that ISDN has long been bypassed by superior technologies, and as a result should never be allowed to catch on.

However, the regional Bell companies, as well as long-distance carriers such as Sprint and MCI, are in the driver’s seat; they already have businesses and homes wired for ISDN-1 and are busily installing central switches that handle ISDN. Since this is what they’re peddling, and we don’t have anything else to buy today, ISDN is likely to become the de facto digital telephony standard even if it’s already obsolete.

Peter Dyson

>BRIEFS

MACROMEDIA SUPPORTS SCRIPTX

Macromedia, the pre-eminent authoring tools company for multimedia, has announced its plans to support the ScriptX multimedia description language developed at Kaleida Labs, an Apple-IBM joint venture company.

The announcement was made during Macromedia’s developer conference last month, and for some reason was greeted with very little fanfare, considering the potential consequences. MacroMind Director and Authorware Professional are the “kleenex” of the multimedia world, with a box on every developer’s desk. And the company’s support of Kaleida, especially considering that many thought it would never support a “competing” scripting language, bodes well for Kaleida at least in the PC-multimedia world.

In the short term, Macromedia’s endorsement of ScriptX should ensure cross-platform playback capabilities of interactive multimedia titles developed using Macromedia applications. The company said it will release translators in the second half of 1993 to let MacroMind Director and Authorware Professional files run on any playback devices that support ScriptX, including consumer electronic machines.

In the long term, the announced support for ScriptX from one of the most powerful multimedia players in the field may fast-forward the adoption of this multimedia description language as a standard, encouraging smaller companies to make a commitment to Kaleida’s technology and to cross-platform file compatibility. Macromedia’s support is a powerful crowbar for Kaleida in the markets that are crucial to its success.

EO MAKES LESS-THAN-IMPRESSIVE DEBUT

EO, Inc., the Mountain View, CA-based startup, provided technology demonstrations of its personal digital assistants at Comdex last month. The EO Personal Communicator 440 and 880 combine pen-based computing, fax, electronic mail and cellular phone capabilities.

The 440 is 2.2 lbs. and the 880 is 4 lbs. Each measures more than 10×7 inches in size. A demonstration proved the size to be clumsy for use, even on a table top, and system operation was painfully slow.

The first models, which are not expected to be shipped until the second quarter of 1993, will be available in five different configurations, according to EO, ranging in price from $1,999 to $3,299 — a hefty price tag for a not-so-portable device.

EO’s products are based on AT&T Microelectronics’s 20- and 30-MHz Hobbit RISC processors and GO Corp.’s PenPoint operating system. Each comes with 4 to 8 MB of memory, expandable to 12 MB through user-installable cards, and an internal fax modem. A cellular phone option is an additional $799. In addition, the company has included standard PCMCIA card slots, a SCSI port and other features.

EO has made some smart moves, such as its partnerships with Japanese consumer electronics giant Matsushita for manufacturing technology, and with telecommunications giant AT&T for communications technology and prodigious numbers of sales outlets.

Its ultimate fate, however, will almost certainly be determined by third-party support. AT&T Mail from Easylink Services provides E-mail services and gateway access to many online services, including the Internet, CompuServe, MCI Mail and Sprint Mail. In addition, some productivity applications will be bundled with the communicators.

Third-party developers, however, have yet to be swayed to EO’s platform en masse. “Content is important to us, but very honestly right now content providers aren’t there for us,” says Pam Miller, EO’s VP of marketing.

Instead, EO believes its initial corporate business customers, which it names as Aetna Insurance, Levi Strauss and NBC TV stations, have a pressing need for mobility first, and for content applications second.

Apple is expected to give EO some competition in 1993 with an introduction of its Newton personal devices, as is the Tandy-Geoworks-Casio joint venture for PDAs and Apple’s spinoff, General Magic (how that’s going to work, we’re anxious to see … ). It has yet to announce expected functionality and a finalized price point, however.

(Correction: In Vol. 2, No. 5, p. 19, figures for EO’s upcoming products were listed as $150 and $250, instead of $1,500 and $2,500. We regret the error, though we wish we’d been right.)

