Race is on to capture digital market

After years of talk, the race is finally on to wire the Republic for the digital age. But it is a slow-motion race, hindered by the need for massive and risky investment, regulatory procedures, the skills available in the workplace, and the pace of the Dail.

NTL, formerly Cablelink, began its recruitment drive last Friday. The company has €250 million (£197 million) to spend upgrading the wires leading to the homes of its 375,000 customers in Dublin, Galway and Waterford, and quickly needs to find an extra 350 employees.

Meanwhile, Cablelink's former owner, Eircom, is beginning trials of ADSL technology. This can, in theory, force up to 4 megabits of information down a normal telephone line, every second. Highquality video and sound requires just 2 megabits a second, leaving the rest of the capacity for surfing the Internet, or chatting on the phone, or sending faxes.

Irish Multichannel, owned by Princes Holdings and the US communications giant, TCI, is also wiring up its cable customers, and engineering a way for its MMDS subscribers to be able to return a signal, allowing them to be as interactive as the rest. The company applied for and was awarded wireless telephone licences, and will use these to offer MMDS customers a "return path", as well as a phone service.

RTE will be the minority partner in a new company, Digico, to broadcast digital television signals in much the same way as the current analogue ones. Except that the capacity will be far, far greater. As the Broadcasting Bill makes its way through the Dail, RTE executives are busy getting international approval for digital television's own "return path", a micro-transmitter that will slot into every set-top box.

The stakes for all of these companies are high. The pace of technological change within the communications industry is extremely rapid; just think of what a mobile telephone looked like five years ago, and one big investment mistake could ruin a firm. Basically, they must gamble on which technology will win out. The one they choose to supply 500,000 customers with could be robust and long-lasting, or it could be the eight-track cassette of the digital world. Worse, it could be superior technology that loses the race anyway, like Betamax video lost out to VHS.

Mr Mark Henry of Amarach consultants says the first thing companies have to get right is the "return path"; how to get a message back, from the customer to the supplier. This is not a problem with cable or ASDL, but it is for MMDS and broadcast digital signals.

"For truly interactive services, there needs to be some way for the consumer to send back a preference," he says. "One solution is to use the telephone, but right away there are cost implications to that."

A recent survey by his company showed that, for the moment at least, Irish people are extremely reluctant to pay more money than they do already for digital service.

At Irish Multichannel, Mr Willie Fagan says the company's new broadband and narrowband wireless telephone licences will solve this problem. He is also, perhaps naturally, sceptical about the merits of digital broadcasting.

"Digico is being sold as a panacea for universal coverage, but it is an inferior product. They have no return path, and to have one, they need to be in bed with a telecom," he says.

He and others within the industry are also wary of RTE's involvement in both programme making and diffusion; it is clear they would prefer the State-owned company to have no role in the new transmission firm.

RTE doesn't see it this way. Its executives look forward to the Broadcasting Bill becoming law by the end of the year, and the speedy formation of Digico. RTE paid for and owns the transmitters, it says, and will hand them over to Digico only in exchange for a decent chunk in the company.

The Broadcasting Bill allows for RTE to own up to 40 per cent of Digico, but industry analysts say the State broadcaster will be lucky to get 30 per cent.

The company's engineers believe they will have resolved the "return path" problem within a year. RTE's Mr Peter Branagan says the Geneva-based international standards body, Digital Video Broadcasting (DVB), is now writing the draft of a wireless return path for Europe's digital broadcasters.

"This will then be ratified by the DVB board, and anyone can use it. There should be a European standard by this time next year," he says. "Basically, there is a micro-transmitter in each settop box, and it sends a short message back to the provider."

For this, Digico would need a licence from the telecommunications regulator, Ms Etain Doyle, but so long as a European standard exists, Mr Branagan says he can see no problem obtaining such a permit.

With the technology problems dealt with, the way should be clear for competition. All of the companies will offer packages, bundling various services and goodies.

Ms Doyle has already stressed that all cable companies must offer cheap "basic service" as part of their licences. But beyond this, one person might choose 100 television channels, plus 10 feature films, plus the Internet, plus unmetered local telephone calls. Another might go for fewer channels but more films.

The marketing watchphrase will be ease-of-use. All are acutely aware that only a minority of people learn to programme their video recorders, so the companies will try to make the new services as simple as possible.

"It has to be far more convenient than the PC. The person sitting at home on their couch wants push-button convenience," says Mr Fagan.

At NTL, a spokeswoman says the company wants to become the complete communications provider for all its subscribers: "There are those who lean forward, there are those who lean back, we want to accommodate both kinds of customer."

The card up Digico's sleeve is the development of mass storage inside the set-top box, a chip that can hold 40 gigabits, or enough for seven feature films.

"If you see a promo for something you'd like to watch, just point and click. It will record it for you, ready when you want," says Mr Branagan.

This technology will allow Digico to compete with Near Video On Demand (NVOD), a system where cable companies broadcast the same popular movies on many channels, starting every 15 minutes.

An interesting side issue to the set-top storage technology is who will control its contents. While it would be convenient for customers to use it as a giant, automated video recorder, the ability to "push" programmes or adverts at subscribers may be too lucrative for broadcasters to cede control of the box.

Another ease-of-use issue is the Internet. The companies are aware that while people read the contents of their computer screens from perhaps 80 cms, they watch their televisions from a distance of three metres or more.

But not only must websites be adapted for vision, they will also be tailored for numerical, rather than alphabetical, remote control devices.

How will this affect our society? Like Gustav Guttenberg, the devout Catholic who never dreamed his printed Bible would spur Protestantism, today's businesspeople cannot tell.

But Mr Henry sees some obvious changes: "It will change the way we interact with the television. At the moment, we tend to gather in groups and watch, in a passive way. In future we'll be leaning forward rather than leaning back."

"In one sense it further breaks down family contact, because people can go into their own world. In another sense it allows relationships to develop online, with people with the same interests," he adds. "In the short term, face-to-face relations may suffer, but as the technology catches up, there will be face-to-face - online."