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DMC

Loads of stories in The Irish Times today, I'll reprint them here....

http://www.ireland.com/newspaper/finance/2002/0408/3647227484BZDIGITALTV.html

Irish digital TV applicant in cash quandary

By Jamie Smyth

The sole bidder for a licence to operate a national digital television service is lobbying the telecoms regulator to amend a draft licence that it believes is preventing it from raising the funds required to support its application.

It'sTV, a consortium headed by former RTÉ executive, Mr Peter Branagan, is the sole bidder for a licence to operate the proposed digital television service. But it has been told by the Government that it will not be awarded the licence unless it secures a principal financial backer for its plan.

It is understood It'sTV has told the regulator, Ms Etain Doyle, that it will not be able to raise venture capital funding without amending a clause within the licence to enable it to supply internet services, as well as more than 30 television channels. The draft licence currently restricts the amount of radio spectrum a licence holder can use to supply internet and data services to customers at "up to 20 per cent of each digital multiplex at any given time". But It'sTV believes this would undermine the quality and reach of its internet services and is lobbying to have this amended to up to 20 per cent of "all six digital multiplexs".

A digital multiplex is a combination of digital television channels and other material. There are six multiplexes planned for the Irish services, one of which will be assigned to RTÉ, with TnaG and TV3 sharing another. The operating company for the service would rent the remaining four multiplex's to other parties.

The amendment sought by It'sTV would enable it to use one of these multiplex's solely to supply high speed internet services, enhancing the quality and reach of the service. Industry sources said It'sTV's move to amend the draft licence reflected the consortia's change in emphasis from seeking to be mainly a pay television provider to placing internet services at the core of its plan. This reflects the downturn in the pay television market which has seen an equivalent service in the UK, ITV Digital, go into administration, and cable group NTL amass huge debts of $17 billion, sources said.

It is understood that NTL and its bondholders have moved closer to a debt-for-equity swap deal to help get the British cable group back on its feet. It'sTV has met officials from the regulator's office twice to discuss the licence but as yet no decision has been reached on the issue.

A decision in favour of It'sTV could create a competitor for Eircom, but it may also distort the original intention of the Government, which was to create a TV service. This licensing issue is the latest in a slew of problems to dog the Government's plan to set up a digital television service, which has already been delayed for two years and cost about €2.5 million.

Originally four firms expressed an interest in the competition to award a licence but just one of these, It'sTV, submitted a bid by the deadline of August 3rd 2001.

On the recommendation of consultants acting for the Department of Arts, Heritage, Gaeltacht and the Islands a deadline of January 31st 2002 was set for evaluation.

But following It'sTV's failure to secure a principal financial backer by this date, the department granted an extension to enable the consortia to conclude talks with a "credible potential lead investor".

It is understood It'sTV has been in contact with a US venture capital firm but has not, as yet, secured the required financial guarantees that would enable it to be awarded the licence. The venture capital firm is believed to be seeking guarantees that the licence would allow It'sTV to position itself as an internet provider, as well as a provider of pay television services.

But the huge costs of launching and operating a digital terrestrial service, estimated by analysts at between €15 to €80 million, is also thought to be a major hurdle to It'sTV's quest to obtain funding. A spokesman for the Department for Art's, Heritage, Gaeltacht and the Islands, said it hoped the award of the licence would be concluded by mid-2002. The department also revealed it has paid a consortium of advisers, led by AIB Corporate Finance, €2.43 million in fees and expenses, to organise the selection contest.

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and

http://www.ireland.com/newspaper/finance/2002/0408/2212790933BZDTTANALYSIS.html

Digital woes delay start of Irish service
By Jamie Smyth

ITV Digital's recent descent into administration couldn't have come at a worse time for Mr Branagan. The Government told It'sTV in February that it must secure a principal financial backer to be awarded the licence, and the collapse of an equivalent UK service will not bolster the nerves of the US venture capitalists which It'sTV is courting.

It is almost five years since RTÉ's former director of technology, Mr Peter Branagan, first developed a plan to establish a national digital television service that could provide consumers with up to 50 new television channels.

In the technology fuelled boom of the late 1990s the word "digital" was synonymous with making money and Mr Branagan's plan had both RTÉ and the Government excited about the possibilities offered by a new service.

As head of It'sTV, the sole bidder for a licence to operate the State's proposed digital television service, Mr Branagan's dream has yet to be realised and looks increasingly likely to be torpedoed by a combination of political delay, increased competition and a slump in the technology sector.

A year long delay in the drafting of the Broadcasting Bill due to concerns raised over the ownership of the proposed television service was the first hurdle faced by proponents of the new service. Although this was subsequently dealt with and the Act finally passed last year, it delayed the competition to award a licence during a buoyant period for the technology sector. Two years later and this sentiment has changed.

Confidence in the pay television market has probably never been lower with ITV Digital, NTL and the Kirch Group all suffering severely.

The cost of acquiring subscribers, purchasing content and upgrading networks has generated huge debts and customers are not willing to spend enough extra on new services to generate returns on this extravagant expenditure. The £315 million sterling paid by ITV Digital in the UK for the rights to lower division football was made at the height of a market which is now on the brink of collapse.

