BT Launches IPTV Service

U.K. telecom provider BT this week launched its BT Vision IP-based video service.

For approximately $175 in installation and connection fees, subscribers get a "V-box" set-top powered by Microsoft's IPTV software. The service offers more than 40 Freeview channels, a service that broadcasts over the air DTV signals in the U.K.; additional programming includes on-demand movies, music videos, concerts, kids' programs, as well as recent and classic television shows. The V-box also includes a PVR that can hold up to 80 hours of content.

The service does not require a regular monthly subscription, however, BT is giving away the V-box--worth about $390--for free to existing and new customers who sign up for a new contract with BT Total Broadband. The $175 initial fee includes a charge of $115 for the box to be installed by a BT engineer and a connection charge of about $60. BT will introduce a self-install version of BT Vision next year.

"BT Vision is all about giving control to the viewer--control over what they watch, when they watch it and how they pay for it," said Ian Livingston, BT Retail chief executive. "We believe that broadband can transform television and take it into a new era. BT Vision is ideal for people who want more choice than Freeview delivers but who want that extra choice without being tied to a pricey, long-term subscription."

Analysts' reaction to the service was mixed.

Senior analyst at Jupiter Research Nate Elliott told that BT has "great films and great kids' content," but he was unsure about customers' willingness to pay for on-demand content and the high start-up costs. He was also not impressed with the sports content. BT recently made a deal with Setanta to give BT Vision Sport customers access to the Setanta Sport channel and its 46 live FA Premiership games, 60 live games from the Scottish Premier League. BT Vision Sport customers will also have access to the 242 "near live" on-demand FA Premiership games secured by BT earlier this year. BT Vision plans to offer the new sports package in the summer of 2007.

Wes Simpson, president of Telecom Product Consulting said the new service could be an effective competitor to cable and satellite in the U.K.

"This is a unique offering, designed for those viewers who haven't already subscribed to the very popular digital satellite and digital cable offerings in the U.K," Simpson said. "It should appeal to customers who are already paying for BT Broadband and to those who want true VOD and PVR capability in their homes."

Simpson said BT has an "ambitious" subscriber target (up to 3 million by the end of 2010), and it remains to be seen how the established cable and satellite providers will react.