BBC drops its £85m carriage of channel agreement with Sky

The BBC has terminated its £85 million carriage agreement with Sky and is opting to broadcast its eight TV channels unencrypted.

ITV has welcomed the BBC's decision. Sky's terms of carriage have been controversial with public service broadcasters for some time.

The BBC, the first to break ranks, will now be transmitting from a different satellite. All BBC TV services, including regional variations in England and services in the provinces, will be available to all viewers on digital satellite, rather than just in the regions they were intended.

Viewers will no longer need a Sky card to watch the BBC.

The move has implications for ITV, which is currently forced to use Sky's conditional access system to fulfil its regional remit. The annual cost to ITV for this service is £17 million and the ITV network has long argued that this is monopolistic and unfair.

Clive Jones, the joint managing director of ITV, said: "We are calling for an amendment to the (Communications) Bill that will allow Ofcom to take account of the particular nature of public service broadcasters and their obligations to viewers when deciding whether Sky's rates are appropriate."

But Sky is standing by its charges. A spokesman said: "Digital satellite is an open platform, so channels can choose whether to broadcast unencrypted or take up Sky's offer of conditional access services on fair, reasonable and non-discriminatory terms."

Sky's access system is designed so digital satellite viewers in a particular region can only get their local regional station. However the BBC claimed the system can be bypassed if Sky adapts its EPG software to allow viewers to select a regional variation.