Arts: BSkyB to offer the Internet on TV

Rupert Murdoch yesterday announced multi-million pound plans to introduce 200 digital television channels in the UK next year, offering subscribers Internet access, home shopping and banking, and as many as 60 channels dedicated to pay-per-view movies and sport.

The project - now under development at BSkyB's Osterley headquarters in west London and at a state-of-the-art customer service centre in Scotland - is due to be launched in the final months of 1997, and will supplement Sky's existing analogue subscriber base of 5.5 million customers.

According to Sam Chisholm, chief executive of BSkyB, viewers will be able to shop and bank from home through a high-speed modem and a new set- top decoder, using their television screens to access the worldwide Internet computer network.

The digital launch is being prepared in tandem with BT, the telecommunications operator, which has engineers working with BSkyB staff in Scotland to test the new technology.

Several banks, led by Barclays and the Co-operative, are also in talks with Sky to develop secure banking services for digital customers. Pay-television programming, including the existing Sky channels, will also be available. Customers will be required to pay about pounds 200 for decoders, which are likely to cost at least that much to make. BSkyB hopes that the manufacturers, as well as service providers such as banks and retail outlets, will agree to subsidise production costs in order to encourage take-up rates.

Media analysts predict the service could emerge as the standard in digital television, eclipsing government plans to encourage the growth of digital terrestrial television.

David Elstein, head of programming at BSkyB, said: "The real home run for Sky would be if the digital platform becomes the industry's standard."

Cable operators, which have been desperately competing to develop a profitable market in the pay-television sector, have until recently trumpeted the interactive advantages of cable over satellite. But Sky's new high-speed modems and decoders, which require a telephone line to be fully interactive, could trump cable's digital plans.

Mr Chisholm insisted that Sky's current analogue service would not be replaced by digital. "There's room for both services," he told analysts following the unveiling of BSkyB's results earlier this week.

A measure of the company's commitment to analogue transmissions is its plans for several high-profile pay-per-view boxing events this autumn. These follow the successful debut of pay-per-view earlier this year, for the Bruno/Tyson fight.

BSkyB's pounds 30m service centres in Livingston and Dunfermline provide the technical back-up for pay-per-view, which allows customers to dial up an automated system, arrange for payment and await a signal to unscramble the picture on the television. The system is currently being upgraded to allow for additional pay-per-view events to be broadcast this year.

Eventually, the centres will also handle BSkyB's digital pay-per-view services, featuring top sports, concerts and movies.

The digital road

BSkyB's plan to offer a high-speed connection to the Internet via satellite dishes is the electronic equivalent of building a three- lane motorway for one direction only, writes Charles Arthur. The Internet is at its most useful as a two-way medium. BSkyB seems to be using it to sell a digital television service that looks like a product in search of a market.

Normally, "surfing" the Internet requires a two-way telephone link. BSkyB's digital satellite system will be able to send a concentrated stream of data to customers at 7,000 times the speed of a phone line. But viewers will need an outgoing connection to navigate around the network.

Thus the 150-odd companies providing Internet access in the UK were unruffled yesterday. Graham Davies, managing director of Easynet, said: "It will be a one-way service, which means there's only so much you can do. It's interesting, but it wouldn't compete or be dangerous to us." But those companies are struggling among each other for profits: the 150 are expected to slim down to five or six in a few years. BSkyB might just be in a position to reap some benefits, in time. But it must lay the other side of the digital road first.