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Japan isn't the only east Asian market chasing interactive TV.

Hong Kong Telecom plans to spend around $8 billion upgrading its network for multimedia services. The company, working in conjunction with IBM Corp., plans to introduce video on demand by the end of next year, with home shopping and banking to follow in 1996. Technical trials started in August, and a consumer trial in 400 homes is expected this fall.

The carrier aims to woo 200,000 video-on-demand subscribers within two years of the service's introduction, said William Lo, director of Hong Kong Telecom's multimedia business unit. Viewers will see a menu of films on their TV screens and make their selection using a remote handset linked to a telephone line.

It's unclear whether advertising will have a place in the test.

"The market doesn't know a lot about the VOD test in Hong Kong," said Andre Nair, managing director of Ogilvy & Mather Media, Hong Kong. "A number of our clients are interested but don't really understand what it's all about. We're educating them."

The Korea Telecom Authority is also joining the interactive bandwagon with a video-on-demand test in 100 Seoul homes this fall. If all goes well, the service will extend nationwide in 1996.

Interactive home shopping services are not part of Korea Telecom's plans. Under current regulations, home shoppers would not be able to pay for purchases with third-party credit cards such as Visa or American Express. Payment would need to be made using cards issued by vendors.

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