Sky signs up Google in broadband deal

Sky has taken a step toward strengthening its fledgling broadband service after signing up the internet giant Google to support a variety of key online services and to launch a Sky-branded version of YouTube.

Sky is the first company to outsource its online applications to the Californian internet search specialist.

The pay-TV giant will offer its broadband customers Google's e-mail and instant messaging products using its own brand and design and will also launch an online video site built on the YouTube system that it is hoped will stimulate user-generated content.

The two companies will also collaborate in the area of advertising across the internet, television and mobile phone platforms. Sky and Google have signed a revenue-sharing deal in the online advertising market.

James Murdoch, the chief executive of Sky, said that the deal will enable Sky Broadband to move "at pace".

"Essentially we think this agreement is very important for us and for Google," he said. The pay-TV giant might also look to adopt Google's internet telephony product.

Eric Schmidt, the chief executive of Google, said: "This is a framework for other global deals. We were looking for a partner to take the innovation we have done on our sites into the broadband space."

Mr Schmidt said that the United Kingdom was the ideal test-bed for Google's services because of the rapid growth of online advertising in this country and the quality of high-speed broadband.

It is the first time Google has been exposed to the television advertising market while Sky gains a foothold in the rapidly growing online advert-ising sector.

"If it works, it will be our most lucrative deal," Mr Schmidt said, although no financial details were revealed.

He added that there was no connection to Google's advertising deal with MySpace that is also part of the News Corp stable of companies.

"They are unrelated deals, but both have the trailblazing aspect," he said.