Digital TV Era: Shopping, Video Calls From Grandma

THE United States, which ushered in the age of television, is about to reinvent it.

There's much disagreement about how far and how fast the technology will take hold. But this much is clear. TV sets of the future will be bigger and display clearer pictures than today's versions. They will also serve as two-way communicators.

``Television will become a communications instrument,'' says Steve Reynolds, an analyst at Link Resources, a New York market research firm. ``It will become a vehicle for shopping and some kinds of transactions. And we believe that it's going to be a vehicle for new kinds of entertainment genres.''

This year could well set the stage for the new TV era. ``I think that 1995 may be the most important year in the history of broadcasting in America,'' says Reed Hundt, chairman of the Federal Communications Commission (FCC). ``The medium is about to be reinvented.''

The biggest development is technological. TV, like other consumer-electronics products, is going digital. ``The digital age has arrived,'' says Joseph Clayton, executive vice president of marketing at Thomson Consumer Electronics, in Indianapolis.

Its arrival means television will have clearer pictures and more channels. It will pave the way for more players to move into the industry, such as telephone companies and computer firms. It will also push forward interactive television.

Government decisions will also play a big role in shaping future television. For example, the alliance of manufacturers responsible for creating a high-definition digital television (HDTV) system is preparing to test it later this year. Then, in August, the HDTV advisory committee is expected to make its recommendation to the FCC. By the end of this year, the FCC hopes to decide whether to set an HDTV standard and what that standard will be.

The standard is important, because it will tell TV programmers just how much of their information pipeline they will have to dedicate to high-quality pictures. That, in turn, will help them figure out whether HDTV programs are worth the money or whether consumers would prefer having more channels with lower-grade resolution.

Some industry experts are skeptical HDTV will ever catch on. ``We won't find HDTV-type programming happening on HDTVs because it won't be economically viable to create such televisions,'' says Avram Miller, vice president of corporate business development at Intel Corporation in Santa Clara, Calif.

But TV makers point out that large TV screens, where HDTV really shines, are increasingly popular. US sales of projection TVs jumped 40 percent last year. They're expected to grow another 20 percent this year, according to the Electronics Industry Association.

But who will offer the programming? Congress will likely wrangle again this session over how to let telephone companies into the TV business, while allowing cable TV concerns to offer telephone service.

While the telephone and cable companies await congressional action, satellite broadcasters are the first to implement digital TV. But whether they can stay ahead of cable and other TV providers in digital TV depends on how interactive the medium becomes.

Do consumers want a lot of ``interactivity'' or just a little? How much are they willing to pay to make a video call to Grandma, for example? Technologically, cable and telephone companies can build the fat information pipe needed to handle such large amounts of video data. But such a system would be a huge economic gamble.

Satellite providers think that their systems, which only have a thin information pipe, will be adequate in the years to come. ``It will be entirely suitable for 90 percent or more of what proves to be financially viable in the marketplace,'' says John Cusick, president and CEO of Primestar Partners in suburban Philadelphia, a satellite TV provider. He foresees most TV viewers wanting to order a movie or buy a dress on a home-shopping channel.

As channels multiply, viewers will need better ways to find out what's on. VideoGuide Inc. in Bedford, Mass., is one of the companies vying to offer on-screen television guides. It will begin rolling out its system this spring, using yet another communications channel - BellSouth's wireless telephone network - to deliver information to its customers' set-top boxes.

If the future of TV seems clear, the current competitive picture looks extremely confused. ``This will not be a good time for the faint of heart,'' says James Meyer, a senior vice president at Thomson, which announced an alliance two weeks ago with Sun Microsystems to offer its own version of an interactive digital-TV standard.