BT, Virgin and Microsoft in TV deal

BT Group and Microsoft are set to team up with Sir Richard Branson?s Virgin Mobile to launch what is expected to be Europe?s first nationwide digital television broadcast service for mobile phones.

Confirmation of the roll-out of the service is expected to come on Tuesday at 3GSM in Barcelona, the biggest mobile phone industry gathering of the year.

Virgin Mobile, which is the target of a potential ?920m ($1.6bn) offer by UK cable operator NTL, is preparing to launch the TV service to subscribers by the middle of the year following a four-month trial in 2005. It is expected to offer at least five TV stations and access to a large number of radio channels.

The service is offered on a wholesale basis by BT, the UK fixed-line telecoms operator, which has developed it in conjunction with Microsoft.

It is a derivative of commercial digital broadcast technology that went live for Korean mobile phone users last year.

Mobile TV is regarded as one of the most promising new technologies by mobile operators, which are looking to find new revenue streams to offset the impact of fierce competition in the core voice market.

Broadcasters such as the BBC and British Sky Broadcasting are backing the new medium, in the hope it will help counter their problems with fickle audiences and fragmenting advertising income.

The success of the BT offering would solve a big headache that other mobile operators are expected to face in the future if TV over the mobile is a success. Although other operators, including Vodafone and Orange, already run nascent TV services in Europe, these are streamed over their own third-generation networks.

The TV application is so capacity-hungry that too many users in one area could shut down access to the network to other users in the vicinity.

Virgin Mobile TV, as it is expected to be called, will run over the UK?s nationwide established digital audio broadcast (DAB) network.

The use of the DAB networks also means no further spectrum is required before services can be launched, a hurdle facing other competing technologies.

Separately, Microsoft will announce on Monday that it is releasing a software upgrade that will allow mobile phone operators, including Cingular Wireless, Orange, T-Mobile and Vodafone, to support a real-time e-mail service to match the one pioneered by Canada?s Research in Motion, maker of the BlackBerry handset.