Sunday, April 26, 2009
Ireland’s tortuous transition from an analogue based TV service to a digital one - scheduled to be completed by 2012 - looks like being even more protracted than anyone would have guessed.
The DTT strategy has been years in preparation - and had accelerated in a promising fashion last year. But the process has been stalled since January, as it was becoming clear that the Communicorp/Boxer DTT consortium would fail to conclude a deal to take up the DTT contracts it won last July.
The contracts would have given it the right to operate three commercial DTT multiplexes, alongside RTE’s free-to-air multiplex.
When it originally won the contracts, Boxer DTT promised it would have its DTT service running by January 2009.That should have meant its digital set-top boxes would be already in the shops.
Boxer has blamed the problems on ‘‘prevailing and anticipated economic circumstances, in addition to challenges in successfully concluding a contract with RTE Networks Limited, to the satisfaction of both parties, for the provision of transmission services’’.
It has since emerged that RTE warned the Broadcasting Commission of Ireland and the Department of Communications six weeks ago that the deal was floundering.
One of the problems that killed the deal, according to informed sources, was RTE’s request for a €20 million security from the Communicorp/ Boxer Group, which was not forthcoming.
It is also understood that RTE - which tried unsuccessfully to win the contract to operate the commercial DTT licence itself - had offered Boxer a contract that envisaged charging it €10 million a year to access the RTE digital transmission network.
In letters sent by RTE management to the BCI and the government, it’s understood that RTE said it had no confidence that a deal was achievable with Communicorp.
As a result, and given the changed economic circumstances since last July, it is understood that RTE’s director general Cathal Goan called on Minister for Communications Eamon Ryan to review the government’s approach to DTT ‘‘as a matter of urgency’’.
There is now a situation of complete uncertainty about DTT. The BCI has given the underbidder - a consortium that includes Eircom,TV3 and Setanta - two weeks to decide if it wants to pick up where Communicorp left off.
If it does not, under normal circumstances the next move would be to revert to the third bidder, the group led by RTE itself with entertainment firm UPC.
While there are good reasons why groups like Eircom or UPC might want to take on a project like DTT, in the current economic climate, it’s not at all certain if either would be prepared to make the investment. The media partners are all battling sharp downturns in revenue.
Realistically, the latest delay means it’s questionable whether or not Ireland will be in a position to switch off analogue TV services in 2012.RTE is supposed to be working on developing a whole new digital transmission network in preparation for the launch of a free-to-air DTT service in September.
Technically, it’s understood it will be able to provide a network that covers 80 per cent of households by the end of this year. That’s now also an uncertain project.
While it’s understood that RTE has already committed a budget of €40 million to this task (which will cost about €110 million to complete), it’s questionable whether there can be any market for a DTT service that has no commercial element at this point.
For DTT to be a success, it has always been understood that it would have to be a joint project between the public service broadcaster and a commercial player.
It’s doubtful now that RTE - facing a €68 million shortfall this year - has the funds needed to deliver any new content for a DTT service, as it had planned originally when its revenue position was secure.
There had been talk of an RTE Three channel on the digital platform. In all likelihood, all RTE could now offer in a free-to-air DTT package would be the channels that are already available to analogue customers - RTE One, RTE Two,TV3 andTG4.
Since availing of the service would mean buying a dedicated set-top box (at an estimated cost of €50), there’s no real reason for anyone to do so, since the analogue signal remains intact.
However, failure to switch off the analogue signal in 2012 would leave Ireland trailing behind the rest of Europe, which is proceeding fast with the transition.
The BCI is insisting that all remains on track for DTT and that it is hopeful that this matter can be resolved. BCI chief executive Michael O’Keeffe said the process was continuing and emphasised that a lot of work had already been done by the BCI on the matter, so any new contract could be completed rapidly.
‘‘There is still a very large market out there for analogue only service. It’s about 25 per cent of the market, and that hasn’t changed,” said a BCI spokeswoman.
However, if the BCI’s search for a party that has the interest and wherewithal to manage the commercial DTT service falls flat, the whole DTT project will be more or less starting again from scratch.
‘‘If we don’t sort this out,” said one insider, ‘‘we’re effectively handing this whole market over to Sky.”
