16 October 2000

Two companies are poised to offer cheap internet access via ordinary TV receivers using set-top boxes.

Powerchannel and Freebox will begin soliciting consumer applications this month, and aim to launch before Christmas to capitalise on seasonal spending.

Powerchannel, which is backed by Granada, will charge a £30 deposit on the box. Subscribers are required to complete a monthly questionnaire which will be used to target advertising. The data will also be offered to marketing companies.

Freebox, whose backers are unknown, will charge only £10 for its box which claims to offer DVD technology. The service will in part be funded by offering subscribers a catalogue of films on DVD.

Both companies face competition from established firms such as ONdigital and NTL. Subscribers to the new services will have to pay their own phone bills for online time.

Alan Stevens, head of digital services at the Consumers' Association, urged subscribers to the rival services to be cautious: “It is like Betamax and VHS”, he said. “There are going to be a lot of competing technologies out there and you could back the wrong one”.

He added, “When you have a financial model dependent on advertising or e-commerce, you have to think that it is a risky venture”.

News source: BBC Online Business News (UK)