Digital delay fuels case for terrestrial TV

Almost a year since the introduction of digital television in the State, fewer than 100,000 Irish consumers have signed up for interactive television, reviving the prospects for a proposed nationwide terrestrial television service.

The two Irish-based cable operators, NTL and Chorus, have signed up just a few thousand subscribers each as the roll-out of their digital networks has been delayed due to the high costs of road digging and laying cables.

The only provider to benefit from all the advertising hype generated by the multimillion pound introduction of NTL's and Chorus's digital packages has been British-based satellite broadcaster Sky.

Sky does not release figures for the uptake of its satellite platform in the Republic but retailers report a speedy take-up of its multi-channel offering.

However, the delay and subsequent bad publicity, which has engulfed both NTL and Chorus, has given a fillip to a proposed third platform for digital television, so-called digital terrestrial television.

Digital terrestrial would offer almost 98 per cent of the population a digital service comprising 30 channels with a better picture and sound quality than the current analogue service.

It would also enable consumers to access a range of interactive services from home shopping to e-government and e-mail through a powerful interactive set-top box.

The competition to receive a licence to operate the proposed digital terrestrial service finally began this month when a consortium headed by former RT╔ executives made a formal bid to the Department of Arts, Heritage, Gaeltacht and the Islands.

This followed a delay of more than a year while amendments to the Broadcasting Bill, since made law, were made following arguments over who would run the system.

Terrestrial television is a free-to-air service that will broadcast a digital signal using RT╔'s existing transmission network and its major advantage is reach, when compared with cable.

It is also expected to offer a better quality service than multipoint microwave distribution systems (MMDS).

An auction process to sell off RT╔'s transmission business to another company will begin in the next few weeks. RT╔ has the right to retain a 28 per cent stake in this business that will broadcast the digital signals to consumers.

This transmission company will be able to generate revenue by broadcasting the digital signals for the firm running the terrestrial television service.

It could also host transmitters for a range of other high-tech firms, including mobile phone companies.

But the business model for the company that will run the terrestrial service is less proven.

While industry experts believe NTL's and Chorus's difficulties this year have given valuable breathing space to a terrestrial platform, most acknowledge a provider will have a major challenge to recoup an investment worth more than £100 million (€127 million).

The cost of obtaining quality content, subsidising set-top boxes and advertising terrestrial television services has already caused considerable problems for two of Europe's existing terrestrial platforms - ITV Digital in Britain and Quiero in Spain.

Both firms are reportedly seeking cash and new investors to fund the roll-out of their services against stiff competition from the likes of Sky.

An Irish terrestrial broadcaster would generate its revenue from subscription packages, advertising and by supplying a range of interactive services.

It would supply these services by using between 15 and 20 per cent of its available bandwidth for broadcasting as a back channel from consumers' TVs to its transmitter.

Terrestrial suppliers hope this added interactivity will make up for the smaller number of channels available to its customers compared to satellite and cable.

"Terrestrial television has been considered in some quarters the weakest of all the platforms because it only offers about 30 channels," according to Mr Gary McCloskey, telecoms consultant with Mason Communication.

"But in reality not many consumers watch more than three or four channels regularly, preferring to dip into a number of specialist channels."

With NTL on the verge of finally introducing its digital service in Dublin, Waterford and Galway, and Chorus last week promising to complete its digital upgrade, the competitive challenges in the Republic will grow.

The success of digital terrestrial television may rest on a swift introduction of the infrastructure and the introduction of innovative services that will appeal to customers.

Certainly any further delays for the terrestrial service could prove terminal as the phony war between the cable operators and satellite providers finally comes to an end.