Leeds City Council is to pay BSkyB to wire up thousands of its tenants to receive the satellite broadcaster's services, in Sky's first deal of this kind.
The arrangement, which Sky hopes will be the first of many local contracts to enable it to reach blocks of flats, will see the operator lay claim to a group of customers that it has always found difficult to reach.
The deal will remove the need for occupiers to have separate satellite dishes to receive Sky services, with one communal dish serving the whole block. Many local authorities and private landlords prohibit tenants installing dishes on the outside of their flats. Under the contract, Sky will also upgrade the communal terrestrial aerial to enable tenants to receive digital terrestrial services.
Tim Wright, head of Sky's homes division, said: "The benefits of digital television should be open to all viewers, including the millions who are currently served by communal aerials. Sky is delighted to help Leeds City Council ensure that tenants and leaseholders can choose how they receive television in the digital age."
The Government has said that the analogue TV signal will be turned off some time between 2006 and 2010. However, around 20 per cent of UK households receive their signal via a communal aerial, which is not capable of receiving the replacement digital broadcasts. That leaves local authorities, which often house their tenants in blocks of flats served by a single aerial, with a major problem to solve. Upgrading the communal aerials across the country will cost tens of millions of pounds. As these upgrades will take several years to carry through, the issue is pressing, according to Sky.
Sky's deal sees the company upgrade all the wiring for 12,000 council tenants for a "commercial" fee. Those households will then have a digital terrestrial signal and the option of paying to subscribe to Sky – the broadcasters' most popular package costs £37 a month.
Sky, already the dominant pay-TV operator, said the move was about "choice" for those tenants. Sky's cable rivals, NTL and Telewest, have already been upgrading council blocks for several years.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies