Outsiders in digital TV battle offer free-to-air

The two outside bidders for digital terrestrial licences have based their proposals on free-to-air services and independence from the vested interests of the established broadcasters.

Digital Television Broadcasting (DTB), backed by the private equity house Apax Partners, and SDN, an operator in which the cable group NTL has a 41 per cent stake, are competing with the two more high-profile bids from the BBC and an alliance of ITV-Channel 4.

DTB is planning to air 21 free non-premium channels, on the three multiplexes vacated by the defunct ITV Digital. DTB will be funded by a combination of advertising revenues and transmission charges.

SDN, which has been operating a little-known multiplex since 1998, will work on a "utility" model, charging content providers a carriage fee. SDN will focus on providing 20 free channels initially, and at a later stage would consider a pay-TV offering with 10 to 12 channels. Compared with, say, satellite, the digital terrestrial signal is relatively expensive to broadcast, costing £1.5m or more a year.

Each of the four bidders has been careful to propose a different business model ­ an attempt to replicate Sky is blamed for ITV Digital's failure. The ITV-Channel 4 bid is the only contender with an immediate pay offering.