Zattoo: Watch TV online, live and free but with a catch

iPlayer and 4oD have changed our lives. Never before has it been possible for one person to watch 22 straight episodes of Deal or No Deal or an entire waking day's worth of Dragons Den with such ease and without fracturing a few laws. Legal or not, the Internet is changing the way we watch TV -- and for many of us, it's addictive.

So when we were told by our exalted colleague, ZDNet UK's own Rupert Goodwins, that there was an online service called Zattoo on which you can watch live TV, we were very excited indeed and wasted no time in installing the tiny client. And sure as eggs is eggs, we were able to watch live TV from the comfort of our own desk.

Bandwidth is getting cheaper and cheaper, making video a more viable online proposition. But there's still an associated cost with distributing high-bandwidth content, so how does Zattoo do it? It's a peer-to-peer application, meaning that the cost of hosting the video is distributed, and each viewer helps to pass on the video content to others.

Zattoo's image quality is pretty good, although it looks a bit ropey in full-screen. We like the simplicity of the system and it's great for watching a bit of telly while you do other things. That said, you won't be able to keep up with UK TV when you're travelling, because it's geo-IP restricted to this country.

The big question is, is this service legal? Zattoo claims it is, and says on its FAQ page, "Zattoo acquires the rights to retransmit the channels separately for each country we launch in. It takes a lot of legwork (read: flight miles and sizzling phone lines) to collect the necessary rights to transmit the channels." We spoke to Channel 4, to ask if this was an authorised service. Its reply was: "We are obviously concerned about any new platforms, online or otherwise, that use Channel 4 content without any agreements in place. We don't have formal arrangements with Zattoo."

A spokesperson for the BBC said, via email, "We have not entered into any formal licence arrangements with Zattoo to re-distribute BBC channels, however we are currently reviewing our linear syndication policy following a number of trials around internet re-distribution of linear TV broadcasts."

Note the word 'formal' in both of those statements. From what we've been able to gather, Zattoo operates in a legal grey area -- it's offering content which it doesn't own, but it is doing so without modifying the channel, so the adverts are left intact. When you change channels, Zattoo can serve an advert, which is likely to antagonise TV companies if it becomes successful, as they'll want to be able to make money from streaming their own content.

We also made a request to Five for comment on the legality of this service, but it hadn't replied by the time we published this story. If it gets back to us, we'll post its response here. –Ian Morris