A TV outsider versus a cosy little carve-up

Digital Television Network is a catchy enough, hi-tech name for a company but you'd be forgiven for not having noticed it. In fact it is the other bidder for the licence to run digital terrestrial television. "Other" is the operative word here, for its bid got utterly lost in all the excitement a couple of weeks back that surrounded the spectacle of Michael Green of Carlton and Gerry Robinson of Granada jumping into bed with Rupert Murdoch's BSkyB to form the only alternative consortium in the running.

Against this kind of fire power, the DTN bid must already look a lost cause. But that hasn't stopped its backers launching a well resourced PR and lobbying campaign to urge its case. DTN is still adamant it can win. Is this just wishful thinking, or is there a realistic chance?

DTN starts from a position of weakness, financially and in every other respect. What was intended as a consortium of powerful commercial and financial interests is now just a one-man band. Spooked by the arrival of BSkyB, first Canal Plus, then NatWest, then Merrill Lynch and finally United News and Media all dropped out of the running. While there is still some possibility of Lord Hollick's United News coming back in, DTN as it stands consists of just NTL, the transmission services company owned by International CableTel. This in itself is a serious enough company, but it is by no means clear what its motives are here. Is it genuinely interested in developing digital terrestrial, or is its main interest in lucrative supply and upgrade contracts for NTL.

Even taking the charitable view, the unfortunate truth is that DTN's chief card is an entirely negative one - that it is the only alternative to a powerful and monopolistic alliance of Britain's biggest commercial TV companies. It has to be admitted, however, that this is quite an ace - so much so that you begin to wonder why it was that Carlton and Granada invited BSkyB in.

BSkyB brings sports and movie rights to the party but the rest is downside, for the extension of Sky into digital terrestrial is bound to be seen as an extension of monopoly. Sky already has a monopoly of analogue pay- TV and is intent on making its own digital satellite systems the dominant future platform for pay-TV too. It provides the vast bulk of the programming for Britain's still fragmented and shambolic cable industry. It will have a monopoly of subscription management in both satellite digital and terrestrial digital. And finally it owns the rights to the encryption technology that allows pay-TV supply. Now it is proposing to become the dominant partner in the commercial part of digital terrestrial too. Is there no stopping this company?

DTN's best hope may lie in Brussels, which has shown itself to be far from shy about meddling in Britain's TV market. If the European Commission thinks BSkyB's monopoly of pay-TV would be strengthened by the company's participation in digital terrestrial, it might take action.

There's no guessing how the Independent Television Commission in Britain will chose to treat these concerns. Its brief is to award the licence to the consortium most likely to achieve the biggest take-up of digital, so that analogue spectrum can be freed up for other things. That provides plenty of scope for the ITC to award the licence to Sky, regardless of the competition issues.

The combined programming attributes of Sky, Granada and Carlton would appear to be streets ahead of its rival. DTN is able to offer some genuine innovations on interactive services, but in terms of content, the contest still looks an uneven one.

The politics of it all gives a further dimension. The decision could be taken at any time between now and the end of May - in other words it could be either before or after the general election. If the ITC intends to go for DTN, it is unlikely to announce its decision before the election, for to do so would risk the wrath of Mr Murdoch, who might then feel inclined to swing his newspapers behind the Labour Party. This shouldn't be a concern to the ITC, which is meant to be entirely independent of and uncorrupted by the politicians; in practice it is very much a concern. To award the licence to Sky ahead of the election would be equally awkward, for the Conservatives could then be accused of trying to bribe Mr Murdoch into supporting the cause.

All this points to a decision after the election. That makes the stakes for the Sky consortium even higher. Just remember: it was "the Sun wot won it" last time round. For the time being its politics are still fluid. Mr Murdoch has played a clever game in keeping the politicians guessing which way the title will swing. The choice is not an easy one. If the Sun sticks the boot into Labour and Labour wins anyway, then the independence of the ITC will not be worth a fig. One way or another, the new government will find a way of ostracising Sky. In these circumstances, Mr Murdoch's best policy might be to have his titles sit on the fence.

Equally possible is that some kind of understanding has been reached during the now quite regular meetings between Tony Blair and Mr Murdoch. Back us and you can have what you want, Mr Blair might have said. If this sounds too conspiratorial to be believed, just read Andrew Neil's book. These are murky waters.

Indeed the true conspiracy theorist might suspect an even darker purpose behind Sky's manoeuvring - to ensure that digital terrestrial doesn't actually happen at all, leaving the future to the Murdoch monopoly of digital satellite. If that seems to be taking the argument just a little too far, the truth is probably not far different.

In evidence this week to the National Heritage Select Committee inquiry into the future of broadcasting, DTN accused Sky of only being along for the ride. The Sky bid had at its heart a partner whose chief purpose was developing digital satellite as the dominant delivery platform for pay TV, DTN said. "It offers nothing substantive in the area of interactive services, may weaken competition in the telecoms market and will do little to help advertisers or new programme providers."

What DTN is saying here is that these broadcasters are bidding merely for the purpose of monopolising the latest form of delivery and preventing anyone else getting a look in. Undoubtedly it is right about this. What is proposed amounts to a cosy little carve-up.

The tragedy of the situation is that DTN by itself is probably not credible enough to provide a realistic alternative. Lamentably, the company that nobody's ever heard of looks destined to remain that way.

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