Mathew Horsman on the difficult birth of digital

The Government, and its agents, had four chances to ensure that the digital revolution in TV does not become a monopoly mirror of Rupert Murdoch's stranglehold on analogue pay-TV. It has blown the first two already; it has left the third opportunity to the vagaries of European competition law; and it is looking hopelessly confused about the fourth and final option.

To recap. First, we had the Broadcasting Bill, which was meant among other things to smooth the birth of digital terrestrial television, liberalise ownership restrictions and - more fundamentally - ensure a fair and open competitive environment for the future of broadcasting. Despite the efforts of some backbenchers and committee members, the Government managed to usher through the Bill without introducing effective controls on Mr Murdoch. He is free to establish his digital satellite service using proprietary "conditional access" technology, and that could mean he emerges as the gatekeeper to the digital world - the role he now plays in the analogue pay-TV market.

The second line of attack could have been the recent inquiry into pay- TV by the Office of Fair Trading, which was asked by scores of complainants to remedy what they saw as a wholly unfair imbalance between Mr Murdoch's juggernaut BSkyB and the other, smaller players in the sector.

But John Bridgeman, the OFT's director-general, accepted "informal undertakings" from BSkyB that it would play nice with its competitors. The ruling leaves Sky's near-monopoly intact and raises serious questions about the degree to which the new digital market will likewise be dominated by a single, powerful supplier.

The third option is one that UK governments have been publicly reluctant to trumpet, for it involves intervention by the competition authorities in Brussels. The Commission is looking at the pay-TV market, and is particularly exercised by the question of competition in the provision of "conditional access" systems - the scrambling and unscrambling of broadcast signals. It is also looking at how to ensure that suppliers of digital services do not abuse their gatekeeper role by restricting access to electronic programme guides (or EPGs), which permit viewers to find and select the programming they want from the vast array on offer in the digital world.

It could be that Brussels intervenes effectively, in which case the UK Government is off the hook. It can claim to Mr Murdoch that "it wasn't us, it was Europe," and thereby hope to continue to receive the fulsome support of the Dirty Digger's four national newspapers.

The fourth option lies in the terms that will guide the introduction of digital terrestrial television in the UK. And it is here that the Government, as well as the BBC, are in danger of killing off the concept in its crib. The first blow came with the Government's reluctance to impose adequate conditions on the "set-top box" that will allow viewers to receive digital TV signals. Many in the industry had hoped for a mandated, licensed "open" delivery system shared easily by all digital suppliers. This now looks unlikely, despite the comforting talk about "common interface". The second blow was the BBC's perhaps now-regretted announcement that it would place its digital programming on Mr Murdoch's digital satellite service, due to be launched next year. Of course, the Beeb also said it was firmly committed to digital terrestrial television (DTT) - a strategy grandly known as "platform independence." But other broadcasters, not least ITV and Channel 4, must be rather upset that the BBC has given Murdoch such a clear measure of support for his own digital service. With the BBC on board, and with the "first mover advantage" Murdoch will have in reaching the digital starting line, there must be some real doubt about whether viewers will have the slightest interest in the Government's DTT plans. After all, who wants to buy one set-top box in, say, November 1997 to receive 200 digital satellite channels (including BBC1, BBC2 and some additional pay-TV programming the Beeb is planning) and then have to buy another box the following year, just to get, say, 18 channels? How can DTT broadcasters hope to beat the cost of Mr Murdoch's system, which is being subsidised by the likes of BT and Barclays Bank? And if Mr Murdoch's box really does work for DTT (that much-vaunted "common interface"), at what cost to rival broadcasters and on what conditions?

All of this is crucial right now, as the main broadcasters prepare their submissions to the Independent Television Commission, which is charged with the task of seeing in DTT. The ITC wants to know by September which of the mainstream broadcasters intend to take up their reserved space on the digital spectrum, and what, broadly, they intend to offer as extended services to DTT viewers. Not surprisingly, neither the ITV companies nor Channel 4 are prepared to rush into DTT if it hasn't got a hope in hell of working.

The Government ought to chide the BBC for jumping the gun on digital satellite (and Oftel, the telecoms regulator, might want to ask BT to reconsider, on competition grounds, its commitment to Sky's set-top box).

In the current debate, no broadcaster has as much difficulty deciding on its digital strategy as ITV. It suffers from a major tactical challenge: handling the division of interests between giant Granada and all the others, in light of Granada's decision to launch satellite services in league with BSkyB. But notwithstanding the split, the rest of ITV - and Channel 4 - might consider announcing that it has no intention of joining the Sky digital satellite line-up. The pressure could then build on the BBC to shift its attention to backing DTT rather than remaining in the embrace of Murdoch.