Having been one of the most depressed places around, German TV is set for a rebound thanks to last week's takeover of Premiere and the arrival of Deutsche Telekom as a video-on-demand (VoD) broadcaster.

Represented by former Kirch executive, Daniel Otto, Telekom's on-line subsidiary T-Online is at the AFM as a buyer. He is seeking to sign up a mixture of studio-level and indie films for its VoD service, which launches officially in the third quarter of this year with a mixture of film, sports, games and lifestyle programming.

Telekom, a former state-owned phone monopoly which was privatised last year, reckons that it has the infrastructure to deliver a credible service that will take on both conventional pay-TV and traditional video rental.

Some 12 million German homes now use T-Online internet services and with an upgrade programme quickly moving many subscribers from ISDN to DSL lines, some three million homes already have the capability to take very high speed broadband services. That compares favourably with the 2.5 million pay-TV subscribers that Premiere has amassed after ten years in business.

T-Online is proposing a streamed - not downloaded - service of VHS quality using advanced rights management systems that prevent access from outside Germany and Austria. With no subscription fees beyond the DSL line, watching films will cost no more than regular video rental and billing is made to domestic phone bills.

For film rights owners, T-Online is also proposing an elegantly simple revenue share model and expects to pact with some of the US-based majors within the next weeks. "We know that the technology works as it is already operational with a range of short films and documentaries purchased from the BBC. Now we need to prove that there is viable revenue stream," said Otto.

Current films will screen in the pay-per-view window, some six months after home video release. The studios have yet to heavily promote their own internet VoD service Movielink, which launched in the second half of 2002, but Otto argues that they will embrace services like T-Online's. "The studios want to increase their scale in foreign markets, but they have not wanted to take on the risk of building networks. We have done that for them."