The new millenium's digital home is witnessing an entirelynew range of products and services, thanks to the all-encompassing convergence.The foremost of them is "interactive TV" or intelligent TV, which somesimply call as "New TV". The digital technology, interactivecapabilities, and new navigation functions are transforming both the televisionset itself and the way consumers view and use it.

Now users will be able to choose the movies and watch it asand when they wish to i.e. Video on Demand (VoD). One will be able to attendlectures in other countries through the television i.e. Distance Learning. Onecan even do shopping through television. Interactive television—with link tothe Internet—will enable us to send e-mail, browse the Web and do things whichwere once only possible with a computer.

The Broadband Need

It is the recognition of this powerful technology that is oneof the major driving factors behind the current broadband strategies. Theplanned merger between the world's largest Internet service provider, AmericaOnline (AOL)and Time Warner—acquisition valued at about $ 125 billion approximately andone of the largest in US—is dictated not only by the convergence of Internetand content/entertainment, but also how to deliver broadband in the digital ageto the masses. Just like it did to the Internet, AOL is creating a model for thecable TV and Internet industry to deliver broadband applications. AOL which hasworld's largest Internet subscriber base of over 23 million and Time Warnerwhich brings one of the largest cable TV networks—including CNN and HBOchannels—want to race ahead in the broadband race too.

The new company after including Time Warner’s cable andmagazine subscribers is expected to have over 100 million paying subscribers.Both partners need to retain customers. The premise seems to be same as the onethat makes Microsoft, a company with 90 percent market share in PC operatingsystems, strive to have software running on cell phones to game players toset-top boxes.

The merger would enable distribution of AOL's interactive TVoffering i.e. AOLTV over Time Warner's cable system—the second largest in theUS. AOLTV is the online giant's effort to extend its interactive services, suchas high-speed Internet access, e-mail and instant messaging, to the TV screen.In the form of a set-top box manufactured by Philips and also a product shippedwith Hughes' DirecTV, it is to help AOL extend its brand, franchise and audiencein the online world to other devices at home. It will also help AOL's expanding relationship with cableoperators. It is expected to serve as a bargaining chip in delivering servicesover other cable TV systems. AOL would benefit from forming partnerships withlarge cable operators to manage the TV portal, which would leverage combinedAOL-Time Warner's strengths in content and services—as a "walled-gardenservice". Undoutedly, a strong market opportunity!