In the United Kingdom, over 46% of households currently subscribe to broadband services. At the moment, BT continues to be the second largest broadband provider, with just over 3 million broadband connections at the end of October.
Yet during the last quarter, the number joining BT was down from previous levels, and its share of new customers dropped sharply as it struggled to compete with the likes of Orange SA, the Carphone Warehouse Plc, and British Sky Broadcasting Group Plc, all of which are now touting their own free broadband packages. BT hopes the IPTV service will provide greater customer retention.
BT Vision is currently only available, free-of-charge, to BT broadband customers. Customers will receive a BT Vision V-box, which includes a free BT Home Hub wireless router. This set-top box incorporates a Freeview digital receiver, as well as a personal video recorder or PVR.
The PVR is increasingly being viewed as the modern-day VCR because it enables users to pause and rewind live television, and record up to 80 hours of programming. The uptake of these machines could have adverse financial implications for commercial broadcasters because users often use the PVR to skip ads, their main source of income.
Customers get access to 40 Freeview channels, and will be able to pick from a catalog of films, music, and other television content, as well as interactive and communications services, all via their television sets. There will also be a pay-per-view option, with films costing 1.99 pounds ($3.93).
The service is free to BT broadband customers, but there is an installation fee of 60 pounds ($118) and a connection fee of 30 pounds ($60).
BT is hoping to capitalize on the demand for home entertainment, and its solution gives householders the ability to pick and choose their viewing without the monthly subscriptions for alternative services provided by UK satellite broadcaster, British Sky Broadcasting Group Plc, and UK cable giant NTL Inc.
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BSkyB has already launched its IPTV service known as Sky By Broadband, available at no extra charge to existing Sky digital customers. Customers are able to download DVD-quality movies and sports highlights directly to their PC. The BBC is also currently trialing a similar system.
BT said it expects to sign up between 2 and 3 million users over the next three years.
