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Digital television negotiations reach crisis point
02 May 2010 By Samantha McCaughren
Ireland’s next generation television service, digital terrestrial television (DTT), is further than ever from becoming a reality, with the whole process close to collapse.
It is almost two years since the contract for commercial DTT was first awarded. But with the news that the Eircom led OneVision consortium is out of the picture, two of the three potential operators of DTT have now walked away From the process.
Commercial operators seem unwilling to do a deal for DTT, with sources close to the process blaming the broadcasting regulator and the government for allowing it to drag on. OneVision also blames RTE’s transmission arm for demanding ‘onerous’ guarantees of €20 million from the consortium, before allowing it to use its DTT network.
RTE is obliged to have the public service side of DTT operational by October, but for DTT to appeal to a wider audience, it must have a commercial selection of channels. Otherwise RTE will be investing up to €100million for a service that will have limited appeal and is unlikely ever to take off.
But Ireland needs DTT.
There is an EU requirement that the analogue television service be turned off by 2012, so people will no longer be able to get a free signal through aerials.
DTT is the replacement, but Ireland is now well behind most of Europe for the digital switchover.
The awarding of the DTT commercial licence dates back to 2008,when there were three groups keen to run the service. Denis O’Brien’s Communicorp joined forces with Swedish digital television specialist Boxer. Eircom,TV3 and Setanta joined British digital company Arqiva to form OneVision. The third party was EasyTV, comprising RTE and UPC.
There was some surprise when Boxer was the first choice of the Broadcasting Commission of Ireland (BCI), given the group’s links to O’Brien, who was becoming a major media player through investments in radio and newspapers. However, the BCI believed there were no issues over his level of control and awarded Boxer the licence in July 2008.
By Christmas of that year, however, there were rumours that the consortium had gone cold on DTT. It was not until May 2009 that the BCI pulled the plug and re-awarded the licence to OneVision, the second preferred bidder. A large part of the blame for Boxer’s decision to quit the DTT process was laid at the door of RTE - or rather its arms-length transmission business, RTENL.
The body wanted boxer to put up €20 million guarantee before investing €100 million in the project.
However, others close to the process believe that the dramatic downturn in the economy was ultimately what sent Boxer and Communicorp running.
After almost a year of wasted negotiations, the BCI assured the public that the OneVision talks would be expedited.
But a number of factors got in the way. A year after the first application process, the original partners in the grouping weren’t so keen on DTT.TV3 and Setanta had their own problems trying to keep their houses in order, rather than investing in a new and untried technology.
The BCI was asked to approve a new shareholder structure at OneVision, which gave Eircom a majority holding in the business.
At the same time, Eircom itself was changing hands through a drawn-out takeover by Singapore Technologies Telemedia, which is keen on new technologies.
The reticence to push the DTT negotiations along may have been due to a belief that the consortium would sign up once the new Eircom backers were in control.
The BCI was going through its own changes late last year, becoming the Broadcasting Authority of Ireland (BAI).
Bob Collins, who became the BAI’s first chairman last October, said he was losing patience with the DTT process, but it still took a number of months for the body to decide that OneVision had reached an impasse that could not be overcome.
The BAI appointed Isolde Goggin, a former chairwoman of ComReg, to review the positions of RTENL and OneVision in relation to DTT. Earlier this month, she reported a significant gap between the two sides. With both sides refusing to budge, no solution could be found.
Sources said that OneVision was ‘‘utterly disillusioned’’ with the whole process and just wanted to move on. Even those close to OneVision believe that the BAI should have set a deadline much earlier to force the hands of both parties.
Others believe that the government and the Department of Communications has to take some responsibly for delays in DTT. While minister Eamon Ryan is positively disposed toward DTT, there has been little incentive at government level for progress to be made.
The legislation requires RTE to get the public service side of DTT up and running, but there is no requirement for RTE to do a deal with the commercial operator.
RTE insiders believe that it has to take a tough approach in doing a deal with a commercial DTT partner in order to avoid claims of state support from competitors such as Sky.
RTE also said that it was flexible on the €20 million guarantee sought from OneVision, and that it would have accepted guarantees from the companies in the consortium.
So now it falls to EasyTV, the third and least preferred bidder, to get DTT’s commercial arm off the ground, but it is not clear if UPC has any interest in DTT any more. It has made considerable headway in the market over the past couple of years with its own digital offering.
If talks between Easy TV and RTE do get under way, the failed consortiums will be watching closely to ensure that no fair advantage is given.
It is more than a possibility that the whole licensing process could have to start from scratch, with even more delays.
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