Century "C" -- 21st Century Digital Media.

The key words of the media at the start of the 21st century are connectivity, communication, creativity, convenience, community, customization, e-commerce and convergence. This century will become "Century C." And there are two words that are even more important: content and context. Content is king. It always will be. But the context will change.

You know about digital video recorders, like TiVo in the U.S.? They are not just VCRs without tapes. They are the first TV portals. Their place is between the viewer and the broadcaster. Those machines are not only able to eliminate interruptions [of] advertising, they are also able to direct the customers to specific content. If you are a broadcaster, access to your TV station is no longer direct, but mediated. New start-ups can push content to the built-in hard disks, bypassing the whole value-chain of established players in the media world.

But that is only the first step. All over the world, cable TV will be upgraded over the next three years. The copper cable capacity is being extended to 862 MHz, the cluster size, is being reduced and a return channel will be added. Also, phone-line capacity will be largely extended. The DSL [telephone-line modulation] technology makes it possible to transform a narrowband medium into a broadband highway. Finally, wireless connections will allow two-way communication with high speed.

These three new networks make it possible to bring full-screen videos in real time to the PC and television sets. This means that if you are connected to one of these networks, you can choose films and video clips from video servers individually. You are your own program director. It's not broadcast, it's point-to-point. You choose what you want and get it immediately. All this is linked with an Internet connection that is always on. Thus, while watching television or video, you can become interactive, get additional information, read your mail, order something.

Is this the future of television? No, this is the present.

Bertelsmann launched this service on April 15 in Frankfurt on a PC-basis and then [will continue] step-by-step in major cities throughout Germany and Europe on PC and TV.

The London-based research company Data Monitor predicts that three years from now every fifth household in Europe will use interactive television services. Eight years from now, 74 million households in the U.S. will have broadband access. They will spend $112 billion for e-commerce via broadband networks.

But be careful. Not everything carrying the label "broadband" is really broadband. There are, for example, hundreds of start-ups that try to send moving images via the Internet to your home. But the Internet will not be quick during the next five to 10 years. It will take a very long time until television quality can be transported over the Internet in real time. Trying to get a video in full-screen quality over the Internet will lead to nothing but disappointment.

But the killer application is not "movies-on-demand." It is the combination of information, communication, education, entertainment and commerce in the same medium. This is "the broadband application pentagon." This includes movies, but it is much, more than that. The combination of videos and service will be decisive.

Interactive Television means moving images in a convenient service context. The service of the Internet will be combined with the entertainment of TV toward a new medium. A medium that looks like television but works like the Internet. A medium where users and viewers merge; we could call them "viewsers."

We will use several end devices in parallel: cell phones, organizers, notebooks, desktops, home servers, PCs and the TV set. And we will use several networks to access services, for example GSM and UMTS [two forms of digital cellular phone], phone-lines, DSL and cable. But "inter-operability" will be decisive. I want to read my mail wherever I am, regardless of the end device I use -- this is called "unified messaging." The TV screen will not replace the PC. But some functions of the PC will be copied to the TV screen and [vice versa}.

Most production companies now sell their content to television broadcasters. Now, program aggregators, syndicators and online services are looking for TV programs. This means, if you are a television producer, you can build your own value chain. The second impact is that you can now have direct customer relationships. You can sell your content on a per-view basis and add community, merchandising and e-commerce features around it. In the same medium -- not parallel to the Internet.

Let's assume you have 25 Edgar Wallace films in your library. It takes you a long time to convince your favorite broadcaster to broadcast them every two years on free TV. But in interactive television, you can just put them on the server, build service around it, (for example, some storyboards or links to the real locations in Scotland), and build your own virtual channel.

This is my view of the beginning of the 21st century: "Century C." Add connectivity, communication, convenience, community, customization and e-commerce to your content! Use convergence! And you will get another "C," the most important one: new customers.

Werner Lauff is president of Bertelsmann Broadband Group.