Strategic Vision: Giga Information Group on convergence in interactive digital TV

While the IT industry is focused on one type of convergence - that of voice and data - it's easy to forget another kind which could have an equally huge impact on companies' new media strategies. Giga Information Group's Bernt Ostergaard looks at the future of interactive digital TV

The on-rushing convergence between infrastructure players (telcos, cable TV, satellite broadcasters) and content production (Internet portals, broadcasters, software vendors), is manifesting itself strongly across a wide range of industry mergers and acquisitions. Fast-paced growth in bandwidth availability is moving interactive television from an industry joke to a significant investment item in the media arena, and challenging the concept of television as a one-way mass distribution media. However, the interactivity level provided by an Internet computer is still far and above what interactive television can provide, and television is still very much seen as low-cost entertainment by most consumers. Control of the new interactive digital television channels is focused on control of the set-top box, where the major service providers still operate with proprietary solutions limiting users' choice of program providers. A mass market will not emerge until set-top boxes are standardised and allow more consumer choice. Kick-starting consumer demand by giving proprietary set-top boxes away free and then charging higher subscription fees (the Minitel-type solution) will only create a pseudo response. Consumers have accepted limited modes of interaction such as text-TV on their TV-screens, but the remote control is not well-suited to more complex modes of interaction. It can be enhanced by a digital screen pointing device (like the wireless mouse), in order to activate icons flashed on a program, but that will require digital screens. Furthermore, actual alphabetical keyboard data entry is unlikely to be accepted by the general public. So interaction remains limited. The open standard set-top box The European DVB (digital video broadcasting) Project's set-top box, Multimedia Home Platform (MHP), with an open architecture for TV, PC, telephony and Internet access, was finalized in mid-1998. DVB is a consortium of over 220 broadcasters, manufacturers, network operators and regulatory bodies in more than 30 countries worldwide, committed to designing a global standard for the delivery of digital television. Numerous broadcast services using DVB standards are now operational in Europe, North and South America, Africa, Asia, and Australasia. The list includes Canal+, BSkyB and Microsoft, but neither Bertelsmann, Kirch or Matsushita have joined. The DVB Project has recently approved one of the most important documents on the future of digital television. The work of the Multimedia Home Platform committee, it sets out a migration path to an open standards future, and will allow the market the freedom to develop wide-ranging innovative products. The need for 'backward compatibility' is at the heart of the debate and the DVB Project offers a forum for industry experts to come up with the best technical solutions for the commercial requirement. In the UK, the ITC (Independent Television Commission) is proposing to add support for the MHP standards as a requirement to licensees. None of this matters very much to the viewer who, today, just wants to watch television, but for an industry beginning to come to grips with the issues of convergence, some quiet satisfaction is in order that they have managed to get the 'route map' in place. Likely futures The 40 per cent of Europeans who are 'information rich' will develop high competence in working with new digital media. They have the buying power to use pay-TV selectively and know ways to apply the potential of the new technology for individual and interactive usage. There are as yet no figures on the correlation between the ownership of digital TV and of the Internet. But there is evidence from the USA that a high proportion of Internet users are multitasking, with 10 million simultaneous users of both TV and PC, from the 25.5 million Internet homes. The 60 per cent that are information poor will remain passive viewers and will not move to digital TV until it greatly reduces in price or is given away for free - as with the BSkyB initiative. They may be worse off in the period between 2000 and 2010 until digital TV takes over completely from analogue media. The author, Bernt Ostergaard, is research director for European telecommunications at Giga Information Group. He has 18 years of experience in the telecoms industry. Prior to joining Giga, Bernt was research director at Informedica A/S, and from 1993 to 1996 was the senior European analyst in Meta Group's Global Networking Strategies Division.