LONDON: UK-based pay-TV, hitherto the sole preserve of US-controlled rivals BSkyB and NTL, is set to develop into the mother of all market battlegrounds with Monday's launch of BT Vision - a webTV service from BT, the nation's dominant telco.

BTV, a wholly-owned subsidiary of BT Retail, is targeting to sign three million paying customers in as many years - a challenging target. It has budgeted to spend £100 million ($1.98bn; €1.48m) in 2007 towards this goal - although BTR chief executive Ian Livingston does not expect to break even on the new service until 2010.

"A lot of people have talked about BT Retail's profits dwindling but our last set of results showed that we have got plenty of headroom to make this investment," he said.

Available only to BT broadband customers, BTV offers 43 free channels, in addition to which it will market a plethora of 'on-demand' content at varying prices.

Comments an investment note from Morgan Stanley: "With a free set-top box, £2-£3 per movie download, and some live football, the offering looks compelling versus current offers from NTL and Sky."

However, as BT itself concedes, its new venture is as much a tourniquet to stem broadband customer churn as it is a device to generate new revenue streams.

That admission is echoed by investment bank JP Morgan: "BT Vision in our view is largely defensive. It should help BT to reduce customer churn after the strong [broadband] challenge established by Sky and Carphone Warehouse .

"However, this is not unexpected and competition can easily replicate such an offer if BT is commercially successful (Sky and Tiscali/Homechoice are already there, Wanadoo is not far away)."

BT's US-owned rivals were predictably dismissive.

Says NewsCorp-controlled BSkyB, which boasts over 8m customers: "There is no contest in content. Sky customers can enjoy the best live Premiership [soccer] action, alongside comprehensive coverage of other sports, first-run TV entertainment and high-definition TV."

And for its part, NTL, founded in 1993 and still awash with red ink, claimed its customers already receive "next generation digital television" with on-demand features.

Says ceo Steve Burch: "Whether taken alone, or with other products from our versatile quadplay package, our TV service is a unique proposition that will not be easy to emulate."

Data sourced from; additional content by WARC staff