Cable heavyweights invest in interactive TV start-up

Several cable industry heavyweights will invest $87 million in ICTV, an interactive television start-up, in a round of funding.

As previously reported, Motorola, TV Guide, Liberty Digital (the Internet unit of John Malone-run Liberty Media), and cable operators Adelphia and Shaw Communications announced equity stakes in ICTV. Interactive TV technology provider OpenTV and ACTV, a digital TV programmer, also will take stakes in ICTV, joining earlier investors Cox Communications and Lauder Partners, which will increase its stake.

Although the individual corporate sums were undisclosed, Shaw and Liberty are believed to have led the round of funding.

ICTV makes software designed to run on cable companies' so-called head-end equipment, the network gear from which the TV signal originates. ICTV's technology allows enhanced TV services, TV-based Internet browsing, email access and other interactive TV applications.

Because the majority of the technology is housed at the head end, rather than on specific high-powered set-top boxes, cable operators will be able to offer new services to millions of existing set-top boxes rather than waiting for and releasing new set-top boxes.

The network-based software approach is intended to prevent subscribers from having to purchase newer set-top box equipment or from having to upgrade embedded software in those devices.

The high profit potential of new Internet-based TV services has led to plenty of competition in the nascent market. For example, America Online, the world's largest Internet provider, launched its AOLTV service this week, while other companies are planning IPOs.

ICTV is expected to use the proceeds to fund product development and expand globally.