The consortium awarded a contract to provide a commercial digital TV service has pulled out, the Broadcasting Commission of Ireland (BCI) said today.
Boxer DTT, which is a consortium between Denis O'Brien's Communicorp and Swedish DTT operator Boxer, won the three national digital terrestrial television (DTT) multiplex licences last year.
The services were due to begin a phased rollout early this year.
The BCI confirmed that Boxer DTT had decided to withdraw its applications for the three DTT multiplex contracts, blaming economic circumstances and "challenges" in hammering out a contract with RTÉ Networks for the provision of transmission services.
Chairman of the BCI Conor Maguire said the commission was disappointed.
"However the BCI is committed to pursuing its policy objectives with regard to digital terrestrial television and will continue its work in this regard," he said.
The contracts will now be offered to One Vision, a consortium involving TV3, Setanta Sports and Eircom.
DTT is set to replace the current analogue television signal when it is switched off at the end of 2012. Households without satellite or cable television services will have to upgrade to DTT using a set-top box and smart cards.
Labour's communications spokeswoman Liz McManus said the news would have a "significant impact" on the roll out of digitial television in Ireland.
"It is now clear that contracts with Boxer were never signed despite the announcement of the go ahead last year," she said.
"Nationally there are consequences as DTT was to be rolled out across the country. Currently the Broadcasting Bill is going through the Dail to allow for the management of DTT, yet, at present, there is no company to deliver it."
Ms McManus warned that problems may emerge in the east of the country when Wales switched off its analogue signal, leaving viewers who previously benefitted from spillover of the signal without access to the channels.
"The Minister has previously stated that he is confident that Ireland can meet the target EU analogue switch-off date of 2012, but is clear that Ireland is lagging behind yet again in the area of technological development. The Minister must now make a statement as to how this debacle
will be addressed to ensure Ireland is well prepared for analogue switch," she said.