WorldGate Deals Net Cash and Customers

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Interactive television provider WorldGate Communications Inc. has secured two deals with four cable companies that could bring its Internet-on-TV service to more than 24 million homes within the next few years.

These new agreements were reached with Adelphia Communications Corp., Coudersport, PA; Comcast Cable Communications Inc., Philadelphia; Cox Communications Inc., Atlanta; and includes the extension of an earlier agreement with longtime investor Charter Communications Inc., St. Louis.

In the first deal, the cable operators have agreed to deploy the WorldGate service to an undisclosed number of their customers by the fourth quarter of this year. WorldGate, Trevose, PA, offers an I-TV service that is based primarily on receiving Internet content during programming and ads, as well as basic PC capabilities such as e-mail.

The cable companies will also receive additional shares in WorldGate if they distribute the service beyond the initial commitments, an incentive to push them toward the 24 million homes they collectively serve. As part of the deployment, the cable operators are also investing a combined $24.5 million in WorldGate. For Charter, this means the cable operator owns approximately 7 percent of WorldGate.

"It's a starting gun for interactivity on the set-top box," said Peter Mondics, vice president at WorldGate. "It's a major deal for us because these operators account for 40 percent of all cable homes in the [United States]. These digital set-top boxes that are being distributed have the capacity to carry so many new services like video-on-demand, e-mail, instant messaging. These are services that they can bring to people for no extra charge bundled with a digital subscription."

WorldGate has approximately 45,000 customers worldwide, with international deployment and trial agreements with 21 cable operators in 13 countries. But that number will increase through these deals and a deal with Microsoft for inclusion on its I-TV entry, MSTV. Microsoft runs off the Motorola set-top box, giving WorldGate's dual versatility -- both analog and digital -- a favorable edge in the race to secure cable operators, the company said.

The second deal involves TVGateway, a joint venture that WorldGate formed with the four cable operators. TVGateway will license WorldGate's television-to-Internet hyperlinking technology to the operators. The venture will jointly develop and distribute added services to the operators' set-top boxes based on WorldGate's application launcher technology, which allows the operators to build over it and add new services for existing I-TV customers, including advances in t-commerce and interactive advertising.

"TVGateway is there to create software to allow cable operators to put new software on the set-top box," said Mondics. "This includes things like e-mail and Internet browsing, but also an electronic program guide and video-on-demand. The development of software to permit integration of services ... with WorldGate applications on Motorola's DCT series of digital set-top boxes makes it possible for cable operators to easily offer a broad range of services to their subscribers."

Mondics added that WorldGate is in discussion with all top 20 cable operators in the United States to join the program.

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