By Nick Higham BBC News

The Freeview digital TV network is being joined by a sister service, Top Up TV - but it's an addition Freeview's owners say they could do without.

If you call a service Freeview you are sending a pretty clear signal to consumers: This is something for which you do not have to pay.

Top Up TV will share digital TV space with Freeview

Freeview's success (it should hit three million users later this month) is attributed largely to the simplicity of what marketing types call its "proposition". It appeals to folk who dislike the idea of pay TV in principle, but do want to watch extra channels.

But now Top Up TV has come along to confuse things, and the BBC, which is effectively the dominant partner in Freeview, is unhappy.

Top Up, founded by two former executives at BSkyB and which recently poached Freeview's general manager to run its marketing, wants to launch a pay-TV service on the Freeview platform. For �7.99 a month subscribers will be able to watch channels like E4, UK Gold and Discovery.

The service will operate on one of the six digital multiplexes available to Freeview users. Two of the six belong to the BBC and two belong to Crown Castle, the transmitter company which, with Sky, is one of the three partners in Freeview.

One is shared by ITV and Channel 4 and the other one, run by a company called SDN, will be used by Top Up.

Pay-TV cards

Freeview launched in 2002

To begin with Top Up will only be available to the estimated 800,000 people who still have an old ITV Digital set-top box.

Selling the service to Freeview's remaining users will be more difficult - most have receivers without a slot for a pay TV card.

The BBC - in the shape of Andy Duncan, its director of marketing (who doubles as Freeview's chairman) - claims it is no more than an "interested observer" of Top Up's service, which will neither compete nor collaborate with the new company.

Top Up TV doesn't see it that way. It believes the BBC is trying to undermine its launch by insisting its channels should be tucked away at the bottom of the Freeview electronic programme guide, rather than being interspersed among the existing channels so that viewers stumble across them as they scroll through the menu.

The BBC denies this. For one thing, it says, it doesn't decide what position channels get on the EPG: that's the job of an outfit representing all the multiplex owners, called TDN or The Digital Network Group.

But when I innocently asked where I could contact TDN I was referred to a man who works for the BBC. You can see why Top Up TV might think the distinction between the BBC and TDN somewhat academic.

Confusion

ITV Digital's demise brings back bad memories for Freeview bosses

What's more, the BBC is undoubtedly worried that the presence on Freeview of a pay service will confuse customers.

Top Up TV says it won't confuse anybody - it will simply offer people who have Freeview a little extra choice.

Either way, Top Up represents a brave attempt to start a viable pay TV service on digital terrestrial television. ITV Digital was an expensive fiasco - it overpaid hugely for sports rights and failed to win enough subscribers.

Top Up is much more modest, offering a range of existing channels with no costly exclusive content. It says it will break even with 250,000 subscribers.

If it succeeds it will give the lie to the conventional wisdom which says that pay TV only succeeds when it can offer exclusive premium content, and also to the conventional view that Freeview users are died-in-the-wool pay TV refuseniks.