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Friday, November 13, 1998 Published at 10:46 GMT

Business: The Company File

Switching on to a TV revolution

ONdigital will have to be on the ball to take on Sky

The UK digital television war gets underway in earnest later on Sunday.

And it promises to change our viewing habits for ever.

BBC's Nick Higham: "ONdigital's arrival has been heralded by an advertising blitz"
ONdigital, the television venture between media giants Carlton Communications and Granada, plans to launch the world's first digital terrestrial TV service.

Customers paying around £200 for a set top box which decodes the new television signals will be able to subscribe to a plethora of channels and receive higher quality pictures, all through a normal television aerial.

[ image: The choice on offer is huge]
The choice on offer is huge
ONdigital is the UK's second digital service, it follows hot on the heels of the introduction of Sky Digital, whose customers have to use satellite dishes to receive channels.

Supply problems

But ONdigital's birth has been dogged by problems.

It has admitted that it is likely to run out of the set top boxes in the pre-Christmas sales rush.

Sky Digital has also been overwhelmed by demand for set top boxes.

[ image: ONdigital hopes subcribers will go through the roof]
ONdigital hopes subcribers will go through the roof
Since it went live a month ago, 100,000 people have signed up for a box and customers now have to wait three weeks for installation.

The lack of set top boxes suggest that both companies either badly miscalculated how popular digital television would be or suffered severe supply problems.

Price war

Despite teething troubles, the onset of the digital television could prove to be beneficial to customers.

A price war could emerge as rivals rush to sign up subscribers.

ONdigital customers will be able to get a basic package of channels for as little at £7.99 a month.

And Sky Digital, owned by Rupert Murdoch's BSkyB is offering a service for a similar price, although it has many more channels

Only the beginning

There it little doubt that the dawn of digital will change the way we watch television.

Customers can now pick and choose from a vast array of programmes using an electronic programme guide.

That is just the beginning.

Interactive services and the Internet will be introduced onto television screens as rivals attempt to tune in to more customers.

Watching closely

The television battle will be watched closely across the world.

The UK is leading the digital revolution and stands to become the first country in Europe to introduce satellite, digital terrestrial and cable services.

Cable TV subscribers should get access to digital next year.

As a result the success or failure of the UK digital experiment will be scrutinised closely by television executives around the world.

City experts believe digital television will take-off over the next few years.

Henderson Crosthwaite analyst Mathew Horsman expects ONdigital to have 2.7m subscribers by 2005, compared to 3.8m for Sky Digital and 4.7m for digital cable.

But in the early days of digital some customers are likely to remain frustrated.

Suppliers getting their wires crossed could interfere with sales.

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