BT and Sky broaden digital alliance

Rupert Murdoch's BSkyB is bolstering its bid for digital terrestrial television by bringing in British Interactive Broadcasting to provide interactive services. The move has raised new fears about Sky's growing potential to dominate Britain's digital television future.

British Digital Broadcasting, the consortium of BSkyB, Carlton and Granada which is bidding for the digital licence, announced yesterday that it was in "formal talks" with British Interactive Broadcasting, in which both BT and BSkyB have a stake, about offering interactive services.

If British Digital Broadcasting succeeds in its digital terrestrial licence bid, the new link would give BT a back-door into terrestrial television via a powerful alliance with BSkyB. The business union of the two giants - BT and BSkyB - is causing concern among industry regulators.

While analysts were not surprised by yesterday's news, it did increase pressure on British Digital Broadcasting's only rival, Digital Television Network, which has based much of its bid for a digital terrestrial licence around the quality of its interactive offering.

British Digital Broadcasting is battling hard to persuade the Independent Television Commission, the industry regulator, that its services have as much potential for interactivity as those proposed by Digital Television Network.

Both Digital Television Network, which is owned by CableTel, and British Digital Broadcasting have been quietly attempting to address any weaknesses in their bids before the Independent Television Commission makes a decision on the licences in the next few weeks.

Earlier this month, Digital Television Network strengthened its programming proposition by announcing that United News & Media would take a 30 per cent stake in it if it won a digital terrestrial television licence. United controls the Anglia and Meridian ITV franchises.

While British Digital Broadcasting has claimed United's role in the Digital Television Network offering constitutes a "material change" to the bid, BDB's talks with BIB are unlikely to fall foul of the ITC as the group's initial licence application mentioned that interactivity may in due course be provided.