A group including the BBC and Rupert Murdoch's BSkyB have won the licences of failed broadcaster ITV Digital, promising free channels to help Britain become the world's first fully digital TV nation.
The Independent Television Commission's choice is a blow to Granada and Carlton, part of a rival bid by Britain's top commercial network ITV. The firms were hoping for a second chance after the failure of their ITV Digital venture.
The publicly-funded BBC has teamed up with satellite pay-TV service BSkyB and Crown Castle International, which operates broadcast transmitters, to provide 24 free-to-view digital terrestrial channels as well as interactive services.
The BBC will offer only free-to-air services in contrast to ITV Digital's effort to make money out of digital pay channels. That collapsed in April, having cost a billion pounds of shareholders' money, and similar ventures in Sweden and Spain also failed.
"This is a safe choice," said Mr Anthony de Larrinaga, media analyst at SG Securities. "The BBC doesn't have to make a profit and it will help the government push digital terrestrial television then turn off the analogue signal."
After ITV Digital's demise, it would have been difficult to hand the licence back to Granada and Carlton, analysts said. When ITV Digital closed, it owed millions of pounds to the Nationwide Football League whose matches it broadcast, threatening the survival of some smaller soccer clubs.
ITV was bidding for the licences with commercial public broadcaster Channel Four, proposing free services and several pay channels. Other applicants included private equity house Apax Partners and digital TV business SDN.
"The commission believes that the BBC/Crown Castle application is the most likely to ensure the viability of digital terrestrial television," said ITC Chairman Robin Biggam.
"It will target those viewers who have not been so far attracted by digital TV and will help facilitate the move towards digital switchover."
The 12-year licences will allow the BBC consortium to transmit programmes to a conventional aerial and digital set or a decoder set-top box that can cost less than 100 pounds, without the need for a satellite dish or cable connection. It will launch its service in early autumn. Its development is central to the UK's aim to become fully digital by 2010.
The new platform will include three Sky channels - Sky News, Sky Sports News and Sky Travel - giving Sky an opportunity to promote its popular satellite pay-TV service by offering viewers a taster.