Neither will BSkyB's recent aggressive push into the Irish marketplace.The success of Sky in the UK was one of the main factors in the demise of ITV Digital, which went head-to-head against the Sky service and lost.

Sky is now claiming more than 200,000 subscribers in the Republic and there would probably be little demand for a new television service. The current malaise in the pay television sector and the competition from Sky in the market form the background to It'sTV's recent lobbying to have the draft licence for digital television amended.

The delay in the roll out of competing internet technologies may offer the firm a window of opportunity to gain subscribers. But it may yet prove too little too late.

Well it looks like the good old ODTR have the make it or break it wand to wave in the case of DTT in Ireland.
It's as simple as that.
These article are very imformative and researched Except:

To be honest, I'm fed up of reading parts of articles which compare ITV digital with what could happen here.

You have only to go into the archives of Digital spy(and others) dig terrestial forum to get a feel of what the low powers ITV digtal operated on, did for it's reception.
Red dots galore-Red dots being what you get when theres not enough signal.
DTT at such low powers meant aerials and amps were needed for the first time for terrestial television in the UK.

This put ITV Digital at an obvious disadvantage as they had to finance aerial upgrades for people who never had to use them before, and in a lot of cases people had to pay more only to find out these didn't work either.I mean why pay for an aerial when you are going to get a dish for free?
Ireland is full of aerials in rural parts, so if you are in the 30% or so areas that wouldn't have a strong enough Irish DTT signal-you Use your aerial.The expensive use of an amp and large aerial would be rare from my experience.

It makes perfect Economic sense for on the one hand Venture Capital houses to look for the use of extra capacity for internet access and on the other for the ODTR to allow this.
Otherwise it's Sky for all and no competition.
mm

triple-play

A decision in favour of It'sTV could create a competitor for Eircom, but it may also distort the original intention of the Government, which was to create a TV service. This licensing issue is the latest in a slew of problems to dog the Government's plan to set up a digital television service, which has already been delayed for two years and cost about €2.5 million.

This is not true. In the Broadcasting Act 2001 in which the rules for the licence award and operation were set down, the Act clearly states in section 3 paragraphs (c) and (d) that the principal objects of the multiplex company shall be stated in its memorandum of associations will be-
" (c) to promote the development of multimedia services, and
(d) to promote the development of electronic information services, including those provided by means of the Internet."

This is VERY important as it means that if it'sTV wanted only to offer a multichannel TV service then they would not fulfil the requirements of the Broadcasting Act. Therefore, it'sTV are NOT distorting the original intention of the Government, as it was the Govts intention to establish both a TV and an Internet services company.

Sorry Jamie, but you got that one wrong...

triple-play

Sky is now claiming more than 200,000 subscribers in the Republic and there would probably be little demand for a new television service.

There is still plenty of room for a new entrant -as long as the new entrant is offering a compelling consumer proposition at a competitive price.

There are ~1.4m homes in Ireland. Sky have around 225,000 of these with cable and MMDS accounting for another 613,000. Even without taking any of these customers it'sTV would have a market of well over 500,000 homes.

If you also factor in that Chorus subscribers (~220,000 homes) are generally looking for a new reliable and competitive supplier of the UK channels then I think it'sTV could do very well.

Add in the wireless broadband internet offering and I think it'sTV is on a winner. A pity the timing is so bad with ITV Digital and Queiro (Spanish DTT) in trouble but they had lower power, expensive STB subsidies, no broadband internet service and outrageous sports rights costs to contend with -all areas in which it'sTV have cost effective solutions.

mike65

Thanks for the updates Damo,

I'm amazed that ItsTv don't have thier financing in order, that they don't plainly makes life tricky for the regulator. After all she does'nt want to been seen awarding the licence to the only
bidder then finding it can't even start opps.

That said the fact it wants to go big in wireless internet should mean the regulator should be falling over herself to help ItsTv
in any way possible- she more than most knows how the irish public has been let down by the other players, and with high-speed NTL access unlikely to be a goer in the forseeable future, if ever, we need an alternative to Eircon. Quickly.

Mike.

Originally posted by mike65
Thanks for the updates Damo,

I'm amazed that ItsTv don't have thier financing in order, that they don't plainly makes life tricky for the regulator. After all she does'nt want to been seen awarding the licence to the only
bidder then finding it can't even start opps.

That said the fact it wants to go big in wireless internet should mean the regulator should be falling over herself to help ItsTv
in any way possible- she more than most knows how the irish public has been let down by the other players, and with high-speed NTL access unlikely to be a goer in the forseeable future, if ever, we need an alternative to Eircon. Quickly.

Mike.

Venture capital firms interested in investing in this area, will have done their home work. They will know,the potential return on their investment would be greater if the go ahead was given for the use of an extra mux for internet access.

Regarding the ODTR-I along with many others have given up praying to them for progress-snails pace,they'd win awards for that:(:mad:
I simply cannot understand why they won't encourage and fast track the arrival of fast web access.
mm