  In this paper we analyze the development of interactive TV in the U.S. and
Western Europe. We argue that despite the nascent character of the market there
are important regulatory issues at stake, as exemplified by the AOL/TW merger
and the British Interactive Broadcasting case. Absent rules that provide for
non-discriminatory access to network components (including terminal equipment
specifications), dominant platform operators are likely to leverage ownership
of delivery infrastructure into market power over interactive TV services.
While integration between platform operator, service provider and terminal
vendor may facilitate the introduction of services in the short-term, the
lasting result will be a collection of fragmented "walled gardens" offering
limited content and applications. Would interactive TV develop under such
model, the exciting opportunities for broad-based innovation and extended
access to multiple information, entertainment and educational services opened
by the new generation of broadcasting technologies will be foregone
