From Wikipedia:

Sky Digital's standard definition broadcasts are in DVB-compliant MPEG-2, with the Sky Movies and Sky Box Office channels including optional Dolby Digital soundtracks for recent films, although these are only accessible with a Sky+ box. Sky HD material is broadcast using MPEG-4. Interactive services and 7-day EPG use the proprietary OpenTV system, with set-top boxes including modems for a return path. Sky News, amongst other channels, provides a pseudo-video on demand interactive service by broadcasting looping video streams.
Provided a universal Ku band LNB (9.75/10.600GHz) is fitted at the end of the dish and pointed at the correct satellite constellation, most digital receivers will receive the free to air channels. Some broadcasts are free-to-air and unencrypted, some are encrypted but do not require a monthly subscription (known as free-to-view), some are encrypted and require a monthly subscription, and some are pay-per-view services. To view the encrypted content a Videoguard UK equipped receiver (all of which are dedicated to the Sky Digital service, and cannot be used to decrypt other services) needs to be used. Unofficial CAMs are now available to view the service, although use of them breaks the user's contract with Sky and invalidates the user's rights to use the card.
BSkyB has no veto over the presence of channels on their EPG, with open access being an enforced part of their operating licence from Ofcom. Any channel which can get carriage on a suitable beam of a satellite at 28 East is entitled to access to Sky's EPG for a fee, ranging from £15-100,000. Third-party channels which opt for encryption receive discounts ranging from reduced price to free EPG entries, free carriage on a Sky leased transponder, or actual payment for being carried. However, even in this case, Sky does not carry any control over the channel's content or carriage issues such as picture quality. Recent years have seen the launch of numerous low-budget channels, including foreign and shopping channels, often with very poor technical quality.