Ready for Prime Time?

By PHILIP ELMER-DEWITT/ORLANDO

It was, if nothing else, a smooth presentation. Remote control in hand, Time Warner chairman Gerald Levin last week greeted a crowd of skeptical reporters in an Orlando, Florida, hotel ballroom, then pushed the "on" button and, with the help of Jim Chiddix, Time Warner Cable's technology chief, began the first public demonstration of the world's most sophisticated -- and expensive -- interactive-TV system.

Nearly two years have passed since Levin announced Time Warner's plan to invest $5 billion over five years for construction of what he called the Full Service Network. Within 18 months, he promised, his company would begin delivering interactive-video services to an area embracing 4,000 Time Warner Cable customers in suburban Orlando. It was now eight months late and at least 3,995 customers shy of the target, but Levin finally had something to show.

First he ordered a movie: a Sylvester Stallone vehicle called the The Specialist (cost: $2.95). Then, pressing the "fast-forward" button on his remote, he zipped ahead to what he said was his favorite scene -- Sharon Stone bending down to place flowers on the grave of the family she had lost to a mob bombing. He pressed "pause" and, like a gadget-crazed kid, began putting his multimillion-dollar toy through its paces. With The Specialist still on hold, he ordered a second movie, The Client, fast-forwarded to another favorite scene -- where Susan Sarandon is deciding whether or not to take Brad Renfro's case -- and pressed "pause" again.

"Now let's see if we can break it," he said. With both movies on hold, he returned to the main menu -- a revolving carousel offering shopping, games, sports, news, movies. He entered a computer-generated shopping mall, complete with a white stucco Crate & Barrel store and the curved glass facade of Sharper Image. He visited a Post Office shop that offered next-day stamp delivery and three-hour package pickup. He popped into the Warner Bros. Studio Store, where he ordered a pair of $10 raspberry-colored baseball caps. He visited the video-game area and played interactive gin rummy with the Willards, the FSN's first live customers, who were sitting at a TV set down the road.

Finally he returned to his movies to see whether the system remembered where he had left off. He selected The Specialist, and sure enough, there was Sharon Stone, still bending over that grave with the flowers in her hand. The room burst into applause.

This was the holy grail of interactive television: true video on demand. What you want to see, when you want to see it, delivered to your TV and only your TV. And it was real. Not a "proof of concept" demo, but a working system being used in at least a handful of customers' homes.

The FSN system, built in collaboration with Silicon Graphics, AT&T, Scientific-Atlanta and a long list of subcontractors, is almost dizzyingly complex. Huge racks of computer disk drives called file servers store movies and other "video assets" in digital form. Giant switches called ATMS shuttle prodigious quantities of data at blistering speeds. A set-top box with five times the computing power of a top-of-the-line IBM PC downloads images from the server at the rate of 30 pictures a second. Press a button on the remote, and the signal travels through cable-TV lines, fiber-optic wires, switches and servers on the other side of town in less time than it takes for a conventional remote control to change the channel on a TV set across a living room.

In hands-on tests, the system rarely tests your patience. Click on a selection, and the network responds almost immediately. It feels "alive" -- almost too much so. Whatever category you select starts promoting itself immediately, pitching a product or showing a movie trailer. But if you don't like what you see, you can always move on. Hitting the "carousel" button, for example, takes you back to the main menu. There's also a handy "skip forward 10 minutes" button, which turned out to be perfect for finding Elle MacPherson's nude scenes in Sirens -- without having to sit through the movie.

It looked good -- if you discount the "boggle" factor. This is a psychological effect Stewart Brand describes in The Media Lab, his 1987 book about M.I.T.'s cutting-edge research facility. It's a sensation familiar to anyone who has spent a day at a high-tech trade show or an hour with a fast- talking computer salesman. Too much happens too fast. There is too much hand waving, too many new things with new names. "The potential for being bamboozled," writes Brand, "is total."

In the mind-boggling hoopla last week, it was easy to forget that much of the system being demonstrated was still under construction, including the all- important network operating system that is supposed to field, smoothly and transparently, simultaneous requests from the remote controls of thousands -- and eventually millions -- of customers, even when large numbers of them are trying to watch the same hit movie at slightly different times.

The boggle factor was most intense in Time Warner's Future Services exhibit, where more than a dozen potential services were on display -- from sports on demand to an instant medical-checkup service. In one such service, rock musician Todd Rundgren showed off his interactive music system, which allows customers to select listening choices by artist, style, tempo or mood. In another, ShopperVision demonstrated its "virtual" supermarket, where customers can browse 3-D aisles, choose among 20,000 kinds of packaged goods and order for same-day delivery.

But none of these applications are up and running on the FSN, and many of them are still in the earliest stages of development. Even the News Exchange, one of the most advanced, has some big hurdles to overcome. It's a video news- on-demand system that would allow subscribers to pick and choose from a constantly updated menu of stories from ABC, NBC, CNN, two local TV stations, the Orlando Sentinel and several Time Inc. publications, including TIME. "Ideally, you want to be able to see the 6:30 news at 7:01," says Walter Isaacson, editor of new media at Time Inc. But right now, because of equipment shortages, getting a news tape edited, digitized, compressed and loaded on the system takes nearly a week, by which time it's no longer news.

Critics of interactive television say there are even deeper concerns. "All these other services are just window dressing," says Mark Stahlman, president of New Media Associates. "The key to this whole thing is video on demand. Is it or isn't it a business? If it is, it's a huge opportunity for Time Warner. If it isn't, the whole house of cards falls apart." Early trials of interactive TV, he points out, were not encouraging. In one test of a relatively primitive system, families ordered only 2.8 movies a month -- hardly enough by itself to justify the billions it will cost to deploy the FSN.

But Levin insists that the only consumer trials that count are ones that offer TV viewers state-of-the-art interactivity, and that the time to conduct those tests is now. "Sooner or later, every significant player in the information and entertainment industry is going to have to understand the implications of broadband digital interactivity," says Levin. "Except as / every competitor in the cable industry already knows, sooner isn't only better, it's often everything. The FSN will drive home this lesson with unforgiving velocity."

With reporting by Richard Woodbury/Denver