Next Electronic Era Expected to Feature Home Media Marvel

WALK into a middle-class home in America. Take the TV, the telephone, and the home computer. Put all three in a large bag. Shake vigorously.

What do you get?

The next generation of high-technology products. By merging the advantages of television, telecommunications, and computers, hundreds of companies hope to create a new industry called multimedia. It could rival today's computer industry. Eventually, it will change the way people interact.

"We're all pretty excited about this," says Tom Ailed, vice president of engineering and technology for Tele-Communications Inc. (TCI), a Denver-based company that is the world's largest cable-television operator. Bill O'Shea, senior vice-president of the networking and integrated systems group at NCR Corporation, says: "We've been talking a long time about the convergence of computing and communications. Now it's happening."

At a panel discussion May 4 in Dallas, high-ranking officials from IBM, AT&T, McCaw Cellular Communications, and Rogers Cablesystems Inc. gathered to talk about the future. Their message: New alliances will create vast new areas of business.

The possibilities of multimedia are so numerous they are dizzying: IBM, the world's largest computer company, is negotiating to twin its computer networking technology with Time Warner's cable-TV business.

The move is one of many alliances that could lead to new kinds of television. In a few years, consumers should be able to use their set to call up a popular movie or request background material for a documentary they're watching.

NCR (a computer company bought last year by AT&T, a telecommunications concern) already builds automated teller machines - a sophisticated blend of computers and telecommunications.

Now, it plans to incorporate a third technology - video-conferencing. Soon, customers may be able to walk up to an automated teller and negotiate a home loan with a bank officer. Eventually, they could do it from home, Mr. O'Shea says.

On Friday, Apple Computer is scheduled to unveil Newton, an electronic organizer with a built-in fax and data modem. It's the first of several consumer electronics and telecommunications products the company plans to introduce. Chairman John Sculley predicts telecommunications will become a mainstay technology for Apple during the 1990s. Telephone network

"We're going to think about the telephone network in the future as just one big computer," says Robert Lucky, executive director of AT&T Bell Laboratories. "We have this concept of a telephone call in the future as an electronic room. It's a place you can go to and meet other people." The room may contain electronic libraries or so-called "intelligent agents" or computers.

By the turn of the century, technologists say, consumers will be able to buy a suite of reasonably priced appliances that incorporate telephone, TV, and computer technology and are as easy to use as today's telephones.

Eli Noam, an economics professor at Columbia University Graduate School of Business in New York City and director of the Columbia Institute for Tele-Information, is a little less sanguine. Technologists are "overoptimistic about change in the short term and conservative about change in the long term," he says. The convergence will take place by the year 2000 for the office but not the home.

The driving force behind multimedia is the dramatic leap in computer power. Techniques once prohibitively expensive are now feasible with today's cheap microprocessors.

For example, a digital image sent over a cable-television wire used to take six to 10 times more room than its analog counterpart. Now the opposite is true. Using powerful microprocessors and a new technique called digital compression, cable companies can offer 10 to 12 times more channels than they used to. Video on demand

By merging fiber-optic telephone wires with their coaxial cables, cable companies can create another 10-fold leap in channels.

No one needs 1,000 TV channels at the moment. So cable companies are experimenting with a service called video on demand. One channel would start showing a popular movie at 10 p.m. At 10:10, another channel would start broadcasting the same movie. At 10:20, another channel and so on. Viewers could tune in any time and still catch the beginning.

But there are barriers. The industries that could be cooperating to build these new products and services are prone to fighting for turf. Newspapers want to make sure that telephone companies can't sell electronic news and advertising. The telephone and cable industries are battling over whose network will carry the new services. Competition a factor

This competition may be healthy in the short run, industry officials say, but in the long run they'll have to come together.

"The true hurdle is the creation of a mass market of services," Professor Noam says.

Regulators could step in to set the rules. But they, like everybody else, are struggling to keep up with developments. Industry officials complain that regulatory uncertainty is keeping entrepreneurs from introducing new services, which are key elements.

Multimedia's situation today resembles that of personal computers in the late 1970s. Most people didn't buy them because they didn't need them. Then a software company offered a new product called a spreadsheet. Suddenly, business people eager to use spreadsheets needed personal computers. More software appeared; more people bought computers. Most businesses and a third of the homes in the United States now have one.

If the telephone, TV, and computer industries offer the right software, then multimedia will become a big hit, company officials suggest. Industries will change. So will the way people communicate.