Set-top rivals to battle it out over net TV

How free is surfing the net via your TV?

By BBC News Online internet reporter Mark Ward

A new war for the hearts and wallets of web surfers is underway, and this time companies are trying to woo people by giving away set-top boxes.

Two companies will soon be giving away set-top boxes that let consumers surf the net via their TV for only a nominal fee.

One claims its gadgets will even play DVD movies and support high-speed net access once it becomes widely available.

But consumers are being warned to be wary of the new services until the companies involved have proved they can meet demand and the technology has stabilised.

Set-top set to

This month two companies, Powerchannel and Freebox, are accepting applications for a free set-top box that will let people surf the net via their TV.

At the moment details of both services are sketchy but they are expected to launch before Christmas to catch the prime shopping season.

But before either one launches they face competition from established firms such as:

OnDigital and its On Net service which gives its subscribers access to the net via their TV for £5 per month on top of anything subscribers pay for digital channels.

Kingston Interactive TV which costs around £15 per month and uses high speed connections to connect subscribers to the net.

NTL offers an internet TV service for £20 per month - £10 for the rental of a set-top box and £10 of phone calls across the NTL network.

Net TV times two

Powerchannel, backed by Granada, is planning to launch later this year and is expected to ask consumers for a payment of about £30 deposit to subscribe to the service.

Every month Powerchannel subscribers will be asked to fill in a questionnaire which the company will use to target adverts at them. The information will also be sold on to marketing firms.

Peter Mowlam, marketing director for Powerchannel, said the company was planning to launch before the end of the year and would unveil its partners at that time. He said it was planning to attract subscribers by giving discounts and privileged access to goods and special offers.

By contrast Freebox says it requires only a £10 deposit to secure one of its boxes that will let people surf the net via their TV. The £10 will be refunded to the customer in the form of discounts on goods or services they buy.

The Freebox is also fitted with a high-speed modem that connects to the net just like a home computer. Also on board is a DVD player that a Freebox spokesman says will be used to access the DVD catalogues that will be sent to users and which will help fund the service. The disc player will also let users watch DVD movies.

The spokesman for Freebox said it could not reveal its partners because it was still conducting final negotiations.

Both services will leave people to pay their own phone bill for time they spend online.

Web warning

The Freebox service has been a subject of discussion on the Digital Spy chat site. Some contributors were sceptical that the service, and the set-top box, could do what it promised. Others seemed happy to take a risk because only £10 would be at stake.

Alan Stevens, head of digital services at the Consumers Association, said it had registered for a Freebox and was eager to get its hands on the device and see if it could do what it promised.

"There are a number of unknowns to the [Freebox] service," said Mr Stevens. "When you have a financial model dependent on advertising or e-commerce you have to think that it is a risky venture."

In the past, several companies have tried to give away PCs or free telephone access to boost the numbers of people online but so far few have built a successful business out of it.

He warned consumers to be wary of the services until the companies involved have proved they can cope with demand and the technology has settled down.

"It is like Betamax and VHS," said Mr Stevens, "there are going to be a lot of competing technologies out there and you could back the wrong one."