Cable reality fails to match promises

The unveiling of NTL and Chorus's cable packages last year suggested Irish consumers were on the brink of an exciting digital era offering seamless Internet interactivity over the television and a limitless supply of channels.

Several months later, the reality has failed to live up to the promise. Both cable companies have signed up fewer than 10,000 digital customers and NTL has yet even to introduce a digital TV service.

NTL's decision to put its £350 million (#444.4 million) investment in the roll-out of digital network on hold will mean consumers in its franchise areas of Dublin, Waterford and Galway will have to wait longer for the technology.

A long delay may accentuate the existing digital divide between rich and poor, as people without a computer continue to encounter difficulties accessing Internet technologies.

This would impact on the State's claim to be an e-commerce hub where citizens can interact with Government online and consumers purchase goods and services over the Internet.

It would also seriously effect NTL's business. Legislation which governs the terms of operator's cable licences gives telecoms regulator, Ms Etain Doyle, the right to revoke an operator's licence if it fails to comply with roll out projections.

Such an extreme decision would not be taken lightly but other sanctions are likely including the withdrawal of NTL's exclusive right to provide television services in its franchise areas.

This would enable Chorus and Eircom to enter the market in the lucrative Dublin area and seriously undermine NTL's business plan. It could also bode well for the eventual winner of the licence to operate the State's digital terrestrial television service.

NTL's decision to delay its digital roll out is good news for Eircom in any event, as it will undermine the British company's telephony offering. NTL's entry into the telephony market sparked a price war with Eircom promising consumers cheaper prices and threatening Eircom's revenue stream.

With no digital network capable of carrying calls, NTL's telephony offering will be less attractive.

The majority of consumers will be offered a confusing choice of carrier pre-select technology. This means consumers would have to rent a line from Eircom while paying call charges to NTL.

Analysts highlighted the hostility of capital markets towards cable firms as a likely reason for NTL's delay. And despite assurances from NTL management that Ireland is a "highly attractive market", yesterday's announcement will raise concerns over the company's long-term commitment to the domestic market.