Interactive TV set to win Brussels' approval

THE prospect of television viewers being able to shop, manage their finances or surf the internet from the comfort of their sofas came a step closer yesterday as Karel van Miert, the European Commission's competition chief, said he was likely to give the go-ahead to a broadcasting joint venture between British Telecom and British Sky Broadcasting.

Mr van Miert was speaking after BT announced that it had made certain promises to ease the Commission's fears about its involvement in the venture, which is called British Interactive Broadcasting (BIB).

BT has promised to sell off its two cable TV operations, which consist of franchises in Westminster and Milton Keynes. It has also pledged to offer third-party companies access to the network it is planning to set up.

BIB, which is a joint venture between BT, BSkyB, Matsushita and Midland Bank, was set up last year to exploit the opportunities for interactive services offered by the introduction of digital TV.

At the beginning of next month, the group is planning to sell decoders, known as set- top boxes, which plug into any TV set. The boxes, which will be subsidised by BIB in order to make them more affordable, will offer access to a range of interactive products as well as BSkyB's 200- channel digital satellite TV service.

For the past year, BIB has been locked in negotiations with the Commission. Even though the venture has the support of all the UK's regulatory bodies, Brussels was concerned that BT's involvement would freeze out potential competitors.

Industry observers said that BT had escaped from the review lightly. Its cable operations are a tiny part of its business and not significant in the light of the recent consolidation among UK cable companies. The requirement to share the service with any third parties was widely expected, analysts said.

Rupert Gavin, managing director of BT's Consumer Division, welcomed the news, saying: "BIB is a world first which will bring the UK to the forefront of the information age and enable digital TV viewers to enjoy the benefits of the information society."

The news came as BT reported unchanged pre-tax profits of pounds 3.2bn for the year to March. The group said start-up costs in continental Europe and increased interest charges resulting from the 35p special dividend paid earlier this year had held back profit growth.

The group said it expected European losses to peak at pounds 300m this year. It has been investing heavily in building up a network of fixed and mobile telecom interests in countries such as Germany, the Netherlands, Italy and Switzerland.

Sir Iain Vallance, BT's chairman, said the company was "talking to a number of operators" in the US following the breakdown of its merger with MCI, the US telecom giant, last year. However, he added that BT would not act until it received a $7bn cash payment from MCI later on this summer.

Sir Peter Bonfield, the chief executive, said the group was well-placed to take advantage of opportunities in its core business as well as new areas such as multimedia, the internet and mobile phones. The shares closed down 2p at 692.5p