TVNZ talks telco deal with NTL

Television New Zealand (TVNZ) as your telco? That's one of the potential implications of the state broadcaster's ongoing talks with the rapidly expanding UK Telecommunications Company NTL.

NTL confirmed last month that it was in advanced talks with TVNZ regarding a possible joint venture. The discussions have continued and - in sharp contrast to TVNZ's relations with the Murdoch-backed Sky Television - appear to have pleased both sides. One TVNZ source has praised NTL's "very impressive upper management".

NTL also confirmed it was looking to offer a merged TV-Internet service in New Zealand, in partnership with TVNZ. If so, the boxes would be based on technology from PowerTV, a US company formed in 1994 by refugees from the failed IBM-Apple joint venture Kaleida Labs.

PowerTV's OEM (original equipment manufacturer) partners are Scientific-Atlanta, Toshiba and Pioneer. Earlier this year it demonstrated the ability to print from a set-top box to a Canon Bubblejet printer, via a USB port on the box itself. It offers Web, e-mail and e-commerce applications.

A key element of the partnership for TVNZ is that the British company's business plan already involves doing what TVNZ, under public or private ownership, will need to do to hold its place in the local market - taking on Rupert Murdoch's formidable media empire.

NTL's $US13 billion takeover of the cable TV arm of Cable & Wireless PLC, which began in July, is almost completed, making NTL the second largest cable operator in Europe, after Deutsche Telekom - and the prime challenger to Murdoch's Sky satellite network.

Its current shareholders include France Telecom, with 25 percent of the company and Microsoft, which has this year bumped up its holding to 5 percent. A further consolidation with Telewest Communications PLC (in which Microsoft holds a 29.9 percent controlling stake) is being tipped.

As well as serving 2.8 million cable customers (from a total 8.46 million homes passed by its cable) with television, Internet, telephony, interactive gaming and video on demand services, NTL operates a digital transmission network formerly owned by the British government.

NTL last year purchased the infrastructure of Australia's National Transmission Authority - the equivalent of TVNZ subsidiary BCL. It presumably sees potential in the BCL network, which is about to undergo a major upgrade to create a national digital microwave backbone.

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