BT launched a digital television service that allows users to record TV shows or order music videos, TV programs and movies through an on-demand service today.

The telecoms giant launched the Internet Protocol (IP) TV service for customers of its broadband internet access service on Monday, allowing them to view and record TV shows or order music videos, TV programs and movies on demand over their telephone line.

The BT Vision service, delivers the TV programs to set-top boxes supplied by Philips Electronics, and uses Microsoft's TV Internet Protocol Television Edition software. BT said Microsoft's platform will eventually allow for the addition of voice, instant messaging and presence capabilities.

To receive the IPTV service, customers must first subscribe to BT's ADSL internet access service, for a fee ranging from £18 to £27 a month. Installation and connection charges are £90. BT then offers packages of TV channels, such as children's shows or music videos, for £6 per month. All viewers have access to a bundle of 40 Freeview digital terrestrial TV channels.

A number of carriers have commercially deployed Microsoft's IPTV services, including AT&T, Verizon, Swisscom, Deutsche Telekom and Telecom Italia.

The IPTV market is forecast to grow, but faces tough competition from cable, satellite TV and free-to-air terrestrial TV operators. Market research firm Gartner predicts IPTV subscribers in Western Europe will number 3.3 million households this year, and increase to 16.7 million by 2010.