Television junkies of the world, get ready for "Friends," "Big Brother" and "The Simpsons" to phone home.
A new breed of TV -- featuring on-demand programs and choose-your-own music video channels -- is delivered over phones lines that are equipped with a high speed Internet connection.
TV over phone lines, also known as TV over Internet protocol (TVIP), is already taking root in Europe, with offerings from France Telecom, Italy`s FastWeb, Britain`s HomeChoice and others. There are many more on the way, with Britain`s top fixed-line phone company BT Group in talks with content companies as it prepares to launch its own service.
In Washington, Federal Communications Commission chairman Michael Powell said on Sept. 15 that almost every major US phone company he has talked with is working to develop TVIP offering.
Consultancy Multimedia Research Group estimates there will be 15.6 million TVIP viewers by 2007, up from a few hundred thousand today.
TVIP takes advantage of the increasing popularity and prevalence of broadband Internet, plus improved technology for delivering customized video and compressing it to a manageable size without hurting quality.
For many of the TVIP companies it is still early days, but there is ambition to spare. Britain`s HomeChoice has a mere handful of subscribers, though it plans to hit 20 000 by year-end, thanks to a heavy marketing campaign.
Its privately held parent company Video Networks has deep pockets -- its major backer is Chris Larson, who was employee No. 4 at Microsoft -- and big plans.
HomeChoice offers about 80 channels through a television set-top box, including a slew of free on-demand programs and movies for an additional charge, and is bundled with a high-speed Internet connection.
Video on demand essentially works as a pre-loaded digital video recorder, like TiVo or Sky+, with the content stored on a central server. For example, HomeChoice`s music channels function as a customized MTV or VH1, letting subscribers choose which videos they want to watch.
It seems incredible that the company could squeeze so many channels, plus a high-speed Internet connection, through the same copper phone wire that has been used for decades. But unlike cable and satellite, which typically have to broadcast all of their channels at once, HomeChoice sends out only one channel of video at a time, customizing it for each subscriber.
Its network, which piggybacks onto the much larger network of BT Group, is within reach of about 1.25 million homes in London, and will be extended to other UK cities in 2005. The company recently signed a deal with Britain`s dominant pay-TV firm BSkyB to offer the Sky Movies and Sky Sports channels.
HomeChoice and other TVIP operators face a number of obstacles, including limited availability -- TVIP requires an Internet connection of at least two megabits per second -- and the difficult task of describing their services to an audience of non-techies. But delivering TV over phone lines has the potential to transform staid telecommunications companies, and to give cable and satellite a run for their customers.
"The telcos` agenda with TV and video is different from the one they had ten years ago," the analyst and consulting firm Ovum wrote in a research note this week. "Back then, the question was: `Can we afford to do this?` Now, the question is: `Can we afford not to do this?"`
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