AMERICA ONLINE ALLIES WITH PRINT MEDIA

America Online (AOL), a publicly held, independent online information service based in Vienna, VA, has found a substantial niche in niches. Its subscriber base has jumped to a record 200,000, a 40 percent increase over last year at this time, and the company is making significant, forward thinking alliances with major print media that should continue to grow the company right into competition with the Big Boys of online services such as CompuServe and Prodigy.

AOL’s media alliance programs provide both regional and national perspectives online from respected newspapers and publications. Its “electronic communities” program, for example, connects AOL users in different parts of the country with regional news and information from area newspapers, such as the San Jose [CA] Mercury-News (by 1993) and the Chicago Tribune (already in service). Local connections provide interactive forums to discuss area politics, sports scores, employment classifieds and social events, and also link with AOL’s entire national service [where, by the way, Digital Media's editor is a forum manager] as well as regional.

In addition, AOL’s media alliance programs supply national electronic information from widely distributed publications such as National Geographic, Macworld and PC World. The Washington Post, which began providing national political coverage on AOL prior to the presidential election, will continue to offer insights into the Clinton-Gore presidency; New Republic, winner of the 1992 National Magazine Award for General Excellence, will debut its first electronic edition on America Online this month; and CNN Newsroom, from Turner Educational Services, an interactive forum that serves as a companion to CNN’s Democracy in America, CNN Newsroom and Network Earth TV programs.

CNN Newsroom went live in October, and the Network Earth interactive forum is expected to be up by January 1993.

AOL has been selected by the Newspaper Association of America to host a private online forum for professional exchange for its 1,700 newspapers nationwide.

MICROSOFT RELEASES FIRST DORLING KINDERSLEY TITLE

After a two-year gestation period, Microsoft has released a new multimedia CD-ROM title based on a highly publicized joint effort between Microsoft and London book publisher Dorling Kindersley. Part of DK’s Eyewitness Series, it is the first release incorporating the valuable DK library to which Microsoft acquired electronic rights in March 1991.

Microsoft Musical Instruments for Windows will hit retail shelves in December at a suggested price of $79.95. The title will also be on display at New York City’s Metropolitan Museum. Included are more than 200 essays or articles, more than 500 photographs and 1,500 sound samples.

Microsoft licensed most of the photographs from DK for the project. The text and sound samples as well as software development and design implementations were generated by both companies, according to Microsoft product manager John Porcora.

Microsoft’s partnership with Dorling Kindersley began in March 1991 with Microsoft’s purchase of 26 percent strategic share of DK. As a part of the agreement, the Microsoft Multimedia Publishing Group gained exclusive rights to license content from Dorling Kindersley book titles for use in multimedia software titles.

SONY ANNOUNCES ‘EYEPHONE,’ VISORTRON

Last month, Sony’s research labs in Japan announced the development of a prototype “eyephone,” or personal LCD monitor, dubbed the Visortron. Engineers have embedded two high-resolution monitors for each eye — 0.7 inches square and 103,000 pixels each — in a ski goggle-type apparatus. Because it is possible to present separate images on each, viewers are able to see 3D images and images with the depth and dimension of a large-screen TV, according to Sony.

The company says that if the technology is commercialized, its applications might include in-flight entertainment, video games and head-mounted displays for virtual reality. As a VR headset, the Visortron would beat the heck out of what’s available today; the visor weighs only 250 grams, or almost 9 ounces — just more than half a pound.

Since this isn’t a product announcement, Sony didn’t reveal a price or introduction schedule. Others who’d seen the prototype say it includes Walkman-style earphones on short string leads from the sides of the goggles and a playback box attached by a cable.

The control box is about the size of a Passport video camera (slightly smaller than two VHS cassettes stacked on top of each other), but observers believe that one quarter of the size may actually be a battery. It’s not clear what exactly will be “played” in the control box.

If the Visortron is of high enough resolution and low enough flicker, it could give such VR viewer vendors, such as VPL Research and Fake Space, a stiff dose of competition. If the price is around that of a desktop monitor or LCD display, it might also be adopted for use in data visualization applications.

In any case, it would behoove Sony and others considering entering this market to do some serious ergonomic studies on the impact of electronic gear that close to the surface of the eye. We should not go into such a market blind, lest we leave it the same way.

