Satellite broadcaster BSkyB is to launch a new subscription service of four channels available on digital terrestrial television through a traditional rooftop aerial. The existing Sky channels will then cease to be freely available on Freeview.

Viewers will need a new set-top box to receive the service, which will use MPEG-4 digital video compression, allowing four channels of news, sport, entertainment and movies to be squeezed into the place of the three Sky channels currently available on Freeview in the United Kingdom. These do not currently include Sky One or Sky Sports programming.

“We look forward to bringing some of Sky’s most popular content to digital terrestrial viewers,” said Mike Darcey, the chief operating officer of Sky. “This will give families more choice and increase the availability of leading content and channel brands.”

It has been confirmed that the sports service will include live Premiership football coverage. The complete channel line-up and pricing details will be announced closer to the launch in the summer.

The new service will use existing capacity used to broadcast Sky Three, Sky News and Sky Sports News. As a result, these channels will cease to be available free-to-air via digital terrestrial television in advance of the launch of the pay-TV service.

The subscription service will use a secure conditional access system similar to that Sky uses for its satellite television service. NDS, which provides the conditional access system used by the Sky satellite service, is a wholly-owned subsidiary of News Corporation, the largest shareholder in BSkyB.

The choice of middleware to support the electronic programme guide and interactive applications has yet to be announced, but it offers the opportunity to move beyond the MHEG-5 standard still used on Freeview.

To access the service, customers will need a new set-top box that includes the relevant conditional access software and MPEG-4 decoder. Sky says that multiple manufacturers will have the opportunity to produce compatible set-top-boxes and other DTT receivers once the service launches. Sky typically sources set-top boxes from multiple suppliers.

A set-top box from Sky could potentially include local hard drive storage, bringing the benefits of Sky+ to the Freeview audience, which would be a compelling proposition.

The use of MPEG-4 could even enable high-definition services in the future if sufficient capacity becomes available following analogue switch off. Commercial digital terrestrial television services in France are also likely to employ the MPEG-4 standard, which is reverse compatible with MPEG-2.

Another possibility is that Sky, which now also provides broadband services, could offer video-on-demand or even additional channels with a hybrid box capable of receiving media over broadcast and broadband networks. Its latest high-definition satellite television receivers, which also support MPEG-4, include a network connection.

The launch of the new service is subject to approval by the communications regulator Ofcom of the necessary variations to licences held by Sky and National Grid Wireless, which provides terrestrial transmission services to Sky.

Sky previously provided pay-television channels on ITV Digital, previously ON Digital. It then became an equal shareholder in the Freeview venture that replaced it and became a strong competitor to the Sky satellite subscription platform.

Freeview is set to overtake Sky in popularity, as more people convert to digital in preparation for the end of analogue television transmissions.

The launch of a premium service from Sky is a further challenge to Top Up TV, which offers additional pay-television services on the existing digital terrestrial television platform, recently moving to a push video-on-demand model.

It is also a response to Sports broadcaster Setanta, which acquired some of the rights to Premiership football and recently announced the launch of premium sports coverage on Freeview through Top-Up TV.

The market for additional services in conjunction with Freeview is likely to become increasingly competitive with the broadband video services from BT Vision, Tiscali TV and Orange.

The Sky announcement was timed to coincide with the launch of the rebranded Virgin Media cable television service. It represents a classic strategic manoeuvre from Sky, which recently acquired a stake in the ITV to inhibit the cable company from gaining control of the commercial television network. It then launched its own triple-play package to pre-empt the cable company.