PBS makes alliance with MCI to develop online service
Plans for this alliance with MCI never developed, nor did MCI's next flirtation (with Rupert Murdoch). Despite MCI's pioneering work in long-distance service and the Internet backbone, its internetMCI venture failed, and the company was later bought by an upstart competitor, WorldCom. Originally published in Current, April 3, 1995
By Steve Behrens
PBS and MCI will develop a computer information service that supplements public TV programming while letting consumers place online orders for books, videocassettes and other program-related materials.
The telecom company said March 23 [1995] that it would invest at least $15 million in the venture over the first five years.
It was one of a series of MCI announcements publicizing its plans for expansion of Internet activities. Four days later, the company detailed its plans to offer Internet access services nationwide under the brand name "internetMCI," and opened a shopping mall on the Internet called "marketplaceMCI."
And on March 29, the company said it hired cable programming veteran Scott Kurnit away from the Prodigy online service to oversee its information services unit, including the venture with PBS. Kurnit, who once produced news for public TV station WGBY in Springfield, ran the Showtime network before joining Prodigy as executive v.p. two years ago.
The venture, which may also include CD-ROM publishing, pursues Duggan's strategy of alliances with major corporations. PBS signed up Turner Home Entertainment as retail home video distributor last spring, and the network expects to announce soon a smaller deal with Apple Computer involving the Ready to Learn project for preschoolers, according to PBS.
The new PBS Online service is likely to follow a model quite different from earlier consumer online services such as CompuServe and America Online, which boasted features available only to service subscribers. Now, both PBS and MCI indicate their venture will be accessible to all comers on the Internet, though users may have to pay extra fees for some products and services.
The "backbone" of PBS will be a "free, widely accessible service," said Duggan, but for viewers who want more information, the network will offer books and other materials for a price, as public PTV does already. "In the future there will be a mix of things that are free and accessible and other things that people are free to buy."
Which services will be free depends on a "complex equation," said Bert C. Roberts Jr., MCI chairman.
Duggan said in an interview that PBS Online content would develop out of a "holistic approach" to program planning, with broadcast programs as the keystone and other media, from books to CD-ROM, extending the project into a national event, gathering the nation "around the electronic hearth."
A major broadcast program and book about Abraham Lincoln could come out during the week of the president's birthday, he said, while Great Performances would feature Aaron Copland's suite dedicated to Lincoln.
PBS Adult Learning Service college telecourses also could be put online, Duggan said, as well as classroom materials that schoolteachers could download in a standard and dependable way.
The service could also help online users get around the "untamed" Internet by providing references to other information sites, said John Hollar, PBS's new executive v.p. for learning ventures.
Duggan quickly acknowledged that PBS hasn't acquired online rights for its major broadcast series and personalities. Some producers already have made separate online deals with other firms. Shortly after the MCI announcement, Duggan said, he got a call from a Children's Television Workshop executive, who protested reporters' assumptions that CTW characters would join the venture. Those rights belong to Microsoft, Duggan was told.
But he expects the venture with MCI will attract many of the producers. "If we build something, they will come," he predicted.
PBS does have rights to its kidvid-block cartoon characters, the P-Pals, Duggan noted in the teleconference.
More details in June
MCI's $15 million--or more--will go strictly into the online portion of the project, according to Hollar. Any underwriting for associated broadcast programs that MCI chooses to back would be in addition to that.
MCI's Roberts said in a press teleconference that the company was interested in making available "a new generation of signature series" for public TV.
Duggan said the company made clear that its underwriting dollars would not go into existing programs or public-affairs programs.
PBS and MCI won't settle on details of their agreement until late May or early June, Duggan said. The PBS annual meeting opens June 9.
"This is like being pregnant," he commented. "You don't know if it's going to be a boy or a girl, or what the child will be when it grows up."
