AOL to launch interactive television service in July

DULLES, Va. - America Online Inc. will launch its much-anticipated interactive television service AOLTV in July, the latest effort to bring e-mail, instant messaging and Web browsing to home TV screens.

The service, being announced Monday, is to debut in Phoenix, Sacramento, Baltimore and five other yet-to-be-determined cities the second week of July. It will be rolled out across the country through the fall, leading up to a Christmas shopping push, company officials said.

AOL is playing down expectations for AOLTV, which will compete with Microsoft's WebTV, and analysts say growth could be slow as consumers are introduced to the product. Interactive television services, most notably WebTV, have thus far failed to take off in the marketplace.

''I see this as a first step in a long walk,'' said Youssef Squali, an analyst with ING Barings.

But unlike its competitors, analysts say, AOL has a huge trump card: 23 million subscribers who already are familiar with the company's service.

WebTV has signed up about 1 million subscribers in the three years since it was launched.

AOL will sell the necessary set-top boxes for $250. Monthly fees will be $14.95 for AOL members and $24.95 for nonmembers, company officials said. The fee for members will be on top of the $21.95 they already pay per month for Internet service.

AOLTV launch comes as AOL awaits federal approval of its merger with Time Warner, a deal that would unify the world's largest Internet and media companies.

Despite projections of initial slow growth, industry officials say interactive television eventually will be a gold mine. It could generate $9 billion in e-commerce and subscription revenues by 2004, according to Forrester Research. Advertising is expected to raise billions more.

''It's hard to sell the idea of interactive TV to consumers. But when we say, 'How would you like to send e-mails during commercials?' they say, 'Great,''' said Barry Schuler, president of AOL's interactive services.