People in Ireland will be able to receive eight BBC digital television channels and all its radio stations free of charge from May 30th if they own a satellite dish.
They will also be able to view a further 100 channels that are already broadcast free-to-air by satellite such as the Travel Channel, Fashion TV and CNN.
The decision by BBC to launch a new "freeview" satellite service in May will increase competition in the Irish market and could undermine the cable and satellite firms, NTL, Chorus and BSkyB.
From May 30th people who have a satellite dish and a set-top box will be able to get all the BBC channels free when it begins broadcasting on a new satellite.
This means the 272,000 subscribers to BSkyB's service in the Republic could simply cancel their existing contract with the firm and still receive the BBC and many other free channels.
It would be particularly easy for BSkyB's customers to switch to the new free system because they already own a dish and a set-top box, although most are contracted to Sky for a year under the terms of their subscriptions.
People who subscribe to the Irish cable companies, NTL and Chorus, would have to buy a satellite dish and a set-top box to receive the new service. One retailer, Electroplus in Santry, yesterday quoted a price of €360 for this electronic equipment.
Industry observers said yesterday the BBC move was significant and would have a knock-on effect on cable and satellite firms.
"For consumers who are only interested in getting British channels this will be an interesting move," said Mr Gary McCloskey, analyst with Mason Communications. "It is a sea change. How much demand there will be is difficult to predict."
Subscription to the basic television packages offered by BSkyB, Chorus and NTL can cost up to €18 per month depending on where a consumer lives. Therefore it would take less than a year and a half for users of the freeview system to recoup the cost of buying satellite equipment.
However, popular premium services such as sports and movies, from BSkyB and cable firms, would not be available to consumers who only buy the satellite equipment.
The BBC channels that will be available under the new service include BBC1, BBC2, BBC3, and BBC4. BBC News 24, CBBC, CBeebies, BBC Parliament will also be broadcast via satellite.
All the British broadcaster's radio stations will also be available to people with a satellite.
BSkyB would not comment yesterday on the potential threat posed by the new service.
The BBC's decision to launch a freeview satellite service was announced by its director-general, Mr Greg Dyke, last week as a move to save £85 million over five years. This is the value of the BBC's existing contract with BSkyB to carry and encrypt its channels on its satellite service.
By switching its channels to the Astra 2D satellite, the BBC will not have to encrypt its channels, making them available to any viewers with a satellite dish. A spokesman said it would also make its services more freely available and promote the take-up of digital television.
Meanwhile RTÉ, which signed a controversial deal with BSkyB for carriage on its satellite platform last year, said yesterday it had no plans to drop its contract with BSkyB in favour a freeview satellite system.
Mr Ray McGuire, RTÉ's contract manager with Sky, said the State broadcaster had a five-year contract with Sky until 2008.