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Fri, Feb 23, 2001 EST
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America Lags in Development of Interactive Television
By Jason Fox   Fox Market Wire
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Interactive companies have for years pushed the dream of customers surfing the Internet, viewing videos on demand, buying books, instant messaging with friends and controlling camera angles — all from the comfort of their TV tube.

Yet the digital couch-potato's dream remains elusive in the U.S., despite millions in research and relentless marketing hype from the likes of AOL, AT&T; and Microsoft. The nascent industry has reached "zero penetration — except for some trials," in the words of Michael Silbergleid, editor of The Guide to Digital Television.

But across the Atlantic, and with much less fanfare, Interactive Television (ITV) has reached 10 percent of viewers, according to estimates by the Jupiter Communications research firm.

In Britain alone, News Corporation's BSkyB has more than 4 million customers using its SkyDigital set-top boxes, according to the company's Web site. Users can choose from a buffet of shopping, entertainment and news options with a single touch of a button on their remote control.

Why has ITV development in Europe so quickly outpaced its American cousin?

Phone charges. Most European countries have "pay-as-you-go" plans in place, even for local calls. Instead of a flat rate, users ante up for every minute spent on their phone. That has dampened enthusiasm for the Internet and helps explain why 55 percent of Americans are connected to the Internet, compared to 33 percent of Britons, 24 percent of Germans and only 14 percent of the French, according to the most recent Nielsen NetRatings ratings. Conversely, there is less U.S. consumer demand for ITV services because of the high Internet use, media analyst Jack Myers says.

Digital video broadcasting. As early as 1993, a consortium of international broadcasters, regulatory agencies and manufacturers met to establish a standard for digital transmissions. While the U.S. committee was derailed by internal squabbles, the rest of the world agreed on a reliable standard that allowed Europeans to push ahead with ITV plans.

Teletext. Europe has offered teletext, a text-based early ITV pioneer, for years. From their remotes, users could bring up text messages — like ads, programming info or giveaways — on their television screen. This helped Europeans get used to the idea of interacting with televisions.

Cable monopolies. A small number of big cable operators dominate the cable industry in the United States. Without competition, cable operators have little incentive to offer ITV. In Europe, operators offer special services like ITV to win over subscribers.

"In the U.K., cable subscribers who want ITV can choose another operator if it offers better services than their existing provider," says Todd D. Wiener, an ITV analyst for research firm TechTrends.

But while Europe may be in the lead for now, ITV services continue to roll out across America. And last month's FCC approval of the AOL-Time Warner marriage has analysts wondering if the union will give stateside interactive television services a much-needed shot in the arm.

Some 27 percent of American households will use some ITV features by 2004, according to Jupiter. With its deal approved, many analysts think AOL-Time Warner is the best positioned to grab the biggest slice of the growing pie, with its AOLTV service.

AOL's service marries its popular instant messaging, interactive content, email, and chat to television programs — courtesy of Time Warner's cable system — so users can simultaneously surf and watch.

For ITV to go prime-time, it needs a uniform, true "plug-and-play" technology that is intuitive and easy to use, experts say.

"It's going to take about two years for the hardware and software to mature a bit, and for producers and instructional designers to see what ITV is capable of doing," Silbergleid says.

So until consumer-friendly technology is in place, don't expect "You've got mail" to appear on your television set any time soon.

News Corp. is the parent company of FOXNews.com

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