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SCMP Reporter

TWELVE days before Wharf Cable is to launch its cable TV system, the managing director of KPS Video Stores has given a blunt personal opinion on the long-term prospects of the HK$5 billion venture.

  ''The public just doesn't want it,'' Garrie Roman said.

  But David Keefe, cable operations director for Wharf Cable, has defended interactive services, saying he believed demand would explode.

  His optimism is backed up by several large Hong Kong-based investment houses.

  Barclays de Zoete Wedd, Credit Lyonnais and Smith New Court all issued conditional, but essentially bullish, financial analyses of Wharf Cable's prospects recently.

  Mr Roman insisted he was not being defensive even though a retail video distribution chain would seem to be the logical loser against a cable TV system.

  The Wharf project was, ultimately, intended to develop into a full interactive service capable of providing video-on-demand, and other shopping, financial, educational and information services, and it was the cost of these options that deterred viewers, he said.

  ''This view is based on research reports - all of which show a low take-up of paid-for and interactive services,'' said Mr Roman, who is a member of the Video Software Dealers' Association (VSDA) in the United States.

  The results of a four-year interactive experiment in Cerritos, Los Angeles, carried out by cable company GTE were, typically, not encouraging.

 In a report in the Los Angeles Times, Cerritos resident Charles Rose, who happened to be a telecommunications consultant, said interactive TV was ''a solution to a problem that doesn't exist''.

  Mr Roman was sent the August 31 report by the executive vice-president of the VSDA, Don Rosenberg, last week.

    Even GTE project head Don Bache said in the report: ''A lot of what we're doing here is speculation. I don't know if we can prove demand exists for all these services.

  ''You have to in some sense 'create' the demand, like with ATM machines.''      Mr Rosenberg's covering letter argues that the report says ''consumers are not clamouring for interactive television and they probably won't use it''.

  It concludes: ''Judging from this piece, the question isn't whether the video industry will survive the coming of the 'information superhighway' but just how much money will the cable and phone companies spend before they realise they're trying to sell something nobody wants?''   Mr Roman said he agreed with Mr Rosenberg's conclusions, and suggested interactive services were not for the mass market, but were relevant in highly specialised and personalised applications.

  Mr Keefe said this was a ''non-realistic view of the future''.

  ''I think we're on the edge of a huge boom in interactive services and pay-per-view TV. People are demanding more and more choice, convenience and the opportunity to have what they want, when they want it,'' he said.

  Home-shopping networks were booming in the United States, and pay-per-view services were on the up, ''although the movies aren't very good yet''.

  He conceded the pick-up rate for both technological developments could not be accurately predicted in Hong Kong, but remained confident for the longer-term.

  ''It's a discovery process with a high initial investment, and an incremental return spread over several years, but I would expect 10 per cent to 20 per cent of local subscribers to be picking up pay services before long, and especially when the Cantonese film product strengthens,'' he said.



KPS attacks cable TV