Perhaps the most interesting quote in the BBC article is from a BT spokesman: "The reason for streaming only on the Xbox is because currently the console does not have the capability for live TV ...." Now, we know the 360 is capable of live TV, as it was demonstrated at last year's CES. Furthermore, all IPTV is streaming, which makes the quote a bit odd. As far as we know, the only thing keeping the 360 from streaming IPTV is a firmware update. For now, we'll give BT the benefit of the doubt and assume that's what the spokesperson was referring to. We've got a call in to Microsoft for clarification.
Update: After a helpful comment and some digging, we've figured out the basis for British Telecom's claim that the 360 couldn't support live TV. It turns out that BT's live TV offerings are all made over the air. In other words, live TV is received via an antenna, something the 360 currently can't do. The on-demand services, on the other hand, are offered through IPTV. Still, as the first official IPTV offering on the 360, it seems a bit lacking. (Thanks for the insight, mike.)
[Thanks, Scotty Turbo]