Awaiting the digital decision

ITV wants to showcase more of its sports rights

By Nick Higham BBC media correspondent

Over the next two weeks or so the Independent Television Commission faces a difficult choice. It has to decide what it thinks about two key questions.

Is there or is there not a future for pay TV on digital terrestrial television? And if it thinks there is, is it prepared to let the ITV companies have another go at proving it?

On the answers to those questions hangs the fate of two rival bids for what used to be the ITV Digital licence - that from the BBC (in combination with BSkyB and Crown Castle, which runs the BBC's transmitters) and that from ITV in combination with Channel 4 as well as a new pay-TV operator called Freeview Plus.

Of course, the Commission could opt to award the licence to neither, but instead to one of two bidders proposing to run digital terrestrial TV purely as platform providers, renting out space on the digital multiplexes to channels supplied by other companies.

The BBC wants its interactive services on digital terrestrial TV

If the ITC accepts the BBC's contention that pay-TV - even in the "pay-lite" form of just seven or eight channels proposed by ITV - has no future on digital terrestrial the choice is between the BBC's own bid and one from Apax Partners, which is proposing a package of advertising-funded, free-to-view channels.

If the commission thinks pay services may indeed be viable it can choose between ITV and the bid from SDN, which already operates the digital terrestrial multiplex that carries Channel 5 and Welsh network S4C, and is applying to take over the three formerly occupied by ITV Digital as well.

The biggest hurdle the ITV/Channel 4/Freeview Plus bid has to overcome is the ITV Digital legacy. The Football League would no doubt be furious if Carlton and Granada, as leading members of this new consortium, were to reacquire the digital terrestrial licence.

The bid envisages 21 free channels, including a music channel, a new channel called ITV Extra and the National Geographic channel, plus a collection of seven or eight pay channels retailing at around £10 a month, and including E4 and Film Four.

Premium channels are necessary if people are to be lured into buying digital receivers, the argument runs.

ITV Digital has cast a shadow over the ITV bid

In ITV's favour is its pay partner: Freeview Plus has been founded by David Chance and Ian West, once senior executives at Sky.

One of ITV Digital's big problems was its lack of experience in pay TV: that is not a charge which can be levelled against Chance and West, who know the business inside out.

Meanwhile the biggest hurdle the BBC and BSkyB have to overcome is the charge that theirs is, in the words of the Independent, "an unholy alliance of TV monopolists"whose principal aim is to keep rivals out of the free-to-view and subscription TV businesses.

A version of this column appears in the BBC magazine Ariel