Intertainer And Zoomtown To Offer Movies Over DSL

The time for video entertainment to be delivered on a large scale over broadband has arrived. On April 3, entertainment-on-demand provider Intertainer Inc. and, a broadband subsidiary of Broadwing Inc. (Stock: BRW), will begin offering a video-on-demand service to Zoomtown's base of more than 40,000 digital subscriber line customers in the Cincinnati area. The venture is thought to be the largest single-market rollout of video on demand over DSL to date, and it could provide a viable model for delivering video services to companies.

The launch comes on the heels of Enron Broadband Services' decision earlier this month to back out of a video-on-demand service that was being tested in several markets with Blockbuster Inc. Intertainer's service will be made available to Zoomtown's DSL customers via PCs equipped with Windows Media Player 7, Internet Explorer 5.0, and Macromedia Flash Player 4.0, but technophiles can transmit the signal to their televisions using a video output card or an X-10 wireless connectivity device. Intertainer is hoping to work with a partner on developing a set-top box for delivery direct to a TV.

Prices for the service range from 75 cents for TV shows to $3.99 for first-run feature films, with 24-hour viewing privileges regulated by the digital-rights-management software built into Windows Media Player. For $9.99 a month, customers can subscribe to a value package that includes two movies, three TV shows, and several other programs. Delivering video on demand via a DSL service provider differs from streaming movies over a broadband Internet connection in that it's easier to ensure the quality of the transmission.

Terrence Coles, senior VP of content for Intertainer, says Microsoft's new Windows Media Video 8 encoding technology is enabling the delivery of near-DVD-quality video over a broadband connection as low as 500 Kbps. Microsoft is an investor in Intertainer. Coles says that reducing the bandwidth threshold for delivering high-quality video was crucial for establishing a viable DSL business model because it opened the door for offering the service to a wider geographic area. "In a DSL environment, it's all about how close you are to the central office," he says. Coles says that while Intertainer is focused on the entertainment market, it would consider providing back-end technology to companies that want to deliver video over their internal networks.

Charles Carnegie, director of service delivery for Broadwing, says offering video on demand over DSL should give Zoomtown a competitive advantage over its cable-modem competitors. TeleChoice analyst Pat Hurley says Zoomtown probably won't be the only DSL provider offering the service for long, as Intertainer could be in heavy demand elsewhere if the Cincinnati rollout is successful. "If they make it work in a market that size, it would be a lot more attractive to larger service providers," Hurley says. Qwest Communications International Inc. is also an investor in Intertainer, and Coles says the company hopes the Zoomtown service leads to deployment in markets where Qwest operates.

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