Will Microsoft-Comcast Deal Mean Faster Web Access at Home?

The $1 billion question: What does the investment mean for PC users?

Paul Heltzel, PC World, and Brian McWilliams, PC World News Radio

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When the deal closes, Microsoft will own about 15 percent of Comcast, the fourth-largest cable television operator in the United States.

In a statement today, Gates said his company made the $1 billion investment %dquotto enhance the integration of broadband pipes and content, to expand the services offered to consumers.%dquot

Analysts say this deal won%squott translate into new products or services anytime soon. Virginia Brooks of Aberdeen Research said she doesn%squott expect Microsoft%squots stake in Comcast to substantially speed up the crawl at which the cable industry rolls out broadband Internet access to its subscribers. She said cable Net access is impeded by the mind-set of cable companies and not by technology.

%dquotThis pace has stalled because of a number of problems,%dquot Brooks said. %dquotI don%squott think Microsoft can fix problems like billing and adequate bandwidth and getting the infrastructure in place. The cable TV industry isn%squott horribly interested in throwing a lot of money out at this point to retool in a major way.%dquot

Peter Krasilovsy, a vice president at market research firm Arlen Communications, said Microsoft may hope to use Comcast to distribute its WebTV service, which the software giant purchased in April for $425 million.

But Krasilovsy said Microsoft is ultimately more interested in Comcast for its content and production assets than as a way to offer broadband access to Microsoft%squots own interactive services, such as the Microsoft Network, the Expedia travel service, and the CarPoint car shopping service.

%dquotLet%squots not call this a straight-out distribution deal for the Microsoft Network,%dquot Krasilovsy said. %dquotComcast can provide Microsoft with synergy in a number of ways. It may also be a way for Microsoft to get their feet wet and see if they%squotre interested in investing in other cable operators in the future.%dquot

Microsoft%squots recent investments in WebTV Networks and Comcast have Brooks of Aberdeen wondering whether the Redmond company and its CEO are violating some of the laws of business physics by branching out too far.

%dquotThey seem to want to be in anything that has to do with communications or entertainment,%dquot Brooks said. %dquotMaybe Bill Gates is a visionary and maybe he%squots a megalomaniac. Sometimes there%squots a very fine line between those two things.%dquot

Despite the numerous cable-modem trials going on now around the country, Brooks said she doesn%squott expect consumers to see widespread cable-based Internet access until the year 2000.

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