ADSL2 is an extension of existing technology that has the potential to deliver data up to 20 times faster than current copper-based solutions. It's claimed to have speeds of up to 24Mbps.
Movies Online will launch the service -- to be known as 'Reeltime' -- in late July. Company director John Karantzis told ZDNet Australia  it secured an agreement on movie content with Sony Pictures and was talking with all the other major studios.
Karantzis said Adam Internet's network was chosen due to its quality and speed. Movies Online spoke to all the major independent Internet service providers and is in the midst on concluding negotiations to launch an Australia-wide service, he added.
In a telephone interview from Los Angeles, he said Reeltime would be priced on a pay-per-view basis, and competitive with video store prices. Movies Online will initially aim at between 10 percent and 15 percent of all ADSL users in each location it targets.
He denied movies studios were concerned about potential piracy due to the digital delivery medium, saying the video-on-demand service would use digital rights management (DRM) technology approved by the studios and the Motion Picture Association of America.
A next-generation video codec will be used to encode the content, with 128-bit encryption utilising a constantly-changing key.
Consumers will have the option of using a set-top box with their televisions, or viewing content on their Macintosh or Windows-based PCs -- Windows 2000 would be a minimum requirement.
Karantzis said content will be streamed live to users over Adam Internet's network, but that other ISPs might need to use a hybrid delivery solution.
He is under no illusions about market realities. "The competitor is the video store," he said. "It's certainly not pay TV." However, he highlighted a recent undisclosed investment in Movies Online by Sony Pictures as evidence of the company's business model.