Digital TV beauty contest begins today

The long-delayed competition to award a licence to operate the Republic's proposed digital terrestrial television service should begin later today.

Bidders for the licence, which will operate at least 30 channels that would be broadcast on RTE's transmission network, have until noon to submit their bids.

Digital terrestrial television would offer 98 per cent of the population access to better picture and sound quality TV, and interactive services such as home shopping.

The Department of Arts, Heritage, Gaeltacht and the Islands, said yesterday it had decided to award the licence on the basis of a hybrid beauty contest and auction competition.

Some 80 per cent of the marks will be awarded on the ability of each bid to promote the platform and provide a stable business plan. Just 20 per cent of marks will depend on the financial size of the bid.

The bids will be evaluated by a team of consultants led by AIB Corporate Finance.

A final decision is expected to be announced some time towards the end of October.

However, last night a Government source urged caution and did not rule out the possibility that no bidders would materialise for the licence.

"The current market conditions are very different compared with the situation when the digital television process first began," said the source.

The competition to establish the platform was held up for almost a year when the Minister, Ms de Valera, ordered amendments to the Broadcasting Bill.

Since then, the capital markets have become difficult for technology projects, and the equivalent digital terrestrial television platform in Britain, ITV Digital, is under pressure.

Carlton and Granada, joint owners of ITV Digital, are reported to be looking for a partner for the loss-making television service.

Mr Gary McCloskey, consultant with Mason Communications, said yesterday it would probably cost more than #100 million to establish and promote a successful business. The high cost of subsidising set-top boxes and purchasing digital equipment would make it a challenging business case, according to Mr McCloskey.

In addition, the digital terrestrial television platform would face stiff competition from Sky Satellite and cable companies NTL and Chorus.

A successful bidder for the licence to operate digital television would be responsible for supplying programming on 20 channels and a range of interactive services. RTE will have the right to operate five or six channels on the platform with the remainder available to TV3 and TG4.

A separate competition to sell off RTE's transmission network is expected to be up and running by the end of August. RTE has the option of retaining a 28 per cent stake in the newly established transmission company.