Sky's the limit

A couple of notable news items today around the UK satellite TV provider BSkyB. In the morning, the Guardian ran a story that said Sky was in talks with Microsoft to offer its proposed DTT service over its new PC-based TV platform. The DTT service that Sky hopes to launch, pending approval from regulator Ofcom, will see the provider use MPEG4 technology to put four pay-TV channels into the spectrum currently being used by Sky to offer three free channels over the DTT service, which is sold as Freeview in the UK.

If it happens, it will be an interesting step in the convergence of media in the UK. Although Sky, which is 39.1% owned by News Corp., bought a broadband service provider a couple of years back, it is using this asset in its consumer business primarily as a triple play bundle. Putting its channels on Microsoft's Windows Media Centre will be the first time that the provider actually attempts to offer its services to the PC.

It also builds on the announcement Sky made last week that it would provide its premium channels to Tiscali for its IPTV service.

Presumably both of these moves are being done for Sky to test the broadband waters rather than really hope for big paybacks for the services. Indeed, if reports from moneysupermarket are to be believed, there's such a speed gap between what consumers are being promised and what they are getting that it may be a while because PC/broadband-based television services really take off in this country.

The other Sky story is that this week it launched a counter attack in its ongoing fight with cable provider Virgin Media over whether the latter was right to claim that Sky was really abusing its market position in negotiating over channels (or not negotiating, as the case may be). If the UK courts rule in Sky's favour after all, it will likely have a negative impact on Virgin Media's bargaining position in the future, not just over channels but for the price at which it potentially gets sold.