A local digital television service, which would compete head-to-head against cable operators and the national digital service proposed by RTE, is being developed by Southcoast Community Television.

The company, which uses multi-channel deflector technology to broadcast into Cork, Kerry and Waterford, is conducting trials and is making an initial investment of £7 million to develop the service with French company, MDS International.

The technology will initially include only digital television, but the company said yesterday it was engaged in discussions with partners to supply additional services such as video-on-demand and high-speed Internet access.

Several other community-based broadcasters are interested in adopting the technology and offering a digital service in various regions across the country, according to Mr Joe Gibbons, Mayo-based spokesman for the National Community Television Association.

"It has the attraction of offering our customers the choice of a top-quality service at attractive prices and with a high level of local and community control," he added. The digital service has the potential to carry up to 1,000 television channels, but a standard package of TV and radio services would cost just £11.99 per month, claimed the company.

The company has been granted a three-month test licence by the Office of the Director of Telecommunications Regulation and is expected to apply for a licence to offer the service before its current analogue licence runs out in December 2001.

"It's a matter of survival for us," said Mr John Hurley, chairperson of Southcoast. "It took us 15 years to get a licence to broadcast television, but it now only runs for another year."

However, the question of licensing local digital services could be as contentious as the deflector debates during the 1980s and 1990s, as there is still no proposed scheme for licensing such services.

Mr Tom Gildea TD, who was elected as an independent deputy on the TV deflector issue, said he would be raising the matter of licensing the service with the relevant Government departments.