Digital Upstart Takes Aim at German Market

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Berlin -- A second German digital-television platform
launched last week at the country's International Broadcast Exhibition media trade show,
hoping to grab a piece of the market dominated by The Kirch Group and Deutsche Telekom
A.G.

Free Universal Network, as the digital upstart is known, is
backed mainly by German public broadcaster ARD, with support from a handful of hardware
manufacturers, retailers and small TV-production companies.

It aims to compete with Kirch's Premiere World digital
direct-to-home platform, which launches Oct. 1, and which is the result of the merger of
Kirch's DF1 digital-DTH service and programming service Premiere.

FUN is also going up against the German cable market, by
far dominated by telco Deutsche Telekom.

"Consumers will understand that digital TV does not
automatically mean pay TV," FUN chairman Lutz Mahnke said.

FUN end-user equipment will rely on software from OpenTV
Inc. and Sun Microsystems Inc., which are also FUN members.

However, German TV-market executives are skeptical about
FUN. For starters, Kirch's Premiere World will have about 1 million subscribers. This
means that the German market will boast about 1 million of Kirch's proprietary
"d-box" digital decoders, which rely on customized software from Irdeto and
Kirch's Betaresearch unit.

Coincidentally, Irdeto, like OpenTV, is a unit of South
Africa-based MIH Holdings Ltd.

According to FUN sources, the platform has sold 30,000 to
50,000 of its set-top boxes.

Some FUN members are reluctant to develop applications for
just one platform and to become involved in a standards war.

"We intended to send out a signal that we develop
programs for all different digital platforms," said Christian Gummig, general manager
of Me-Myself & Eye Film und TV Produktions GmbH, a production company and FUN member.

So far, FUN is only available by satellite, and its biggest
problem is probably its lack of distribution on cable, which reaches about 18 million
homes here. At the same time, FUN lacks any exclusive programming.

Still, it does boast an advanced, user-friendly electronic
program guide that enables users to easily find programming on the country's public
broadcasters.

Germany's top private broadcaster, RTL, which is owned by
European media heavyweight CLT-Ufa, launched a FUN-compatible EPG, but it declined to
become a full member of the platform in order not to become "related too closely with
ARD," one source said.

While FUN has a relatively small number of boxes in the
market, it has won praise from consumer-electronics retailers, as well as consumers.

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