The shopping mall in your sitting-room...

The instant gratification of interactive television may soon be a household reality. Laurence Blackall and Geof Wheelwright report A good way to upset Alan Rudge, newly promoted deputy to BT's group managing director, is to ask him why his company is notbroadcasting television programmes. Clearly frustrated by the Oftel diktat that keeps BT out of that lucrative field, Dr Rudge has had to look elsewhere for the company's next winner in the consumer telecommunications market. That winner might be interactive television - a system that allows people to buy things electronically by hooking up their televisions to their phone lines.

When BT Interactive TV starts consumer trials in Colchester and Ipswich this summer, it will be a milestone in one of BT's most important development projects, Information Communication and Entertainment (Ice). This advanced multimedia development programme represents an enormous investment, even by BT's standards. Interactive television has for many years been an ethereal concept, much discussed and never implemented. Now, following completion of a successful technical trial, interactive television haslost its "vapourware" tag and promises, in BT's words, "to create a revolution in the home".

Drawing on the technologies of telephone, television and computer, the trial will deliver a range of services, such as shopping, banking, community information and television programming, to its 2,500 subscribers. "We call it advanced development becausewe don't really know what the market wants," says Dr Rudge. "We're exploring the marketplace with the technology."

BT is not alone in wanting to find out what the market wants; each of the services has attracted big names. The list of retailers includes Thomas Cook, Sears, WH Smith and Safeway. Others are expected to take to the "teleshopping" mall as capacity grows on the system.

However quickly teleshopping and telebanking catch on, though, it is hard to imagine any interactive service being more popular than video on demand. A consortium of the BBC, Carlton, Granada, Kingfisher and Pearson will supply programmes, with sports coverage from BSkyB and music videos from major record labels. Subscribers will be able to choose from a regularly updated selection of 600 hours of television programmes, 400 hours of movies and 200 hours of music videos, not to mention 350 hours of educational programmes.

The system is designed to be user-friendly. BT thinks the icons and mice of modern PCs are too complex - instead, customers will use a remote control to choose items on their screens. Life has to be made as simple as possible for the armchair consumer; computer literacy cannot be a prerequisite for subscribing to interactive television.

This presents BT with a problem, for customers need a computer in their homes if they are to indicate which service, movie or product they want. The solution is to sneak a computer (an Apple LC475) into the box on top of the TV set, and to make it look like the gadgetry used to receive cable or satellite.

This summer's consumer trials will not only be a first serious attempt to find out what the market wants, but will also provide a rigorous test of the technology. Technically, it is feasible for a thousand people to watch the same movie at the same time,but the sophisticated database technology that lets each pause, rewind and restart at will does not yet exist. There are simply no "off the shelf" products available, so BT is developing them with the software company Oracle and others.

Even testing these interactive services in the marketplace will force BT to develop a world-leading position on technology. Despite all the hype, Dr Rudge says no one is actually delivering interactive television. Not even in the United States? Not yet, he insists.

Time Warner and US West, a formidable alliance of "content and carrier", are planning a trial of on-demand services with 4,000 customers in Orlando, Florida. But the project has been beset by technical problems, and is now promised for the end of 1995. Bell Atlantic, another US telephone company, also has an interactive television service about to start trials; using similar technology to BT, the Stargazer service will offer education, entertainment, information and shopping to 2,000 homes in northern Virginia. The Bell Atlantic project lacks the banking and community services planned by BT; they will probably be written into the project when the firm launches the real thing.

PC makers will be watching the consumer trial closely. Until the arrival of CD-rom, they have made little headway at selling computers into the home. High prices and technophobia have played a part in this but, ultimately, the reason that computers have not had the success of VCRs or automatic washing machines is that they do not fulfil any fundamental needs. Computers don't clean the house or fetch the kids home from school. But if Dr Rudge's experiment is a success, at least they can start doing the shopping.

Interactive television and video-on-demand are the most active areas of research.

Microsoft, Oracle and Hewlett-Packard are all trying to develop and market "video server" technologies to deliver digital video and audio signals to computer-control television "set-top" boxes.

The latest of these to gain prominence is Microsoft's software design for delivering continuous multimedia such as audio and video. Films are particularly problematic for computers because of the vast amount of data they include and the high speed at which computers have to deal with it to maintain continuous playback. Another difficulty is to find a way of allowing lots of customers to "read" the same data at once.

Microsoft says that its package, codenamed Tiger, will provide a solution that can be used from desktop computers right up to the citywide deployment of cable television images.

Compaq and Intel have already demonstrated the first continuous-media server hardware based on this Tiger technology. This has been designed to provide a cheaper way of delivering video-on-demand by using standard PC components and asynchronous transfer mode switches as part of the delivery mechanism. ATM allows data to move more smoothly, which makes it possible to use network capacity more efficiently.

Microsoft says that this development will allow thousands of users to gain "split-second" access to thousands of media files (such as movies, music videos or TV shows), and allow laserdisc-quality control of them - including the ability to pause, reverse, fast-forward and jump to parts of the file.

Nathan Myhrvold, Microsoft's senior vice-president of advanced technology, hopes this move will dispel the notion that only very expensive systems can deliver video-on-demand. "Some people assume that video-on-demand is a hardware problem for massively parallel machines, but it's really a software issue," he says. "Once you have the right software, you can implement it in many ways - on personal Tigers for individual or workgroup use, corporate Tigers for small private networks or city Tigers for large-scale, metropolitan service areas."

Tiger is based on Microsoft's existing Windows NT Advanced Server software, and will be tested in Seattle by Microsoft and Denver-based US cable television giant TCI TeleCommunications, with more widescale testing in Vancouver, Canada.

Microsoft is confident that Tiger will appeal strongly to cable television, telephone, utility and private network companies and will be used to deliver services such as telecommuting, video messaging, information navigation, corporate multimedia servers, television post-production work, shopping kiosk production and business transaction processing.

Meanwhile, the California-based hard-disk maker Micropolis has developed its own video server product and made sales to the giant US hotel chain Hyatt. Its 52 gigabyte video servers will provide a selection of 20 movies, each of which can be accessed by up to 64 rooms at once. Guests will be able to watch any of the available movies anytime, with full digital control to pause, fast-foward and rewind the movie.

The Japanese electronics giant Matsushita is planning to market the system to airlines for inflight entertainment, such as movies, video games, business information and even in-seat gambling to passengers via seatback video terminals.