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The box also boasts PVR functionality, enabling the recording of broadcasts - although paid-for on-demand content will no doubt be encrypted. It also supports HD broadcasts.

Other services will include online games, community services, instant messaging, chat and video telephony.

Ian Livingston, chief executive BT Retail said today: 'Our services will be a world first and will place power in the hands of the viewer. No longer will BT customers be reliant on TV schedules. From next year, they will be able to watch what they like when they like. This is all about giving our customers choice, convenience and control.'

The only outlay will be for the box itself, which will give access to all the free channels via digital terrestrial signals. However, BT will no doubt be looking for paid-for services to complement the offering, alongside the already-detailed movies on demand.

BT is using Microsoft's IPTV framework to deliver the broadcasts across the Internet. Microsoft, CEO Steve Ballmer, said: 'With BT service, Philips set-top boxes and Microsoft TV IPTV Edition software, the integrated entertainment

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and communications capabilities offered to UK consumers will be among the richest and most advanced in the world.'

BT's current schedule is to have the service running across the UK by autumn of next year. But that means it will have quite a lot to concertina into 2006. It only plans to start a commercial rollout of 8Mbps services in the spring, and bandwidths of this throughput will certainly help to deliver robust broadcasts over the Internet.

However, a spokesperson for the company told us that the service 'can be done at 2mbps,' and assured us that the video would be streamed in at up to 1.5Mbps, keeping 512Kbps free for other users.

We were told too that BT plans to roll this out nationwide, rather than target small profitable urban hot-spots where population density is high.

Wanadoo too is being aggressive in this area, planning UK trials in a number of cities for video services next summer. While Wanadoo is playing catch up to BT in delivering Internet TV, BT might have to take a leaf out of Wanadoo's book by delivering a 'Livebox' style device. Certainly if BT delivers any more than the odd movie across the Internet, then if you've paid for a movie stream, you would want some kind of hardware to dedicate the bandwidth needed for your viewing and prevent interference from other users of the same connection.

The other corner of the DSL Net TV triumvirate that look certain to dominate next year has to be BSkyB. Having bought out the UK's main LLU player EasyNet, it will want to ramp up that network quickly. Wanadoo has already committed €1bn to LLU. And let's not forget the cable guy - the merged mammoth of ntl and Telewest will not give away market share lightly.