The former telecoms monopoly, which has committed around 1 billion pounds to the project, is stepping into an arena where others have failed, invariably outmanoeuvred by BSkyB in the battle for programming and subscribers.

But the deep-pocketed, 168-year-old BT has learnt from the master. While the battle over sports rights grabs the headlines, the underlying struggle is for supremacy in the triple play market - the bundling of television, telephone and broadband.

"This is all about broadband," Liberum analyst Ian Whittaker said. "BT are not in this to get a new stream of revenues, what they're in this for is to persuade their customers not to churn (switch) to Sky on broadband."

Sky, 39-percent owned by Murdoch's 21st Century Fox, has dominated the British pay-TV market in the last decade and seen off rivals like the Disney-owned ESPN and the Irish-based challenger Setanta, by using revenue it gets from more than 10 million households to outbid rivals for content.

For years it built up its business by luring customers with the offer of high-quality sports and movie programming. Eyeing an eventual saturation of the pay-TV market however and rapid changes in technology, it moved into BT's territory in 2006 to offer broadband and telephony services.

The move has helped to grow the firm's market value to more than 13 billion pounds and its steady growth stands in contrast to the roller coaster ride endured by BT which suffered two major profit warnings in 2008 and 2009.

Having shed costs, the telecoms group has started to rebuild itself by launching a superfast fibre broadband network and an online TV service that was designed to persuade customers to upgrade to the quicker, more expensive offering.

The surprise acquisition of Premier League rights is the icing on the cake for a group that is now valued at double that of BSkyB.

DAVID BECKHAM EVERYWHERE

The clash between two of Britain's biggest media companies is already evident on billboards around the country.

Determined to protect its leadership of the broadband market, BT is offering its sports service free to consumers who take its broadband. It has 6.8 million customers, which includes some small businesses, compared with BSkyB's 4.9 million.

BT, whose adverts feature current Premier League players Gareth Bale and Robin van Persie, said last week that more than half a million customers had signed up to take the sports service. It said the number of lines being dropped by consumers preferring its rivals was at its lowest level in five years.

BSkyB has responded by offering free broadband to consumers who subscribe to its sports channels for the next year. Its own ad campaign features former England captain David Beckham following its Premier League coverage everywhere from his sofa to his local cafe.

"We feel very good about where Sky Sports is and what we have got planned," Chief Executive Jeremy Darroch said last week.

The BT service will go live at 1700 GMT on Thursday, with football action from a pre-season tournament involving Manchester City and European champions Bayern Munich.

Two weeks later it will help launch the new Premier League season, the main attraction for many sports fans, with its rights to 38 live Premier League games per season at a cost of 246 million pounds a year.

BSkyB retains the lion's share of the rights, with 760 million pounds spent on 116 games per season, and while analysts do not expect Sky customers to depart in droves for BT, it may make it harder for the pay-TV group to sign up new customers.

BT has made much of the fact that it will have the first choice of matches for almost half of its games, an advantage that ESPN did not enjoy. However, BSkyB will show some of the plum early fixtures including the first three games for champions Manchester United.

BT, which is basing its studios on the London 2012 Olympic Park, has signed up for three years for the Premier League and believes its service will gain momentum as the season goes on. It has also taken a leaf out of BSkyB's sporting playbook by boosting its content by buying ESPN's UK operations and acquiring rights to English club rugby.

BSkyB says its rights to English cricket, Formula One motor racing and Champions League football mean it remains a must-have service for British sports fans.

It has seen off past threats but BT has deep pockets and big ambitions, making this clash one to watch.

"BT has laid down a marker," Liberum's Whittaker said. "It's not going anywhere anytime soon and it's got plenty of cash. We'll have to wait and see but BSkyB is used to dealing with big threats."

($1 = 0.6530 British pounds)

(Editing by Elaine Hardcastle)

By Keith Weir and Kate Holton