ONdigital is taking new measures to bolster its digital television service, offering TV-based Internet access separate from its digital television service for the first time.
The year-old startup, jointly owned by Carlton Communications and Granada Media, has signed up a million users since launch, but is heavily subsidising its set-top boxes and hasn't proven as successful as many observers had hoped. It faces stiff competition from satellite operation British Sky Broadcasting (quote: BSY) and cable operators such as ntl and Telewest (quote: TWT), without being able to offer all the features of either.
ONdigital has been offering Internet access for some time, but it was tied to a television subscription service. Now users will be able to get the Internet set-top box on its own, paying an introductory rate of £4 a month for three months and £8 a month after that. The offer will be promoted through lastminute.com, which sells excess inventory in a variety of markets. The set-top box comes free but users have to sign-up to the service for at least a year.
"ONnet is perfectly suited to cater for the needs of lastminute.com's target audience of spontaneous, affluent individuals -- particularly for the many consumers that already have access to the Internet at work but have yet to take the step of buying a PC for their home," said Rhys Grossman, commercial director at ONdigital, in a statement.
The company recently stopped selling ONnet boxes through Granada's retail channel, as most of the company's business was coming through other outlets.
ONdigital is being closely watched as a lynchpin in the government's plans to get the country converted entirely to digital television by 2006, when it hopes to shut down the present analogue system and sell it off for a hefty sum. However, ONdigital's chief executive Stuart Prebble recently blasted the government for not doing enough to get viewers to make the switch.
Stand-alone set-top boxes supplying Internet access have so far failed to find a significant market, although "walled-garden" interactive television services such as BSkyB-owned Open have proved popular.
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