Regulator raps Spanish pay-TV plan

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In a move that it is thought could force Telefonica to close down its TV cable operations, the Spanish Telecommunications Market Commission (CMT) has vetoed Telefonica's Imagenio ADSL pay-TV service.

The regulator rules that Telefonica Cable, part of Telefonica, is not legally entitled to market Imagenio's pay TV service as it is neither a digital TV operator nor a conditional access provider.

Telefonica is likely to regard this stance as legal nit-picking since its set-top-boxes are being distributed by Telefonica itself, although not by Telefonica Cable.

But CMT argues that Telefonica Cable is not qualified to deliver the service. The regulator does not regard Imagenio as being a broadcast service, but rather an interactive audiovisual service. The service in question comprises 22 TV channels currently available in Madrid and Barcelona.

CMT has now denied the model contract that Telefonica Cable had submitted for approval, and so left the Imagenio project up in the air. The company is reported to have said it will appeal against CMT's decision. Industry observers believe that, if ratified, the decision could drive Telefonica to close down Telefonica Cable.

The telecoms group recently announced a full frontal assault on ADSL with a €3bn investment and the CMT decision represents a setback in its plans to break into the pay-TV market.