Set top boxes poised to dethrone the PC in Xmas rush

Set-top boxes could be the next step forward for unwired Brits but will it become a spam frenzy?

The plan is to wire two million UK households who currently can't get online via a free Net-enabled set-top box allowing surfing through the TV. The catch? Each month users will have to submit details of their shopping habits and Net access will not be free.

PowerChannel, which is backed by Granada Media Group, is the latest entrant to the increasingly competitive set-top box market. As PC sales reach saturation point, other ways have to be found to overcome the digital divide and give everyone access to the Net.

PowerChannel will begin shipping its TV Internet box in time for Christmas. The boxes, which are similar to set-top boxes sold by Bush for £79.99 (inc VAT), will allow users to surf the Net on their television set, but unlike digital set-top boxes from companies like Sky, OnDigital and Freebox will not support digital television.

Chief executive officer of PowerChannel Jay Gambrell told ZDNet News that the company plans to supply at least two million units over the next three years. "It's a pretty sizeable commitment. Our product is aimed at people looking to surf the Internet in an easier way than from a PC," he said. Gambrell doesn't believe his company is going head-to-head with existing Internet access suppliers. "In the UK there are around 200 ISPs serving the 30 per cent of the population who currently have Internet access. The remaining 70 per cent is a large untapped market."

Users will have to complete a detailed questionnaire about their shopping habits each month, including details of items they are thinking of purchasing such as holidays and cars. This will take around 15 minutes to complete and consists of around 60 questions. PowerChannel will then sell this information to "trusted third-parties," along with details of the Web sites visited by each user.

Although the box will be given away for nothing, Gambrell emphasises that the service is not cost-free as users pay by giving up personal data. "We don't pretend our service is free, because our users pay in time and trust. It they don't pay, then the result will be no different than for any other paid service," said Gambrell, explaining that people who don't give information truthfully won't be online for long.

Unsolicited email, known as spam, is widely recognised as one of the biggest problems users have with electronic mail. While Gambrell assures users that his company would never sell or give away email addresses, it's likely that users will receive plenty of special offers and "targeted marketing".

PowerChannel's box uses an embedded browser developed by US company PlanetWeb. The American software developer already supplies the Sega Dreamcast's Internet browser which, according to company sources, was designed and implemented in 60 days after Microsoft failed to deliver a solution.

The PowerChannel box comes hot on the heels of UK-based Freebox, which is giving away set-top boxes offering DVD, digital TV and Internet. It claims the boxes are worth £1,100. Launched in September, Freebox promised to deliver boxes to every house in the country in order to overcome the digital divide. It's Web site, however, is currently telling users they face a six month wait due to demand for the boxes.

A Freebox spokesman does not see the two companies going head to head. "Our box has much greater multimedia capability, with a built-in CD and DVD player and access to digital TV," a spokesman said.

Gambrell is sanguine about suggestions of competition from Freebox. "This is a wide-open market, and the presence of a second company could be useful in educating the consumer" he said. Gambrell admitted that PowerChannel had considered including more features in its set-top offering, but decided it would not make good business sense. "We had to find a price/performance ratio for the device, so we could give it away and still make a profit."

He also questions whether Freebox's business model -- based on content and partnership deals -- can be successful. "From what we hear about Freebox, we wonder if their model is viable and self-sustainable. Freebox talks about giving a way of giving away a box worth £1,100, which sounds a lot but if they can make it profitable then great," Gambrell says.

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