The Rupert Murdoch-owned satellite broadcaster is also reported in the national press to be prepared to invest up to £200m in local loop unbundling in a bid to provide phone and broadband services direct to end users.
Should BSkyB go ahead with its broadband and fixed-line telephony plans it would enable the satellite operator to offer users the all-important, and till now much hyped, "triple play" of phone, TV and broadband services.
Now that NTL and Telewest have agreed to merge, the enlarged group - with access to half of the UK's homes - would pose a serious threat to BSkyB's position. Likewise, BT is also pressing ahead with its plans to offer TV over broadband with a commercial service expected to be launched within the next 12 months.
Speculation as to the target company BSkyB are looking at include, Pipex, EasyNet and LLU TV provider HomeChoice.