AOLTV To Launch in Three U.S. Cities

Mammoth online services provider America Online announced Monday that it will roll out its much-anticipated interactive TV service this week in three U.S. cities, selling enhanced TV for $14.95 (US$) on top of the standard AOL monthly access fee.

With AOLTV, consumers in Baltimore, Maryland, Phoenix, Arizona, and Sacramento, California will be able to watch television using their existing signal source, whether broadcast, cable or satellite, and add additional interactive features delivered through a set-top box. The set-top boxes are manufactured by Philips Electronics and are available exclusively through Circuit City stores or online through AOL.

In addition, the company is working with Hughes Network Systems to create an integrated set-top box for AOLTV and the DirecTV satellite service. Hughes is a sister company of DirecTV.

Current AOL members can subscribe for $14.95, while non-members pay $24.95 per month.

Beefing Up Passive TV

The additional content includes such familiar AOL services as e-mail, instant messaging (IM) and chat, as well as a new interactive on-screen program guide to help viewers get more information about TV shows. The service can be navigated with a wireless keyboard or a universal remote control. A main menu includes one-touch shortcuts from either the wireless keyboard or remote control to all of AOLTV's features.

Possibly preempting concerns by federal antitrust officials -- who are already probing AOL's merger with entertainment giant Time Warner -- AOL made a point of developing its interactive service on a non-proprietary platform. AOL says it hopes its software and set-top box will provide a platform for information and entertainment content developers to create new interactive programming and expand the reach of the service's current offerings.

The company used the open operating system Liberate to enable content developed by television programmers for AOLTV to be used on other services as well.

The rollout of AOLTV follows announcements last week that AOL is working with TV recording device company TiVo and with mobile phone service Sprint PCS to make those companies' services compatible with AOL's interactive content.

Web Surfing and Channel Surfing

The new interactive service also merges two activities that consumers tend to participate in simultaneously, AOL says, citing its own research that an increasing number of people watch TV and surf the Internet at the same time.

AOLTV includes 11 new content channels designed to complement television programming, and the service provides users full access to the Internet while they watch TV through picture-in-picture viewing. The company is counting on the service's program guide to win over new users who are tired of the passive, scrolling guide channels included in most cable services.

The AOLTV Program Guide "dramatically simplifies navigation," the company says, by organizing TV channels into groups of networks, movies, news and other categories. Users can view information on programs up to three days in advance of air date and change channels by clicking on words and graphics within the guide.

America Online also built in places for programming partners and sponsors to provide additional information and content, creating additional revenue streams for AOL.

"Such content could include links to additional online information such as background for news and sports programs, online polls, and e-commerce opportunities," the company said.

AOL has lined up E! Entertainment Television, Oxygen Media, Starz Encore Group, QVC, The Weather Channel, the creators of Sesame Street and several other programming developers to create information and entertainment content for the service.