Europe Intelligence Wire via NewsEdge Corporation : Source: The Guardian, April 05, 2001

To its evangelists it offers an internet for the masses, already representing 1.5 million email registrations in the UK alone. To the money men it offers the holy grail of electronic commerce that will outstrip the web within five years. But to its critics it is little more than a dumbed-down, stripped-out web. So who is right? Just what is interactive TV?

The prospect of multi-channel television with limited interactivity has been the goal of satellite broadcasters, telecommunications giants and hardware manufacturers for nearly 50 years. And although interactive TV is now, finally, finding a place in our living rooms, there is confusion over what it actually is and does. Even people in the industry usually hedge with a swift "can I get back to you?"

In a nutshell, interactive TV comprises four different kinds of service converging through the set top box. First, there are enhanced TV services such as Sky Sports Active, or ITN's interactive news channel. Then there is limited web browsing, followed by restricted interactive shopping spaces and, finally, teletext. In the UK these services are available through five major operators; BSkyB, NTL, ONdigital, Telewest and Homechoice.

For many, combining the once separate technologies of television, telephone and internet means reaching the kind of mass audience that the PC alone might never achieve. According to NetValue, PCs are now in 30.8% of UK homes (mostly with modems). That means almost 70% of UK homes are with out them. Even in the US, where PC penetration has reached more than 50%, that still leaves a lot of people offline. So can we yet call the net a truly mass medium?

Many of the makers of interactive TV say not. And what's more, they claim that only they have the means to reach the mass market and turn every UK home online. It is worth remembering, they say, that the government plans to switch off analogue television some time between 2006 and 2010. Therefore, interactive TV is likely to end up in almost every home in the UK.

And it is not just in the UK where there are bullish predictions for this medium. IT research company Jupiter Media Metrix says interactive television will now grow faster than the PC internet in the US. In a report published last month, Jupiter predicts adoption will grow by 83% per year, serving 46 million homes by 2005.

And the UK (along with Germany and Sweden) will not be far behind, says Jupiter.

Similarly, another research company, Forrester Research, predicts that interactive television will reach 80 million households worldwide by 2005.

Such optimism is leading forecasters to believe that the value of goods and services bought through interactive television (t-commerce) will exceed the value of internet consumer shopping (e-commerce) within five years.

If correct, there is lots of money to made out there. But with the UK's dot.com revolution currently in turmoil, are we ready to believe that another revolutionary brand of shopping is about to change consumer habits?

BSkyB - by far the leading player in the UK - says it can make money through a mix of subscription revenues, betting and coaxing viewers to buy other goods and services through their TV. It anticipates that by 2005 it will be able to squeeze an average of pounds 400 a viewer a year through each set top box. Its interactive movie service, Sky Movies Active, to be launched in June, will earn a commission from each cinema ticket and a slice of the revenue from each phone call.