The service, which was developed with Microsoft and is exclusive to Xbox customers who have a subscription to the gaming console's Live online entertainment network, goes live in all Foxtel coverage areas tonight.
The starter pack of 11 channels costs $19.50 a month, on top of the monthly Live Gold subscription fee and the cost of a broadband subscription. Additional packages will offer entertainment, sports and two tiers of movie content at a cost of an extra $10 a month per package.
Foxtel product chief Patrick Delaney said the service would not be available to customers in regional areas as Foxtel's program rights did not allow it.
But the sports channel, which was created specifically for Foxtel on Xbox 360, would include most of the sports for which Foxtel has the internet rights.
"The English Premier League and the A-League (soccer) will be on there,'' Mr Delaney said. "We have paid extra to negotiate those rights. Other than the NRL and the AFL, I think Fox Sports has cleared almost all its sport to be on there.''
Telstra currently holds the internet rights rights for the NRL and AFL, which are set to be negotiated in the next year.
Xbox chief David McLean said the majority of Xbox Live's 500,000-strong customer base would be able to receive the service, which is delivered over the internet via the connection on the Xbox console.
"I estimate 85 per cent or thereabouts of our subscribers will be able to get acess from day one,'' Mr McLean said.
Mr Delaney said discussions were underway to see if the service could be rolled out, via Austar, in regional areas.
To date, no internet service providers have agreed to exempt Foxtel on Xbox 360 from counting towards a subscriber's broadband download cap, which means users may incur extra charges if they go over their limit.
Mr Delaney estimated one standard definition movie would use about 1.3Gb of data.
Subscribers can sign up for the service using their credit card on a month-by-month basis and there is no contract.
Xbox Live customers who don't sign up will still be able to pay to access the company's Foxtel On Demand pay-per-view movie and TV download service.
The service will compete with FetchTV's internet TV service, which will is expected to be available via a number of smaller ISPs for just under $30 a month after an initial establishment cost for the FetchTV box, and Telstra's T-box, which costs $299.
FetchTV's partner ISPs and Telstra's Big Pond will exempt their respective IPTV services from download charges.
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