Eircom move lifts hope of ending digital TV impasse

THE chances of finally resolving the impasse over Digital Terrestrial Television (DTT) are understood to have "improved considerably" in recent days after Eircom moved to take a 65pc stake in the consortium charged with rolling out the next generation of paid-for TV.

Originally equally owned by Eircom, Setanta, TV3 and UK firm Arqiva, the One Vision consortium had been contemplating its DTT options since May 11, when it was awarded the contract for the technology's "commercial rollout".

The group's lengthy delay in signing binding contracts with the Broadcasting Authority and networks provider RTE has prompted widespread speculation that One Vision was preparing to hand back the contract, mirroring Communicorp/Boxer's decision to give up the original DTT contract in April.

It is understood, however, that after a period of limited engagement over the autumn, RTE and One Vision have embarked on discussions with renewed vigour in recent days, with one meeting last week, another today and a third scheduled for early January.

The impetus for the resurgence in discussions is understood to be linked to the Broadcasting Authority's declining patience with the lack of progress, coupled with proposed changes in One Vision's ownership structure.

The changes, notified to the Broadcasting Authority last week, would see Eircom take a 65pc stake in the venture, while Arqiva takes 25pc, Setanta takes 10pc and TV3 assumes a "nominal" shareholding.

While RTE and One Vision have clashed on pricing, the main bone of contention is understood to have been RTE's insistence on some form of "security" from the consortium, ideally a €20m deposit in recognition of the many millions of euro RTE networks must invest in DTT infrastructure.

Guarantees

Sources close to the process confirmed One Vision's revised structure would materially impact the security issue.

"When you have a better joint venture, you could have more of one type of security, like parent company guarantees, and less of another," said one source. "The more solid the joint venture, the easier it will be to arrive at terms suitable for everybody."

Industry sources said Eircom's majority stake "makes sense" because the telco has a strategic interest in having a "triple play" TV, phone and broadband offering that could compete with major rival UPC.

It is understood that TV3's slimmed down One Vision stake reflects the broadcaster's doubts about whether the project is commercially viable enough to convince owners Doughty Hanson to cough up a multi-million euro cash injection.

Both Eircom and TV3 declined to comment on the ownership changes, as did a spokesman for One Vision. A spokeswoman for the Broadcasting Authority confirmed changes had been notified, but said the authority would not announce a decision on the new structure until the New Year.

Sources close to the process, meanwhile, pointed out that while the chances of One Vision sealing a DTT deal had improved of late, success was by no means certain. "It's looking like we'll know by the middle of January, so that's something at least," said one source.