NEW MEDIA: SPOTLIGHT ON - BBC ON SKY - Satellite war threatens BBC's position at head of Sky's EPG

BBC's broadcast footprint in Europe is a problem for the company, Ian Darby reports.

The BBC's announcement last week that it will broadcast its eight channels unencrypted on digital satellite outside the Sky Digital platform was the opening scene in a lengthy "satellite wars" story.

Disgruntled at shelling out a reported £85 million over five years for Sky's services, the BBC was taking on Sky with a rival platform. But, analysing the nuts and bolts of its proposals, you could be forgiven for wondering what all the fuss was about - for viewers, little will change.

They will still be able to access BBC channels through Sky Digital but, in addition, for the few who possess digital satellite boxes without a Sky viewing card, it means they will be able to access the BBC's full national and regional services for free.

The BBC's five-year deal with Sky, with the satellite broadcaster encrypting the broadcast signal so that only viewers in the UK could view its channels (for rights reasons), is close to an end and the BBC has decided to broadcast its channels via the Astra 2D satellite. This may yet become an issue in itself, because some observers argue the satellite's "footprint", or area that the signal reaches, goes beyond the UK.

However, the BBC argued that the proposals would allow viewers to access all 15 regional variations of BBC1 for the first time and these would also be listed on Sky's electronic programme guide.

Sky's official response was relatively even, almost bland. However, its comment that "Sky looks forward to negotiating charges with the BBC for the technical services it is requesting" might turn out to be the interesting part of the statement. The BBC will need Sky to make adaptations to the EPG software to allow the viewers to receive the regional service they require. For this, the BBC will still have to pay Sky.

And Sky may well move BBC1 and BBC2 from their coveted and prominent top slots on the EPG. One source suggests the BBC has no "divine right" to these slots. Second, Sky fails to see why it should enter into work modifying its EPG in a way that will benefit the BBC over other broadcasters.

Observers expect heated negotiations between the two parties. Paul Longhurst, a managing partner at The Allmond Partnership, says: "At the highest level, there's clearly disagreement between Sky and the BBC on how all this should be done. Two bits remain unclear: whether the BBC is able to reach an agreement on cost, and positioning on the EPG. If it can't do that, then it's a serious problem because Sky could go down the route of transmitting the channels but with few people knowing how to get them. The other thing is the footprint from the new satellite. Does it contain overspill and how tight is this? The possibility of a footprint that extends into Europe presents a major rights issue."

The BBC was clear in its statement that the new Astra broadcast will "limit broadcasting principally to the UK". However, a glance at Astra's website and a map of the reach of the satellite shows that just about the only country in Northern Europe incapable of receiving the signal is Iceland. France, Germany, Denmark, the Netherlands and parts of Italy can all pick up the broadcast, which will present a legal minefield for the BBC. Despite this, ITV and other public-service broadcasters were quick to back the BBC.

Media agencies predict that ITV will look at following the BBC out of its conditional access deal with Sky when it expires in 18 months time.

Toby Hack, the head of interactive television at OMD UK, says: "It makes sense that if the BBC can get away with this then others can too. ITV has stood up and said 'well done' because they are all squeezed hard by Sky."

However, analysts are concerned that ITV will find it harder than the BBC to offer an unencrypted service. A statement by Merrill Lynch says: "ITV has more rights that are sold on a pan-European basis. Any overlap could be extremely problematic. ITV's advertising is sold on a regional basis: if customers can choose the ITV region to view (wherever they are) through customising their own channels in the EPG, this could undermine advertisers' segmentation strategies and cause a lot of problems for media buyers."

It seems that the BBC's announcement is the only the opening salvo in what is likely to be a protracted negotiation battle. And, given the legal issues, there is no guarantee that the BBC's proposals, in their current form, will see the light of day.