Telstra's T-Box joins crowded video market.

TelstraClear yesterday launched its version of the MySky personal video recorder.

And it is confident T-Box will sell better than Telecom-backed TiVo currently being sold with heavy discounts amid slow uptake.

Initially T-Box is limited to Auckland and Christchurch _ where TelstraClear operates the Saturn cable TV service.

But the telco says it is the starting point for an extended media operation once New Zealand broadband improves.

But as Sky's dominance grows will it continue to be allied with Sky TV with an extended reselling arrangement? Or might it eventually provide some competition for Sky?

The T-Box supports high-definition pictures and recording and can record 50 hours of programmes at high-definition quality, or 300 hours at standard digital definition.

Entertainment technology writer Philip Wakefield of screenscribe.tv is sceptical about exclusive content on T-Box.

But he gives a thumbs up to the look, saying its interface is streets ahead of other PVRs.

T-Box is another addition to the bewildering array of TV technology.

But it is also a sign of convergence as the telcos eye TV content as a way to increase broadband demand.

Like MySky _ and to a much lesser extent Telecom-backed TiVo _ T-Box links customers, discouraging them from moving to a rival.

But low sales of TiVo _ leading to heavy discounting _ have raised questions about the scale of a market for PVR's dominated by SkyTV and MySky.

The dominant pay TV operator is in nearly 48 per cent of homes.

Both broadcasters and telcos have warned about its increasing dominance over TV content.

TelstraClear is playing down comparisons between T-Box and TiVo, linked to Telecom and whose sale price has been knocked down from $920 to $360 after slow sales.

``T-Box is a very different proposition,'' said Steve Jackson, head of consumer markets for TelstraClear, the New Zealand offshoot of the Australian telecommunications giant Telstra.

``It's a television device and the starting point for us to move into broadband at a later date as fibre optic develops.''

One aspect of T-Box linked to Saturn ensures it will evade one of the problems that has limited TiVo's appeal _ Saturn has plenty of content. Saturn resells SkyTV's channels.

While initially focused on the TiVo set-top box and its PVR function when it launched in November, Australasian licensee Hybrid Television Services is focusing on its download facility ``Caspa'', available on several platforms to download movies and TV shows for the net.

Meanwhile, Sky is set to launch its own broadband download site.

Sky chief executive John Fellet said that after 30 years in the pay-TV business he was still surprised by the swift success of PVRs.

But Sky needs to grow and more people will be using broadband to download shows.

Which is why the slow progress of TiVo must be worrying for TVNZ, and the future success for Caspa is important to it. It is essential if TVNZ is to develop a role in internet TV and share in the revenue from pay TV, apart from putting product on Sky.

TVNZ owns one third of Hybrid Television Services, the remainder is owned by the Australian Seven Network.

TVNZ's situation in this country has some parallels with Australia.

Sky's controlling shareholder News Corporation owns 25 per cent of the dominant pay-TV company Foxtel.

The largest stake in Foxtel is held by Telstra, so as TelstraClear eyes a role in media there will be interest in how the pay-TV relationship develops with Sky.

MySky is at the heart of Sky's growth in the retail sector but as it grows there is more focus on its role as a wholesaler of programmes and its dominance of content.

Sky says that it is happy to have its licensed shows delivered on other platforms.

But free-to-air broadcasters have become wary about its influence along with the telco sector.

The most vocal has been Alan Freeth, chief executive of TelstraClear.

Freeth has been critical of its negotiating stance, objecting to Sky claiming exclusivity, limiting TelstraClear's ability to show additional channels on Saturn.

The issue came to a head after the last negotiations between Sky and TelstraClear. Steve Jackson said that the disagreement had been averted while the terms of the current content contract is played out.

But as Telstra uses T-Box as the foundation for its media aspirations there may be trouble ahead.

Steve Jackson said that the terms for the programming deal would be concluded in 2 years.

``We will be seeking new terms to ensure that we are able to obtain programming beyond the agreement with Sky,'' the TelstraClear spokesman said.