Digital woes delay start of Irish service

ITV Digital's recent descent into administration couldn't have come at a worse time for Mr Branagan. The Government told It'sTV in February that it must secure a principal financial backer to be awarded the licence, and the collapse of an equivalent UK service will not bolster the nerves of the US venture capitalists which It'sTV is courting.

It is almost five years since RTÉ's former director of technology, Mr Peter Branagan, first developed a plan to establish a national digital television service that could provide consumers with up to 50 new television channels.

In the technology fuelled boom of the late 1990s the word "digital" was synonymous with making money and Mr Branagan's plan had both RTÉ and the Government excited about the possibilities offered by a new service.

As head of It'sTV, the sole bidder for a licence to operate the State's proposed digital television service, Mr Branagan's dream has yet to be realised and looks increasingly likely to be torpedoed by a combination of political delay, increased competition and a slump in the technology sector.

A year long delay in the drafting of the Broadcasting Bill due to concerns raised over the ownership of the proposed television service was the first hurdle faced by proponents of the new service. Although this was subsequently dealt with and the Act finally passed last year, it delayed the competition to award a licence during a buoyant period for the technology sector. Two years later and this sentiment has changed.

Confidence in the pay television market has probably never been lower with ITV Digital, NTL and the Kirch Group all suffering severely.

The cost of acquiring subscribers, purchasing content and upgrading networks has generated huge debts and customers are not willing to spend enough extra on new services to generate returns on this extravagant expenditure. The £315 million sterling paid by ITV Digital in the UK for the rights to lower division football was made at the height of a market which is now on the brink of collapse.

Neither will BSkyB's recent aggressive push into the Irish marketplace.The success of Sky in the UK was one of the main factors in the demise of ITV Digital, which went head-to-head against the Sky service and lost.

Sky is now claiming more than 200,000 subscribers in the Republic and there would probably be little demand for a new television service. The current malaise in the pay television sector and the competition from Sky in the market form the background to It'sTV's recent lobbying to have the draft licence for digital television amended.

The delay in the roll out of competing internet technologies may offer the firm a window of opportunity to gain subscribers. But it may yet prove too little too late.