Analysis: PC or not PC... TV is the question

ONdigital launches its own version of Internet via the telly this week, reopening the Net on TV debate at a time when PC-based Internet services are at their lowest ebb due to the failure of unmetered access.

ONdigital, Sky's (quote: BSY) main rival in the fledgling digital TV market, has chosen to avoid the unmetered Internet access route opting instead for BT's (quote: BT) 1p per minute off-peak, 2p per minute peaktime service. Add to this a monthly £5 subscription fee and it signals a return -- in TV land at least -- to the pre-Freeserve (quote: FRE) days of Internet use.

The continued failure of unmetered Internet services and the increasing coverage they are being given in the press has reopened the debate about how the masses will eventually access the Net. Analysts have predicted for years that PC penetration will reach a peak and TV firms are now seizing the opportunity to steal a march on traditional PC Net providers.

ONdigital's announcement comes soon after rumours that Sky and BT are on the verge of a deal that would see interactive TV services delivered via ADSL as well as a signed deal between Sky and cable company ntl.

ONdigital's chief executive Stuart Prebble is convinced that people prefer to surf from the comfort of their armchair. "For the millions of people who have been left behind or excluded by the Internet revolution, ONdigital is the easiest way to get online," he says in a statement. "Why spend hundreds of pounds on a computer when you can access the Internet on the TV that already sits in your living room?" he asks.

A spokesman for ONdigital admits that price is a key factor for getting people online but he believes that many would rather pay monthly fees and per minute charges than shell out a thousand pounds for a PC they will only use for Net access. The unmetered fiasco justifies growing cynicism about the PC Internet experience he thinks.

"It [the unmetered debacle] has certainly done some damage and some people will have gone out and bought PCs believing they were going to get free Internet services," he says.

The spokesman explains why the TV firm decided not to go down the unmetered access route. "We like to deliver the services that are realistic," he says. He remains in no doubt that TV will be king in the fight for eyeballs. "All the research seems to suggest that over the next year or so TV will be increasingly used for getting on to the Internet and in the long run Internet access via the TV is the way the majority of consumers will get online."

This conclusion is based partly on research undertaken by consumer consultants at the Henley Centre. But Andrew Curry, associate director of new media there, is not entirely convinced about the Net on TV revolution, pointing out that the history of Web TV in the States has hardly been distinguished. It is not all bad though he says. "What has worked well in the States is content sharply aimed at TV -- an Internet connection to allow viewers to directly interact with TV programmes," he says. Basically this means interaction with gameshows or TV quizzes, either voting or taking part in some other way via a Net connection.

The bad news for ONdigital, Curry says, is that its audience may be too upmarket for this type niche use of the Web on TV. "People that want to do that generally have a lower market profile," says Curry. The ONdigital audience, he says, is generally of a higher market profile than say Sky viewers. They are also more likely to have a PC; more bad news for ONdigital's Web TV plans.

While ONdigital is understandably excited about its Internet venture, Curry sees it more as a "defensive strategy" in response to competitive offerings. "It can't compete with the more sophisticated technology of cable and it can't compete with Open," Curry says.

Sky is inevitably gushing in its praise for Open, the interactive ecommerce platform it packages with its TV services for shopping, banking and email. In June, Sky claimed 1.6 million homes logged on to the service, with 1.1 million using it once a week. The average time on line it said, was seventeen minutes. Research from the Henley centre bears out the huge popularity of Open suggesting a full half of Sky's viewer are regular Open users.

ONdigital found it difficult to praise Open, pointing out that it is not offering a full Internet experience. "Open is in effect closed while we are bringing the World Wide Web to the TV," says the ONdigital spokesman, while Sky argues that "it never pretended to be the Internet."

Internet via TV still has a long way to go. One problem is that most Web sites are designed for a PC monitor. ONdigital says it has the technology to overcome the problem. "On the whole the Internet on telly doesn't look good but with our netbox we have reconfigured sites so it immediately looks much better," a spokesman says. He predicts that as TV Net access becomes more acceptable Web designers will begin to cater for TV Net viewing, possibly designing for both TV and PC.

Game shows and other interactive entertainment could accelerate development of TV savvy Web pages according to Curry. While he accepts that ONdigital may have solved some of the cosmetic problems associated with shifting the Net on to the TV he thinks the platform will struggle to keep pace with changes in PC technology like PC specific applications and executables.

The latest figures from audience measurement firm Nielsen/NetRatings suggest that home Internet access via PC remains a buoyant market with 19.4 million Brits now surfing from their home computers. Whatever the future for unmetered access in the UK, it would seem that TV still has a long way to go to before is usurps the traditional PC as the preferred Internet vehicle.

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