The jury is still out on whether the millions being spent on the development of interactive television will, in retrospect, prove a healthy investment. itv, long on the futurists’ lists of just-around-the-corner technology, has proven an exercise in frustration over the past couple of years, both for those waiting to see it and those waiting to sell it. By all reports, the saga continues.

On the technical side, roadblocks include the manufacturing of a cost-effective set-top box which will turn the television set into an interactive entertainment unit, authoring tools for program content, and the lack of the bigger bandwidths required for interactive tv distribution to the home.

While the technical machinations of how it’s going to work are holding up the industry, just building the system is a financial leap which is playing a part in stalling itv development. The interactive tests underway in Canada, including Intercom Ontario’s interactive community prototype in Newmarket, Ont. and dry runs for wireless services by Cogeco and WIC Western International Communications, all have one thing in common: they’re developed and managed by companies with deep pockets.

Doug Keeley, president of ICE Integrated Communications & Entertainment, a Toronto-based multi-medium development company, says the cost of developing and distributing the technology is what’s holding the industry back.

‘The issues right now are cost, cost, and cost. To transmit requires huge amounts of power, and in turn, money. Setting up huge servers to store programming and all the switching necessary to do accounting and billing requires the same. My take on the vision of having this all at our fingertips by 1996/97 is, no way. Not a chance.’

In the face of technology weighted down by engineering problems, and astronomical distribution costs to boot, some are soldiering on with development while others have jumped ship.

Malofilm Communications’ New Media Division, which opened in March, began exploring itv as an entertainment platform and has since opted out.

‘We’re not doing anything in interactive tv. Our feeling is that the interactive side of the business is much more likely to develop in a shorter time and much less expensively on the computer than on the television set,’ says Stephen Takacsy, vp, finance, for Malofilm. ‘Should it one day become a reality, we’ll be there, but right now it doesn’t exist.’

Malofilm’s decision to abandon its itv experiments was based on the multitude of problems with the technology and a corporate evaluation of where the convergence environment is heading. The tech ‘costs a fortune,’ and more importantly, the consumer in the immediate future is going to transact via the computer and not the television set, says Takacsy. The set-top box, too, is a big problem, ‘even for digital television, never mind interactive.’

Videoway Communications’ Pierre Dion agrees the primary challenge is the set-top box. A subsidiary of Group Videotron in Montreal, Videoway is part of the ubi consortium which is investing $750 million in an interactive television project set to start up in Quebec this fall.

Since 1989, Videotron has distributed 400,000 set-top boxes throughout Canada, the u.s. and the u.k., at the manufacturing cost of about $350 per box. ‘It’s not that we can’t make them. But we need one we can manufacture economically that we can distribute free to customers and that is powerful enough to do two-way communication on the television,’ says Dion, who adds that the ubi consortium will likely announce a u.s. manufacturer for its set-top box in December

Michael Ellis, a software engineer at ice, says the cost behind the amount of Random Access Memory necessary to pull in and push out interactive programming is a deterrent to manufacturers. It’s difficult to say exactly how much ram would make a system functional, but generally, applications require two to four megabytes to store programming, and one each for operating systems software and video memory.

‘Each set-top box has to have a minimum of four megabytes of memory, and a lot of developers require six. They also need a price point around $300 per household before it’s practical, and right now with that amount of memory, most are running between $700 and $2,000,’ says Ellis.

What is the clearest on the technical side so far is a building platform of choice for interactive tv in Canada, with manufacturers including General Instrument and IBM Corporation opting for the Digital Audio Video Interactive Decoder system with OS-9, a real-time operating system developed by Iowa-based Microware Systems. david is built on an open architecture which will allow different companies to incorporate their tools of choice, including program creation tools, servers and set-top boxes.

According to Brian MacLaren, account executive and executive producer at Oberon Interactive, a Canadian developer of interactive media programming, priority on the technical development side is finding how the whole configuration of boxes, servers and authoring wear will link together to provide smooth transmission of information.

Also top of the agenda for development companies like u.s.-based Micromedia, Cybase, and Interactive Resources, are program creation tools that will work on an interactive system. It’s a whole other beast than television programming, a non-linear concoction that incorporates user interface systems, and it’s a core piece of the puzzle that needs to be in place before interactive tv moves forward, says MacLaren.

‘What we’re waiting for at this point are tools to be developed for program creation that allow us to set up the content. Without the authoring software, teams of software engineers working doing original content would be necessary.’

In the meantime, Oberon continues to develop interactive series that will be available when the market is ready and is in production with series, including 50 episodes of an interactive health show budgeted at $5 million and starring John Cleese. The first 10 episodes will be ready mid-1996, in cd-rom and cdi versions. According to MacLaren, ‘It’s educational and health care that will be two of the primary markets at first for this technology.’

Ellis maintains that content distribution will be almost impossible until there is portable authoring software available. What is needed is equipment at the head end and the set-top which will interpret various combinations of encoding and decoding technology. Companies including Cybase and New Media Studios are in development with the software, but another mountain will present itself when it comes time to build the hardware.

‘It will cost service providers an enormous amount of money whatever they decide is their system, hybrid fiber coax or what have you. Just the hardware at the server end is well over $100 million. Then there’s the enormous costs of trials themselves. The Internet is already in place, and I think what we’re seeing are developers taking advantage of an already booming network to discover what works in the interactive market and what doesn’t.’