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Last Updated: Wednesday, 6 December 2006, 14:55 GMT
Hi-tech world assesses BT Vision
BT telephone exchange, Visual Media
BT Vision gives people on-demand access to some shows
Industry experts and analysts have broadly welcomed the launch of BT Vision - the telecommunication firms' IP television service.

BT Vision mixes digital TV channels with on-demand programmes, sports events and movies delivered via the net.

One analyst said he was "more impressed" than he thought he would be prior to the launch of the service and other industry watchers said it looked expensive when compared to similar services in the UK.

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Via BT Vision subscribers will get access to more than 40 digital Freeview channels as well as on-demand channels for movies, music, sport, children and popular TV programmes.

The service revolves around the V Box - a set-top box that lets people record up to 80 hours of Freeview television on to its 160GB hard drive. Like the rival SkyPlus service it also lets people record, pause and rewind live TV. It is also the route for getting at the on-demand content.

Mike Cansfield, principal analyst at Ovum said the launch of BT Vision signalled the start of a "new era" in the home-entertainment market.

"I'm more impressed than I thought I'd be," said Nate Elliott, senior analyst at Jupiter Research. Mr Elliott said BT Vision had a "great" line up of content for film fans and children and the deal to offer live Premiership matches should satisfy many sports enthusiasts.

Analysts at Screen Digest said the launch of the IPTV service made good sense given that BT already had almost 3m broadband customers. A BT broadband service is required for anyone who wants to use the service.

Cost curve

But Mr Elliott from Jupiter pointed out that the sign-up costs for BT Vision could put some off. Set up costs could reach 380 for those who are not customers of BT - though this falls if customers sign up for a new broadband service. The start-up costs will also fall in 2007 when a self-install version is introduced.

Mr Elliott said this was "far too much" given that people could buy a Freeview set-top box and a digital video recorder on the high street for less than 100.

Digital home, Visual Media
Homes are making more use than ever of digital media
He questioned the wisdom of charging so much when BT declared that its aim was to poach customers of rival Sky who balk at its prices.

A better strategy, Mr Elliott said, might be to give away the on-demand service for free for a few months rather than charge the 14 per-month fee from the start.

While few would be willing to try it unseen, getting them hooked and then charging could reap dividends for BT, he said.

Mike Cansfield from Ovum said BT Vision was entering a crowded market and its success would depend on how well the service was marketed to get across the significance of the on-demand segment of the service.

In a briefing note Screen Digest said if BT reached its target of attracting 3m customers by 2010, it could cost the company more than 300m. On-going costs for the service, which include the introduction of high-definition programming and video telephony, could also prove to be high.

But, said analysts, the biggest brake to BT's ambitions could be the sheer number of competitors in the UK. As well as established TV providers such as Freeview, Sky, NTL and HomeChoice, BT will soon face more competition from new entrants such as Orange.

This mature market serves viewers so well that only 11%, suggests research from Jupiter, will be willing to pay for on-demand TV. A figure which might mean BT struggles to reach its ambitious targets for signing up customers.

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