TCI, TW may team with Microsoft

Two of the nation’s largest cable operators may team up with the world’s biggest computer software company to promote a standard for interactive TV.

Cable companies Tele-Communications Inc. and Time Warner Inc. are in negotiations with Redmond, Wash.-based Microsoft Corp. over a new joint venture, tentatively called Cablesoft, according to a report in the New York Times.

The move would effectively create a cable industry standard for software that controls the TV set-top box. TCI and TW Cable have an estimated 18 million subscribers, or 32% of cable households.

Reps for both cable companies would not comment on Sunday.

The CEOs of the three companies — Gerald M. Levin of TW, TCI’s John C. Malone and Bill Gates of Microsoft — have been meeting to discuss the deal, according to several exex following the talks.

Sources said the venture would not be exclusive to cable providers, but open to telecommunications companies as well.

“I wouldn’t be surprised if AT&T is involved,” said Denise Caruso, editor of Digital Media, an industry newsletter. TCI and AT&T already have engaged in limited video-on-demand experiments and are expected to make a larger agreement soon.

At stake are two separate levels of software. For consumers, there is the on-screen menu that sends commands from the home to the cable operator, such as a movie selection or the ordering of a sweater from a home shopping channel. Beyond that is another, more complex software program, the operating system. This software would manage millions of transactions between the home and the cable network.

The latest venture comes just weeks after TCI and TW announced they were banding together to promote standards for this new market (Daily Variety, June 4 ).

It also could spell trouble for rival systems vying for a place in new cable systems that are rolling out around the country.

The biggest losers could be Apple Computer Co. and Kalieda Labs, a joint software venture between Apple and IBM Corp.

Last month, Apple reportedly pitched its operating system and user interface to TW exex but was rejected in favor of Microsoft. And Kalieda said last week it was supplying its software to cable-box manufacturer Scientific-Atlanta Inc. and computer chip-maker Motorola Inc.

The idea of Cablesoft couldn’t come at a better time to unravel a growing list of competing systems and software, said analysts.

TCI has selected set-top boxes to be made by General Instruments with computer chips from Intel Corp. Meanwhile, Scientific-Atlanta and Toshiba Corp. have been contracted to make the boxes for TW Cable in Orlando, where a 4,000 -home trial of its Full Service Network is set for early 1994. And last week, at the National Cable TV Assn. confab, TW said it selected Silicon Graphics Inc., designers of high-powered computer workstations, for its microprocessors. Currently, Microsoft software is not compatible with SGI chips.