SBC Joins the Convergence Crowd

The siren song of digital convergence appears to be claiming another victim: SBC Communications (SBC).

Following the treacherous route previously navigated by Microsoft ( MSFT) and others who have tried to merge the personal computer and television experiences, SBC on Monday announced a new venture designed to meet Americans' ostensibly overwhelming demand to use their TV sets as digital camera slide projectors or caller ID readouts.

With the wireline phone business being eroded by wireless, and cable operators like Comcast ( CMCSA) muscling in, SBC and other telcos are looking to video and entertainment as opportunities for growth -- as they often have in times of uncertainty.

Monday's announcement -- which follows SBC's November announcement that it will be spending billions to build a fiber-optic network for delivering TV signals to households -- is a further illustration of the telco's desire to be a major player in the multimedia entertainment business.

But SBC's ungainly sounding description of the hardware central to the venture -- a box that combines a satellite TV receiver, digital video recorder, video-on-demand delivery system, music jukebox, caller ID display and photo viewer -- raises the question of whether potential customers will view SBC's hydra-headed offering as a panacea or pestilence.

In theory, it may seem obvious that consumers would want a grand unifying device to easily mesh all the gadgetry in their households. As SBC spokesman Andy Shaw explains, the company's set-top box, offered in conjunction with privately held 2Wire, will let people connect their computer with their TV and stero system "without having to be a serious geek to do it."

But in practice over the past few years, marketers have consistently overestimated end-users' desire for such convergent visions, or to watch any displays on their TV sets other than movies and TV shows.

"I suspect it will fail," says Phillip Swann, a writer and consultant who is president of TVPredictions.com. "They're not communicating something that will enhance the traditional television experience," he says. Rather, he says, SBC is offering something that will intrude on the television experience, or complicate it.

To use the new service, which SBC plans to roll out in mid-2005, consumers will have to subscribe to both satellite TV, via SBC's joint venture with EchoStar Communications ( DISH), and DSL service, via SBC's joint venture with Yahoo! ( YHOO).

At the heart of the service will be a satellite TV receiver with built-in digital video recorder -- one which will enable users to access digital pictures, via their TV, and music, via their stereo systems, that may be stored elsewhere in the household on a PC. Using any computer with Internet access, consumers will also be able to program their home DVRs to record particular programming. At some point in the future, consumers will also be able to access their home networks via SBC's majority-owned Cingular Wireless.

"The big story is the integration -- making all these disparate products talk to each other," says Shaw, not just putting a number of different products together on one bill.

And though TV slide shows have been around for years without the phenomenon having taken off, Shaw says there's a demand for it, analogous to people's interest in watching vacation videos. "We think there is great benefit to this," he says.

But Swann is skeptical about putting the square peg of computing into the round hole of television. "Every time they talk about PC-like features on the TV, they lose about 96% of their potential audience," he says. "They're doing things because they can, not because people want them."

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