C-CUBE SHIPS MPEG1 VIDEO ENCODER

While many broadcasters anxiously await the arrival of an MPEG-2 standard for video compression (due to appear in March 1993), some companies are showing an interest in working with today’s MPEG-1 technology. C-Cube Microsystems has released a software package, MPEGtool, for encoding digital video into MPEG-1 syntax.

A single-user license for MPEGtool, which runs on a Sun Sparc workstation, is available for $35,000. It enables the compression of video and is designed primarily for CD-ROM.

However, MPEGtool is also being used as an interim solution for sending video over telephone lines. In fact, one of C-Cube’s first customers was Bell Atlantic, a telecommunications company that is experimenting with sending video over standard telephone lines. C-Cube is supplying Bell Atlantic’s Project Edison with video encoded by MPEGtool for its test transmissions across plain-old copper wires.

Video encoded with MPEGtool will not achieve broadcast-quality levels. But for certain applications — such as testing the viability of video over telephone lines — Art Richards, manager of research and development at Bell Atlantic, says C-Cube’s MPEG algorithm “works. It seems to be of VCR quality, which is the target.”

MPEGtool is based on the MPEG1 video compression standard, which is optimized for CD-ROM technology; that is, the MPEG-1 standard sacrifices high resolution for the capability to move data according to the slow CD-ROM transfer rate. Faster CD-ROM drives are now coming on to the market.)

In the first half of 1993, C-Cube plans to offer a hardware-based MPEG encoding solution for Sparc VME systems. Also, MPEGtool will be ported to other platforms as demand dictates. (See p. 20 for a description of MPEG1 and MPEG-2.)

NBC TRIES ‘DESKTOP NEWS’

IBM, NBC and NuMedia Corp. have entered into a joint agreement to develop and test market a multimedia news delivery service. Beginning this month, the nationwide test service called NBC Desktop News is designed to send customized clips primarily from NBC news broadcasts to PC users.

The proposed service will deliver text, graphics, video and sound in a format designed to look like broadcast news. Users can customize the service to include their own material, such as training programs or corporate news. When the service comes out of testing, monthly subscriptions will range in price from $14.95 for basic services to $200 for customized functions.

The goal is to “deliver information to people anywhere, anyplace, anytime, in any form,” says Mike Wheeler, NBC consultant for the project. Headline news, including business and financial market information, are included in the basic subscription service. Information will be updated every two hours. For an additional fee, subscribers can request industry-specific information and can customize how it is received.

The service employs NuMedia’s patented Desktop TV (DTV) system. DTV is multimedia software that accesses and manages live broadcast feeds and other input to PCs. Both analog and digital systems will be evaluated during the test period. The digital system will download information from a satellite to a PS/2 server for data distribution via local area networks. For the analog test system, IBM’s PS/2 TV board and F-couplers that can connect to building wiring, such as shielded twisted pair and coaxial cable, will be used.

The initial test period will continue through mid-1993, and programming will be delivered via satellite to registered sites. Broadcast, fiber optic and cable delivery systems are under review.

NEWSWEEK PUBLISHES INTERACTIVE MAG

Beginning in January 1993, Newsweek will begin publication of Newsweek Interactive, the first subscriber-based general-interest magazine to be published on a CD-ROM disc.

This quarterly, electronic version of the popular news magazine will include text, animation, video, photo essays and sound, and will be produced using technology from Software Toolworks of Novato, CA. Initially it will play only on Sony’s portable MMCD player, which ostensibly adheres to the CD-ROM XA standard.

The first Newsweek Interactive disc, “Unfinished Business: Mending the Earth in the Nineties,” will be mailed free to those who buy the Sony multimedia player.

Newsweek believes CD-ROM distribution makes sense for its readership; its research shows that 7.6 million of the 23.5 million people who read the printed edition worldwide either own or work on a personal computer. (The study does not reveal, however, how many of the individuals surveyed own or have access to a CD-ROM XA drive, however, a slight sticking point.)

The company hopes the interactive version will give people with the proper equipment a new way to experience the Newsweek perspective. But it says Interactive is not a substitute for the print version. In addition to a different publication schedule, it will contain material that does not appear in Newsweek, including articles from The Washington Post and audio interviews from the Associated Press Radio Network’s Newsweek on the Air program.

The magazine is expected to be ported to multimedia-capable IBM PCs and compatibles by early 1993, with Software Toolworks distributing the discs to retail stores by spring.

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