BT has signed a major deal with Ericsson to support its launch of several new sports channels this summer, including what it claims will be the UK's first ultra-high-definition (UHD) channel.
The fixed-line telecom incumbent is trying to establish itself as a serious rival in the UK's pay-TV market, having spent heavily on sports rights to challenge market leader Sky , and evidently believes the lure of a higher-quality service will help it to attract new customers. (See BT, Sky Splash £5.1B on Premier League Rights.)
Ericsson says it will be responsible for developing and managing three new BT Sports channels under its latest deal with the operator -- BT Sport Europe, BT Sport Showcase and BT Sport UHD.
Announced earlier this month, BT Sport Europe is to launch on August 1 this year and will feature soccer matches from the UEFA Champions League and the UEFA Europa League.
BT Sport Showcase will be a free-to-air channel available to consumers who do not currently subscribe to the operator's broadband service and also featuring some coverage of the European soccer competitions.
But the forthcoming BT Sport UHD channel -- also due to launch in August -- could be the real game changer, allowing customers to watch a number of sports events using UHD technology. (See BTE 2015: 4K All the Way.)
UHD promises a quality improvement over current high-definition footage. Pay-TV players hope it may give them an edge over service providers still making do with older display standards.
BT Group plc (NYSE: BT; London: BTA) and Ericsson AB (Nasdaq: ERIC) say they have been collaborating on UHD TV for several years and carried out the first multi-camera production of a sports event in UHD back in 2013.
But a UHD service may have limited appeal until more consumers have acquired UHD TV sets, and BT remains a long way behind Sky in the UK's pay-TV market.
At the end of March, the operator revealed that 1.142 million customers had taken advantage of its TV offerings, while boasting more than 7.7 million subscribers in the retail broadband market.
Sky does not break out customer numbers by product area but served a total of 11.9 million customers across the UK and Ireland on the same date. (See Sky Boasts Record Customer Growth.)
While BT has entered the TV market through its broadband business, Sky has moved in the opposite direction but continued to sign up new TV customers at a healthy clip.
The satellite player added 94,000 TV customers in the UK in the year to March, while BT expanded its service by 140,000 customers over the same period.
BT, however, has been offering TV services free of charge to its broadband customers, a practice it may struggle to maintain under regulatory scrutiny.
To BT's annoyance, telecom regulator Ofcom has been including the costs of the TV service when calculating whether the gap between BT's wholesale and retail prices is sufficient for broadband rivals to prosper. (See Ofcom Maintains Regulatory Attack on BT.)
A tougher regulatory line on pricing could force the operator to either lower its wholesale charges or increase the fees it charges retail customers.
Sky, meanwhile, has been rumored to be planning its own launch of a UHD service this year but has yet to make a firm announcement on the technology.
There may be some wariness about investing heavily in UHD given the failure of other TV technologies to generate much interest: While HD has proven popular, for instance, 3D TV has not caught on in the same way.
Besides supporting the rollout of new channels, Ericsson has secured a three-year extension to its contract for BT Sport 1 and 2, the operator's existing sports channels.
According to Ericsson, the contract extension covers playout, media management and access services for both channels.
— Iain Morris, , News Editor, Light Reading