Cut-price digital decoder to hit UK

A UK technology company is planning to give a boost to the take-up of digital television services by launching a digital terrestrial television (DTT) set-top box costing £29.

Such DTT boxes currently cost around £100, so TVcompass's device -- which is due to go on sale in spring 2003 -- is likely to undercut products made by manufacturers such as Pace. It will give access to 24 free-to-air TV channels that will be broadcast by the BBC -- which successfully acquired the licences formerly used by ITV Digital -- as well as digital radio.

The company has admitted that it will make an up-front loss on the sale of each model, but believes it will be able to generate additional income from advertising, and interactive services such as shopping and gambling.

"It will obviously cost more than £29 to make the TV remotes and set-top boxes, and then ship them to customers," said TVcompass chief executive Stephen Voller in a statement. "But because our system offers further revenue opportunities from shopping, travel, gambling and advertising we are in effect subsidising the cost of the hardware to the consumers through these additional services," Voller added.

According to Voller, his company's device will even appeal to people who already have access to digital TV via satellite or cable.

"In so-called digital households -- those who are prepared to pay £300 to £500 a year for hundreds of channels from satellite or cable -- usually only one TV set is connected to the subscription or pay TV service," said Voller. "The opportunity for our boxes is on every TV in the house."

Friday's edition of The Guardian compared the TVcompass strategy to Amstrad's decision to sell cheap satellite dishes in the 1980s, suggesting it could give a significant boost to the take-up of digital TV in the UK -- which is vital if the government is to hit its target of turning off the analogue broadcasting signal by 2010.

Less encouragingly, the "sell at a loss" plan is also reminiscent of Freebox -- a UK firm that said in September 2000 that it was planning to give away set-top boxes that would provide access to digital TV and the Internet. It too hoped to generate revenue from e-commerce and advertising -- but although it began taking orders its product has not yet appeared.

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