Raymond Snoddy on Broadcasting

Ring in the new: BT's launch of internet TV will have Sky worried

The headlines were big for the launch of BT Vision, the internet television service from the UK's largest telephone company: "BT to screen top football"; "Premiership live TV deal will challenge Sky head on." The BBC was almost as excited.

After all, from the start of the next Premiership season BT will be showing no fewer than 282 games a year. There will also be on-demand movies, music, and favourite classic TV programmes plus the opportunity to call up recent programmes that you've missed on broadcast television.

Then there is a hard disk in the free box that can record up to 80 hours of programmes. It's ready for HD pictures at a later stage, and there are none of those nasty compulsory monthly subscriptions. It's pay as you go, just like mobile phones.

What a deal. Sky has clearly had it, and as for Sir Richard Branson and the NTL cable group it's just as well they pulled out of the ITV deal. They just wouldn't have been to afford it anyway, would they?

All of the fabulous BT Vision offers are true, of course, but perhaps a little context would be helpful.

The fact that 242 of the football games are "near-live" - shown at 9pm on Saturday evenings - is a slight disadvantage. Some desperate fans will be attracted, but for most "near-live" is likely to induce only a "near-willingness" to pay.

The 46 live games, sublet from the Irish sports rights group Setanta, are for the 5.15pm kick-offs on Saturday and on Monday evenings. Sky still has the rights to the big Saturday and Sunday games, and will hold on to the majority of the business.

As for on-demand movies, the British public has shown a marked reluctance to pay for more than a handful of movies a month. Marginal revenues are the result.

The UK has been one of the slowest in Europe to move to internet television, or IPTV, mainly because of the established strength of satellite and cable. Although just about every country in Europe now has a service, usually provided by telephone companies, so far at least the progress has been much slower than expected. By the end of the year there should be around three million IPTV subscribers in Europe, with the largest number in France. Consultants Screen Digest forecast that by the end of the decade there will be 1.34 million IPTV subscribers in the UK compared with 3.5 million in France and 1.79 million in Spain.

If the Screen Digest forecast turns out to be anything like correct, then Sky, with more than eight million subscribers, is unlikely to be brought to its knees by BT Vision.

BT does, however, have a number of things going for it. The "no-subscription" pledge will be attractive to some, although to get the £199 set-top "V Box" for "free", a BT broadband subscription is needed.

BT Vision will be able to offer limitless content from around the world. And the phone company has been clever in tapping into the Freeview market by offering a hybrid set-top box and with it more than 40 Freeview channels.

But competition is already on the way. Tiscali, owners of the Home Choice internet service, plans to expand outside London, and Orange will not be far behind. Then last week Sky and Google announced "a broadband alliance" to launch new web-based services - just in case. Still, congratulations are in order for Sir Christopher Bland, former chairman of the BBC and now BT chairman. He's back in television again. Pity it took BT 10 years to get round to it.

BT Vision should at least be able to force Sky to put a cap on its regular annual price rises, even though for the foreseeable future it will trail a long way behind satellite and cable in third place.

On, off, on: why the bottom line will determine the BBC's move north

All the signs are that the BBC plans to push ahead with the move north to form the centrepiece of the planned Salford Media City - despite the off-stage kerfuffle.

Rather unwisely, the BBC decided to play the Salford card in the fraught negotiations over the level of the licence fee. The line of argument - that we can't take major departments north unless we get a decent licence-fee settlement - backfired badly.

More than 160 backbench MPs expressed their outrage by signing an early day motion. The BBC director-general Mark Thompson has hinted privately that he was pressured into going for such a negotiating ploy. Who could have done such a thing? Surely not the Culture Secretary Tessa Jowell, looking for ammunition to combat the hard line being taken by Gordon Brown on the BBC licence fee?

The truth is - and Thompson has acknowledged as much in visits to Salford - that the move will save the BBC money in the longer term. So apparent costs of £600m reduced to less than £400m are very notional. There is a cash-flow problem in the medium term but nothing that can't be dealt with by lifting the outdated £200m limit on BBC borrowing.

The truth is that the BBC is getting a great deal from the Salford Media City developers who quite rightly see the BBC as the equivalent of attracting Tesco to a new shopping centre. As recently as last week, the most detailed discussions were continuing on designs.

With two foxes already shot - the Salford veto, and a potentially useful threat from the then chairman Michael Grade to resign unless... - all the BBC can now do is threaten to refuse to pay for the analogue switch-off.

This would not play well with Chancellor Brown, who seems hell-bent on trying to impose a below-inflation settlement. Cynics note that if Brown gets his way Rupert Murdoch will be very pleased. Doubtless the media baron would find a way of showing his gratitude come election time.

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