BT outlines its plans for battle with pay-TV rivals

BT has announced plans to enter the television market, putting the telecoms group in direct competition with satellite operator BSkyB and the cable companies.

The dominant telecoms company will offer a new broadband product from autumn next year which will be integrated with a Freeview decoder for picking up the digital terrestrial television signal. It will supplement the Freeview channels with on-demand content, such as movies, plus a "catch-up TV" archive of recent programmes. It will also have a personal video recorder, capable of digitally storing 80 hours.

Ian Livingston, head of BT's retail division, said the service would be open only to the company's broadband customers, currently comprising 2 million households.

He said: "We will be the first company to give millions of customers converged TV. Give us a few months and no consumer will know BT as just a phone company anymore. With this - and BT Fusion [a combined landline and mobile phone] - we are leading the future of communications."

BT did not release details of the on-demand content. However, the company said that it would not be bidding for the next round of rights to televise Premier League live football, which costs £1bn a year. Consumers will need to take a 2-megabyte BT broadband line for £17.99 a month. They will also need to buy the PVR, which will be made by Philips at a likely cost of up to£150.

The basic television channels will be free-to-air, picked up via a traditional aerial, so there will be no TV subscription involved, unlike offerings from Sky or cable. BT will charge separately for any on-demand content that is ordered. Mr Livingston said: "The big difference with Sky or cable is that there is no upfront commitment with our product."

Analysts said BT was betting it could hook customers with a lower starter price than pay-TV services, and then allow people to "pay as you go".

Although some felt that BT's plans lacked ambition to compete with the high-end services offered by pay-TV providers, others said it was sensible not to take Sky head-on.

One analyst said: "BT's product is broadband-centric, whereas Sky will be more TV-centric."

Sky bought the broadband provider easyNet last week and made clear it is after broadband customers from BT and others for a bundled TV-internet service it is to launch in the future.

What's on offer

BT

* £17.99 2Mb broadband

* PVR (over £100)

* 30 Freeview channels

* Catch-up TV, Video on demand (next year)

Sky

* £42.50 a month for about 400 channels (lowest pack £15)

* PVR (£49 for Sky+ box)

* Broadband and telephony (next year)

Homechoice

* £17.99 1Mb broadband (£49.99 for top pack)

* 39 channels via DSL line

* Pay-per-view video, catch-up TV

* No PVR