PBS began thinking about getting hitched last spring. "We became convinced that PBS, without a venture partner, could not build PBS Online" with the magnitude and power of Prodigy or America Online, said Duggan. PBS went to a number of communications companies and settled on MCI.
Until the details are worked out, the PBS-MCI venture is "a vapor deal," comments Peter Krasilovsky, senior analyst with the interactive services consulting firm Arlen Communications. PBS and MCI announced it early because PBS wants to demonstrate that it's out looking for revenue sources, and MCI seeks to raise its profile as an Internet player, he said.
Known for the aggressive marketing that cracked open AT&T's long-distance telephone monopoly, MCI is now publicizing its Internet pedigree. MCI helped build the Internet's fiber-optic backbone and now carries about 40 percent of Internet traffic over 35,000 miles of circuits. Vinton Cerf, a technologist who codeveloped the Internet's basic protocol, helped design and build the Internet's backbone when he was working at MCI, led the engineering of MCI Mail, and has returned to the company as senior v.p. in charge of Internet architecture.
MarketplaceMCI is part of the company's push for more subscribers among home computer users. Already operating or soon to open are catalogue outlets for Borders bookstores, Timberland clothing, Hammacher Schlemmer gadgets and Aetna Life. MCI expects that encryption software will permit secure transactions on the Internet.
This kind of online selling could work especially well for PBS as a marketer of videocassettes, said Rod Kuckro, manager of the Washington-based data technology group of the newsletter publisher Business Research Publications. "Let's say there's a gardening video, and you're interested in it," says Kuckro. "Instead of a 30-word description in a catalogue, you have a video clip with an interview with the producer. That's a much better way to lock up a sale."
Krasilovsky says the PBS venture has many other revenue-producing opportunities, including selling sponsorships for information pages, with low-key credits akin to PTV underwriting.
How much exclusivity?
The Internet's open, nonproprietary software protocols, established by the universities and military researchers, stands to give telecommunications an enormous boost of scale, accessibility and innovation, just as the open standards of the IBM PC did for personal computers, Business Week pointed out in this week's issue.
One result is that the Internet world has grown from 10,000 computers in 1987 to 1 million in 1992, 2 million in 1993 and 3.8 million last year, according to MCI.
Other major companies plan to join MCI in offering Internet access and online services. AT&T and many of the regional Bell phone companies are preparing announcements, and Microsoft will put software for its forthcoming online network into the millions of copies of its next version of Windows, due out this summer.
But unlike AOL and other consumer online networks, MCI isn't making all of its services exclusive to its own subscribers. The company wouldn't be setting up marketplaceMCI for merchants if the customers were limited to subscribers of any single online service, said MCI spokesman Kevin Inda.
"I don't think there's any information provider or retail provider who is content with an exclusive arrangement any more," said newsletter publisher Kuckro. "The pattern is, those deals aren't being signed anymore." Some providers, like the floral service 800-Flowers, have outlets on several online services.
For PBS and MCI, the exclusivity question has not been resolved, Duggan told Current, but he and Hollar left little doubt about their preferences.
All roads now lead to the Internet, Hollar said, and it makes sense for PBS to be there. MCI indicated it would be "quite flexible" about "where PBS might show up" online, he said. Duggan also likes the road metaphor. The Internet, he said, is like a public highway that travelers can use without extra charge, but they can always stop at a shopping mall to buy something.
Services like America Online now see that the Internet has become the "destination of choice," he observes, and they're building gateways to give their subscribers access to the 'net.
Inda, the MCI spokesperson, likewise predicted that a substantial portion of the PBS-MCI service will be open to everybody on the Internet. Users will have access to some parts free of charge and will pay for others, he said.
If parts of the service are freely accessible, it may be possible for computer-users to use parts of PBS Online through the free or low-cost local online services planned by some public TV stations. "One of the things that MCI was attracted to was the network of local stations," said Hollar.
Later news: The MCI deal fell through, but PBS Online was thriving three years later.
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