A commercial licence will soon be awarded for London. Will the Radio Authority finally get to flex its muscles?

The relationship between the broadcast media and their regulators - the Independent Television Commission and the Radio Authority - is always a bit fraught. Commercial broadcasters push as hard as they can against ceilings of any description, including limits on ownership, watershed rules and sponsorship restrictions. The regulators fight back, intent on using their full powers to ensure that public service interests are met and that programmes, whether on telly or on the wireless, are of a sufficiently high and morally acceptable standard.

These tensions, which are probably a good thing for broadcasting, are seldom more obvious than during the long-drawn-out process of awarding licences. The ITC and RA are inundated with applications, and then have to weather a steady stream of press comment, extra submissions, questions, criticisms, whingeing.

One such award is in full swing, as the RA gets down the difficult task of deciding, probably on 16 January, which of 25 hopefuls will be allowed to start a new commercial radio service for Greater London. The task is complicated by provisions in the Broadcasting Act of 1996, which for the first time gives the RA the duty of considering the "public interest" in the event that it elects to award a second FM licence to an existing broadcaster.

In the free-for-all that is London, two established broadcasters - London News Radio and Capital - have each asked for a second FM licence, a prospect that, unsurprisingly, would not go down well with rivals.

As part of its consultation process on the public interest, the RA invited the public and interested parties to submit their views on whether LNR or Capital should be allowed to extend their already significant market share. The deadline for submissions was 10 days ago.

According to those in the know, the Authority received about 40 submissions from the general public and 13 from among the 25 applicants. A trickle also came in from MPs, all of whom were invited to make their views known.

The Authority's staff is now busy collating the information, and tabulating the range of views. The material will be used by the RA Board only if either Capital or LNR is selected as the winner of the franchise. The Board would then apply the public interest test, and decide whether to ratify the initial award.

It all sounds a bit complicated. So in the interests of helping out the hard-pressed members of the Board, let's review the key issues here.

First, the Authority has some clear guidelines on which to base its public interest test. It will be asking, for example, whether a reduction in the "plurality of ownership" of local radio would be a bad thing (likely answer: yes). It will also ask what the effect of dual FM licences would be on the range of programmes that are available, and on the diversity of the sources of news, opinion and information.

On these measures, it looks pretty apparent that awarding a second FM licence to either Capital or LNR would do nothing for plurality of ownership. LNR's backers include Associated, the publishers of the rival-free Evening Standard, and GWR, soon to be the country's largest radio group when it completes its acquisition of Classic FM at the end of the year. LNR already has the newly relaunched LBC and the all-news "News Direct" service on AM. Capital swamps London with its FM service and its Gold AM brand.

Diversity of service is another matter, though. It can be argued that Capital's Gold service on AM would attract fresh listeners if it were moved to a new FM frequency (which is what Capital wants to do if it wins the new FM London licence). There is presently no high-quality golden oldie service in the capital. LNR, for its part, is offering a business and sport channel, which would also extend choice for Londoners.

Upshot? Both groups would pass the diversity test but fail the "plurality of ownership" test. Moreover, the two groups are already big players in radio (Capital owns the country's dominant sales house, too) and surely should not be preferred to other, vibrant new services.

Of the remaining candidates, you can take your pick. As this column has suggested before, XFM, the alternative rock music station, and Festival Radio, also alternative in character, with news, information and listings for a younger crowd, seem to fit the bill. Of course, you might prefer to see a children's radio station (although who would listen during school hours?) or a gay station (the Paris gay radio station has been a great success). Or how about reggae, Irish, African-Caribbean or even Eurozone, offering "a European agenda in English for London"?

Some of these are clearly long shots. But as seasoned veterans of the Radio Authority licensing regime know, the unexpected can happen. Who would have thought Viva!, the "women's station," would win a licence (and it probably shouldn't have, since it was a disaster from the start and is now being relaunched by Mohamed Al Fayed).

In the end, the range of applicants is so varied, I suspect the Authority will end up awarding the licence without having to review the public interest issues at all. That is what happened in the East Midlands recently, when GWR was passed over in favour of Radio 106 FM, backed by CLT, the Luxembourg- based broadcasting giant, and Border Television, the tiny ITV company. The public interest information gathered in that case was never presented to the Authority's board.

If that happens in London, we will be no closer to knowing whether companies such as Capital Radio, Virgin and GWR will ever be allowed to own another FM licence in the same area. Until one of them is actually selected by the Authority, the public interest test will remain wholly hypotheticaln