The telecoms regulator has invited expressions of interest from firms that would like to supply digital television services to compete with satellite broadcaster Sky and cable companies.
The proposed multichannel television services would be restricted to specific geographic areas and based on technology similar to the type used by the now-defunct British operator, ITV Digital.
This technology would use the same 12GHz frequency band that Sky currently uses to beam its satellite signal into 240,000 homes in the Republic. This has raised concern at Sky about the signals causing interference or picture loss for some of its customers.
Last year the firm lobbied the regulator, Ms Etain Doyle, to seek to prevent her from issuing regional digital television licences. In a letter, Sky warned that licensing local services would result in: "serious adverse effects on existing and future digital telecoms services as a consequence of interference". But Sky said yesterday the regulator had assured it interference would not occur due to this licensing and it was continuing dialogue on the issue.
The decision by Ms Doyle, who asked firms yesterday to make submissions by mid-September, may also signal that the Government's plan to establish a national digital terrestrial television service is now not considered viable.
The national digital television service was proposed as early as 1998 but was subsequently held up following lengthy delays in the passage of the Broadcasting Act. The Government finally initiated a comparative selection process to select a consortia to establish the service last year. But following the technology downturn just one firm - It's TV - applied for a single licence on offer. This licence has not been awarded due to concerns over It's TV's ability to finance the service.
Few venture capital firms are prepared to invest in new technologies at present following a major shake-out in the technology sector and the pay TV markets this year. And many observers think the dramatic demise of British digital terrestrial firm ITV Digital and the rapid advance of Sky in the Republic has undermined the case for a national digital TV service.
A Government spokesman told The Irish Times yesterday the comparative selection process for a national licence was ongoing and a final decision was expected in September. But few experts hold out much hope of this service rolling out within the next 12 months.
Mr Peter Branagan, head of the It's TV consortia, said yesterday it would consider bidding for a regional licence to operate a digital television service if it was not awarded a national digital licence.
He said a television service in the Dublin area would be particularly competitive.
Other firms which may be interested in applying for licences to operate regional services include deflector companies which already offer multichannel television to certain regions. Southcoast Community Television, which broadcasts to about 20,000 people in Cork, confirmed yesterday it would study the regulator's plan.
In November 2000, the firm lobbied the Government to allow it to introduce its own regional digital service without success. It submitted a licence application to the regulator that proposed providing services to about 100,000 homes in Cork, Kerry and Waterford.
But Mr John Hurley, chairman of Southcoast, said yesterday it would be extremely difficult for groups to invest in digital services in the current economic climate.
"It is two years down the road since we first applied for a digital licence and things have changed dramatically since then with the entry of Sky and people becoming less excited about investing in digital television," he said.
Chorus, one of the cable firms that would face extra competition from such regional services, yesterday downplayed the threat from digital terrestrial services.
Mr Willie Fagan, director of regulatory affairs at Chorus, said the big issue was the cost of setting up a service. "For the deflector firms, I can't see there being a business case for that," he said.
