BT has announced that Pace Group will provide a new generation set-top box for its BT Vision IPTV service.

Existing BT Vision boxes were made by Royal Philips Electronics, which was recently acquired by Pace.

BT Vision equipment, known as the V-Box, combines a digital terrestrial receiver for linear TV channels and IPTV connectivity to deliver on-demand content and interactive services.

The new Pace personal video recorder box can store an average of 80 hours of content and has a new design, improved energy efficiency and a more powerful processor, the company said. It employs Microsoft's Mediaroom IPTV middleware and Nagravision conditional access technology.

"We are very pleased to announce this contract, working with the team that launched the first generation V-Box," said BT Vision chief executive Dan Marks.

"Our medium-term goal is to secure two to three million subscribers for our BT Vision service and we are looking forward to making this vision a reality in co-operation with Pace."

Pace chief executive Neil Gaydon said: "The hybrid model of providing the latest interactive services, alongside digital terrestrial programming, is a very compelling one. We are excited to be working with BT to bring this advanced product to market."