The Government's plan to launch a digital television service that would compete with satellite and cable firms may be blocked by the European Commission.
The Commission has begun two separate investigations into State financing of digital terrestrial television services in Germany and Sweden to determine if the arrangements amounted to illegal state aid.
The results of the formal investigations are likely to provide a blueprint for the future financing of so-called digital terrestrial television services in Europe by outlawing subsidies for the services.
Digital terrestrial television services beam digital TV signals into people's homes and businesses using an upgraded version of state television transmitters.
Several European Union governments have financed digital terrestrial television projects in an effort to promote the roll-out of digital TV- a type of television service that offers better picture quality and interactive services.
However, the European Commission has raised concerns that State funding for these services may unfairly discriminate against existing satellite and cable television firms.
The Minister for Communications, Mr Ahern, has floated plans for a digital terrestrial television service that could potentially offer all viewers both Irish and UK channels.
He is also planning to sanction a digital television trial by RTÉ shortly that would enable people in the greater Dublin area to receive a number of digital channels for free using this service.
However, industry sources said yesterday that the European Commission's investigations into State aid could delay a trial and undermine the commercial viability of the digital TV project.
One source said a digital terrestrial television service would probably only be attractive to consumers with the British channels, pointing out that such a launch would be difficult to achieve without State aid.
A spokesman for the cable company Chorus said: "This indicates a need for Government when introducing new services with State backing to ensure that they comply with all the proper rules for State aids."
Senior European Commission officials visited the Republic last week to speak to the communications regulator and private firms. It is understood the issue of digital terrestrial television was raised in some of the discussions with the Commission officials.
The Government first adopted a policy to set up a digital television service in 1997. But since running one failed competition to appoint a firm to run the service in 2001, it has not come up with a viable plan to get a digital TV service up and running.
A spokesman for the Minister for Communications, Marine and Natural Resources, Mr Ahern, said the Commission investigations would not affect its plan to launch a service in September.
