A civil servant advised that an MMDS company could claim damages of over £10 million should a deflector operator in Munster be granted a licence, the High Court was told yesterday.
Mr Sean McMahon said he was principal officer in charge of the telecommunications and radio regulatory division of the Department of Communications since October 1993, and was now director of telecommunications regulation.
He said he had speculated in a draft reply to queries from the then Taoiseach, Mr John Bruton, in May 1996 that an MMDS company, Cork Communications Ltd, could have sought £10 million damages if South Coast Community Television Broadcasting Service was granted a licence to rebroadcast British TV channels.
Mr McMahon was being cross-examined on the fourth day of judicial review proceedings being taken by South Coast against the Minister for Communications, the director of telecommunications regulation and the Attorney General.
South Coast, which operates a deflector system in east Cork and west Waterford, is seeking several orders, including one quashing the purported refusal of April 15th last by then communications minister, Mr Alan Dukes, of the company's application for a rebroadcasting licence.
Mr Justice Carney yesterday allowed Cork Communications Ltd (CCL) to be removed from the proceedings.
In court yesterday Ms Mary Finlay SC, for South Coast, said the Department sent three letters to the firm in November and December 1995, inviting applications for a licence to re-broadcast British TV channels in that area.
Mr McMahon agreed that it had been indicated to the company that its licence application would be considered on its own and on its merits.
He had been at a meeting in January 1996 with South Coast representatives, the then communications minister, Mr Michael Lowry, and then junior minister, Mr Hugh Coveney.
He agreed the minister had stated he wanted to deal with the South Coast licence application in isolation from other deflector groups, without his coming under pressure from such groups. He said the minister did not lead the company to believe its application would be dealt with in isolation of all other considerations.
The minister had made it clear there might not be a licence and that the national situation had to be considered, Mr McMahon said. The minister was "generally favourable" to South Coast's application and steps were taken to appoint consultants to evaluate it.
He said Mr Bruton had written to Mr Lowry in May 1996, expressing concern about the delay. Mr Lowry had replied outlining the situation, and noted that the commercial interests of CCL would be threatened by issuing a licence to South Coast.
Mr McMahon said he would have had a hand in drafting that letter. It would have been his duty to point to the possibility of a claim for damages by CCL.
Mr McMahon said Mr Bruton, in a letter of May 27th 1996, asked who gave exclusivity to CCL, what sort of damages it was entitled to if South Coast was licensed and whether there was any way whereby South Coast could avoid causing direct damage to CCL. Additional questions were posed in another letter from Mr Bruton three days later.
Mr McMahon agreed that in a reply he drafted to the Taoiseach's questions he had speculated that CCL could claim damages of up to £10 million. He thought South Coast believed it had a promise from Mr Bruton that he would grant it a licence.
He denied a suggestion by Ms Finlay that the Department hoped South Coast's licence application should not succeed. In the Department's view it would be "very difficult" to resolve the situation.
The Department hoped consultants would come up with a solution, he said. The consultants had advised in February 1997 that it was technically possible to permit South Coast to operate on a restricted, short-term basis.
Mr McMahon said Mr Dukes had told the Dail in February 1997 that he had received the consultants' report and had described it as a technical analysis in the decision-making process.
The hearing continues today.