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BT undercuts Sky as pay-TV war escalates

BT stepped up its push into the pay-TV market yesterday by cutting the price of watching Premier League football to as little as £6.99 a month.

The Sky Sports 1 offer, available to customers who take a bundle of broadband and calls for 24 months, follows the communications regulator's ruling that BSkyB must sell its premium sports content to rivals at regulated prices.

BT Vision customers who want to add Sky Sports 1 and Sky Sports 2 on a month-by-month contract will pay £16.99, which still undercuts Sky's price.

The telecoms group began offering the packages yesterday in time for the start of the new Premier League football season in August.

However, it is likely to be doing so at a loss after reports said BSkyB plans to increase its retail prices for sport, meaning that the price it charges wholesale customers such as BT will increase accordingly.

Sky is said to be increasing the retail price of Sky Sports 1 and Sky Sports 2 by £3. Under the wholesale pricing mechanism set out in Ofcom's ruling, this means the wholesale cost of both channels rises from £17.14 to £19.07 a month, close to the level from which Ofcom brought them down.

The telecoms company currently has 467,000 BT Vision subscribers.

BSkyB is taking legal action over the Ofcom ruling but in the meantime agreed to sell the channels at the price it currently charges Virgin Media, its only wholesale customer.

The difference between this and the recommended Ofcom price will be held in a special account until the outcome of the full hearing of BSkyB's appeal.

Consumer groups said Ofcom's intervention meant more choice and lower prices for viewers, but sporting bodies reacted furiously to the potential cut in funding.

Ofcom's announcement followed a three-year investigation into the industry after concerns were raised by BT, Virgin Media, TopUp TV and Setanta, which has since gone bust.

BT Retail chief executive Gavin Patterson said: "A more competitive market will ensure that customers continue to get the best sport for the sharpest prices and this opening of the market will be in the best interests of customers."

Mike Darcey, Sky's chief operating officer, said: "If BT really wanted to give customers a fair deal, it would stop charging so much for its broadband and phone services."