A representative of BT said Wednesday the company plans to use Microsoft's TV Internet Protocol Television (IPTV) Edition to offer the service, which will be available on a subscription basis. BT will also offer over-the-air Freeview broadcasts. Freeview is a free TV service in the United Kingdom.
BT has no plans to go into broadband TV broadcasting because of the logistics involved.
"We want to deliver a seamless video-streaming service combined with digital terrestrial channels in a two-in-one box," said a BT representative. "The combination of Microsoft technology with BT's 21st Century Network will result in an exciting set of next-generation entertainment and communication services."
BT will trial its Microsoft-based service early next year, with a commercial launch expected in the summer, Microsoft said in a statement.
BT's 21CN project will see its circuit-switched networks replaced with a single IP-based network. The launch of the IPTV service could encourage broadband adoption.
Broadband already has widespread availability in the United Kingdom, with BT reaching 5 million connections in March this year.
Tom Espiner of ZDNet UK reported from London.