Television brings politics, entertainment and the arts to a mass audience with powerful impact. Is it any wonder that in every European state politicians have maintained regulatory controls over all television broadcasters, state owned and private.

There is no free market in television broadcasting and as a consequence it is the legislators who ultimately control market conditions. The other unique aspect is the method of funding that has evolved as a mix of the licence fee and the sale of television airtime to advertisers. Dual funding finances the distribution and content of a national service. It is a sector regulated and with a state-owned operator that held a monopoly for the sale of television advertising and a permanent state subsidy through the licence fee. RTE is an organisation with two different and sometimes competing goals - a commercial broadcaster maximising the mass audience and the revenues they bring while at the same time being a public service broadcaster catering for a completely different agenda including minority interests and cultural priorities. This was the environment at the launch of TV3 and while it remained Government policy to have only one licensed TV broadcaster all these arrangements were mostly achievable with a funding regime that was effective and reasonable.

But Government policy changed, and compared to every other European country, changed very late in the day. Now with TV3, the increased availability of choice of programming for the viewer has expanded the marketplace; repatriating viewers from UK-based services and ensuring improvements in the services provided. However, it does continue to be an uphill struggle. RTE has enjoyed an historical advantage where audience habit, loyalty and relationships are significant revenue drivers. RTE also retains dominance of the advertising market having 70 per cent of the advertising revenues available. It also enjoys the significant cross promotion opportunities on its radio and TV channels which are denied to its competitors due to the current IRTC ownership restrictions.

While you might expect a new entrant to be prepared for all these factors there is one factor outside the market that introduces a massive and paradoxically unregulated distortion, the annual state aid of £70 million from licence fee tax. There is currently an application to increase this by 70 per cent which would create an additional £56 million a year. Faced with this prospect our position is categorically not to oppose the licence fee. Nor do we lay any claim to it. We oppose the lack of direction for its use, and the lack of independent and transparent scrutiny of its use. Unlike telecommunications where a single regulator provides a fair and common framework for all competitors, broadcasting has two separate and unconnected regulatory regimes. Potentially, RTE could use the subsidy to compete unfairly with TV3 which could jeopardise our existence and close the market to new broadcasters. It is not enough for RTE to proclaim innocence, it requires effective independent scrutiny.

Is this scare mongering? RTE, because of its receipt of public subvention, can subsidise its commercial activities with licence fee funding if no prohibition exists, and it does not. In advertising, the licence fee enables RTE as the dominant player to maintain advertising rates in television at one of the lowest levels in Europe, devaluing its Irish audience and forcing competitors to trade at an even lower level.

In programming, the licence fee allows RTE to outbid TV3 and others. In the negotiations for Coronation Street, it quickly became apparent that RTE would continue to up the ante irrespective of the programme's commercial worth and it was only through the unscheduled sale of 45 per cent equity stake in TV3 to Granada that secured access to the programming.

Irish broadcasting is now at a crossroads. It has been suggested by Mr Peter Flood in a recently published analysis of RTE's application for a licence fee increase, that:

This would represent "a commitment of Irish digital media to a traditional (and unsustainable) model at the expense of developing any native broadcasting and media sector. It will result in greater penetration of imported services in Ireland to the general detriment of Irish production, broadcasting and the advertising sector;

There will be no substantial Irish programme or production dividend from the plan. Additional programming expenditure (surely a raison d'etre of public service broadcasting) will account for only 30-50 per cent of the increase by 2005.

There is a choice between either a largely state-sponsored broadcasting sector or a vibrant independent broadcasting sector competing alongside a genuine public service sector. But only if we ensure that the private sector can compete on a fair basis with the publicly funded sector.

Future investment in broadcasting in Ireland can only be encouraged and sustained through a level playing field.

This will benefit everyone from the viewer to the independent broadcaster, from the investor to the public service broadcaster.

James Morris is chairman of TV3. Peter Flood is working on a doctorate in public service broadcasting at DCU.