Under an agreement announced last week between messaging carrier Arch Wireless Inc. and entertainment company Gemstar-TV Guide International Inc., TV sets sold next year will be-in essence-really big pagers.
The deal between the two companies involves interactive television, which allows viewers to check the time of the next Stanley Cup face-off, send e-mails from their TV and even purchase products featured in TV commercials with the flick of a remote control.
The announcement is especially important for Arch, which will gain increased traffic on its data network and score a large amount of extra cash. In the long run, the company could benefit from sharply reduced prices for pagers and other devices using the Arch network.
“This type of application fits very well” with Arch, said Kris Brigham, Arch’s vice president of corporate development. “It’s a really good fit for us.”
The deal calls for Arch to provide its wireless network to TV viewers using Gemstar’s interactive TV service. Gemstar, which recently acquired TV Guide, offers a variety of media services, including interactive television. The company’s interactive television service, Guide Plus+, will be built into TV sets manufactured by a variety of major companies, including Thomson Consumer Electronics, Philips and Zenith. To access the interactive services, TV viewers will have to do little more than turn on their television.
Brigham said Arch’s role in the equation is to broadcast TV schedules, transmit messages and dispatch purchase information. The buying function likely will be conducted through a window that would appear during specific commercials, giving viewers the instant gratification of pushing a button for what they want.
Gemstar will pay Arch for messages going both in and out of the sets. Arch executives wouldn’t speculate on how much revenue the deal would generate, but Brigham said it’s “significant for a $1.2 billion company,” which is what Arch hopes to make by year’s end.
Another major bonus for Arch is that most Americans flip the tube on at night, which is when most of Arch’s messaging traffic slows to a crawl.
“We will be broadcasting large amounts of data in these off-peak hours,” Brigham said. “We can do it on off-peak hours without stress to the network.”
An even more salient part of the deal involves Advantra International, a Belgian wireless device manufacturer and a subsidiary of Punch International. Advantra will be building the transceiver part of Gemstar’s interactive service. Arch said it plans to offer technical support to Advantra in hopes that the company can develop new, lower-cost ReFLEX radios. The high volume of radios sold under the Gemstar agreement is expected to produce cheaper radio modules than those manufactured today. Separate from the Gemstar deal, Arch reached a similar development agreement with Standard Telecom America, which makes mobile devices under the Nixxo brand name.
“There’ll be a very low research-and-development cost per unit” with the new transceivers, Brigham said. “We’re going to leverage that to build new handheld devices.”
A cheaper transceiver-Arch executives said the price could be as much as halved-could mean more device sales and more subscribers-and ultimately more revenue for Arch.
Arch’s announcement comes at an opportune time for the company, which is suffering along with the rest of the messaging industry with flagging profits and a diminishing subscriber base.
