Ihug's TV venture rivals intended ally

By Keith Newman

Ihug has gone head to head with intending part-owner Sky TV in launching a digital TV service, brushing its suitor aside with its first commercial sign up.

The first non-residential customer for the new multi-channel TV offering, the Jet Inn near Auckland airport, dropped Sky's hotel service in favour of the newcomer.

Manager Vanessa Michel has four channels across 95 rooms and says Ihug's iDTV package was chosen over several other contenders after the hotel decided Sky was too expensive.

Jet Inn also plans to add a movie channel, pay per view services and fast internet access.

Through its satellite-based Satnet service, Ihug has been offering fast internet to about 1000 users in line-of-sight of the Sky Tower, claiming speeds of 400Kbps and the ability to deliver up to six megabits per second to each user.

For its iDTV service Ihug has so far secured the Discovery channel, Animal Planet, CNNi, CNBC business, Family Channel, MCM Music Videos, Country Music Television, and Fashion TV. It is negotiating for Cartoon Network, TNT movies and National Geographic.

A 24-hour music channel is also promised by the end of the month along with possibility of broadcasting local videos produced at film schools and polytechs.

The iDTV service will feature "MultiVu" which allows viewers to have a mosaic of real-time iDTV channels around the outside with a TV guide in the middle. Ihug is also working on encryption (scrambling) technology to deliver adult and other pay per view movies.

Ultimately 24 channels could be offered. Ihug director Tim Wood envisions a constant 3Mbit/sec stream into subscribers' homes, delivering content and services.

"That might mean customers can subscribe, for example, to an adult channel, Bloomberg, and constant news and e-mail."

Ihug is also believed to be involved in a venture with a Japanese firm to provide on-line gaming facilities for internet users.

Sky has its own pay per view movie system for hotels, a market now contested by at least five suppliers in New Zealand. The others are Maginet, MovieLink and Guestnet.

Sky was supposed to sign in August to acquire a 30 per cent shareholding in Ihug in what was understood to have been a $30 million deal.

Its conclusion apparently hinges on the sorting out of "a couple of outstanding issues," and Ihug director Tim Wood said neither party saw the digital TV foray as a problem.

He said iDTV was an "affordable, intelligent TV" system which provided pay per view movies on a monthly basis while Sky offered more content, including sports and news channels and more movies.

The service is also seen by Ihug as a carrot to make the transition to fast internet service more attractive. By mid October the company says it will have fast internet access available to 90 per cent of Auckland. As a bonus - and for a small extra fee - customers can have digital TV as well.

The new digital TV service is available to existing central Auckland Ihug subscribers from the company's Sky Tower transmitter. Further sites are planned for Waitarua, in the Waitakere ranges, and Pine Hill, which covers the eastern beaches.

Ihug will assess early next year whether it is feasible to roll out the service to other major cities.

Consumers wanting both fast internet and digital TV will need a receiving dish, a set-top box for their TV and a fast internet card installed in their PC. To buy and install the equipment will cost about $1000, plus between $70 and $80 monthly, depending on whether a 600Mb or 2Gb limit for downloading data is chosen.

TV-only users will pay $680 to buy the equipment and a $30 monthly fee.

Ihug has had a team of 25 developers working on its set-top box options and new interactive applications, including home banking and shopping and a device which will allow people to have e-mail and browse the internet without a PC. Web browsing and e-mail on the TV should be available early next year.

The main competitor for the fast internet service is Telecom's Jetstream offering which uses existing copper telephone lines.