BT to challenge Sky with new TV on demand

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To be launched on 4 December, BT Vision will have no monthly fees once consumers have purchased a digibox, believed to cost about £139.

Customers, who will need to be signed up to BT's broadband service, will pay to watch programmes "on demand" from a huge library of films, TV shows and music videos.

It has signed up Disney, Universal Pictures, Sony BMG, Premiership Football Highlights, MTV and a raft of other broadcasters to the service. A BT spokesman said: "Our objective is to have content available in the same window as it is on film and DVD."

BT hopes by offering an archive of classic film and TV, as well as movies first, it can lure customers away from Sky and cable companies.

The BT Vision box will also be able to receive and record Freeview TV channels, Dan Marks, BT's chief executive of TV, said. "We will offer 32 freeview channels for free, with the option to pay for extra programmes such as films, music videos or Premiership matches. You'll be able to download and watch these whenever you want, and easily catch up with the previous week's TV if you've missed anything."

BT has also signed up Endemol, the company behind Big Brother, to develop exclusive content for the service. It has won the rights to show 242 Premiership football matches in a joint bid with Sky. BT will not be able to show the ties live but viewers will be able to download full Premiership games from 10pm on matchdays.

Will Findlater of Stuff magazine said: "It's going to be a really bloody battle for the TV market. Video on demand is really the future of consumer TV, as it allows people to watch programmes when they want."