Two cable firms accept regulator's terms for licences

Only two cable companies are understood to have accepted the terms of new licences being offered to the industry by the Telecommunications Regulator, Ms Etain Doyle, when the deadline expired at midnight last night. The others may follow later this week.

The cable companies were asked to surrender their licences and accept new terms. However, only Cablelink and Casey Cablevision, a small independent operator, are believed to have indicated that they will accept them.

It is thought that the memorandum for the sale of Cablelink will now be circulated with two weeks. The sale, which is expected to raise in excess of £160 million (#203 million), will see majority shareholder Telecom Eireann (75 per cent) and RTE (25 per cent) exit the company.

Industry sources say a number of key issues remain outstanding. These include future price increases and how these will be implemented and controlled; the levy which the regulator wants to impose on the cable firms and the issuing of radio spectrum which some companies need to offer interactive services.

The latter is known as "the return path" and affects companies such as Princes Holdings and other MMDS licence holders. The provision of such add-on services such as video on demand and home shopping is a key factor in the future potential revenue streams of the cable companies.

The regulator had set midnight last night as the deadline for companies to indicate whether they would surrender their current licences and accept the new ones. If they did not accept, then the issues would proceed via litigation. It is understood that the companies are keen to avoid taking the legal route, but some are still deeply unhappy with aspects of the licensing conditions. The board of Princes Holdings, jointly owned by Independent Newspapers and TCI, a US-based cable group, will meet tomorrow evening to decide its response.

Princes Holdings is the second-largest cable group in Ireland and has indicated that it will bid for Cablelink. It is thought the company would not like to become enmeshed in legal proceedings at this stage.

Another company, Cable Management Ireland (CMI), is thought to have several reservations still about the licence terms. The company could not be contacted last night.

One of the issues CMI is thought to be unhappy about is pricing for services in the future. Industry sources said the regulator wanted to set the prices for services, but there was no clear mechanism for doing so.

The issue of the licence fee has also caused some consternation. The regulator wants a fee (or levy) of 3.5 per cent of each operator's gross revenue from basic and premium services. Many in the industry argued that the levy should just be commensurate with the regulator's office's administrative costs.

It is believed that the operators have now fully accepted that they will have five years' exclusivity on their particular platforms in their own areas, and that the licences will last 15 years.