The Government is looking at taxpayer subsidies for some late-adopters to get Sky's Igloo set-top boxes after old analogue TV signals are switched off.
The move is aimed at easing the transition to digital transmission, but would fit with Government policies that promote pay TV and undermine Freeview and the free-to-air TV sector.
From September next year to December 2013, analogue TV signals will be switched off region by region, the West Coast first and Auckland last.
After switch-off, viewers will need tuners inside TV sets, a set-top box or a personal video recorder to pick up free-to-air channels.
It is understood an assistance scheme being evaluated by the Department for Culture and Heritage will be aimed at people with disabilities.
The subsidies would be limited to special cases, and Igloo is being considered as a provider because it includes a free-to-air tuner.
If Igloo is successful, up to 60,000 of its set-top boxes could be delivered to homes. This would provide a big boost to the new pay-TV platform, which offers a scaled-back version of Sky and pay-per-view sports and movies.
Freeview chairman Rick Friesen said he would be disappointed if Freeview missed out on any assistance package.
Sky chief executive John Fellet doubted pay-TV customers drawn to the Igloo box would meet the targeted demographic for an assistance scheme.
But a source familiar with Government thinking said it was unlikely the package would be means tested.
The plan comes as TVNZ moves to close public service channel TVNZ 7 and lease it out as a shopping channel.
Igloo is 51 per cent owned by Sky and 49 per cent by TVNZ and has been launched to coincide with the digital switchover and pick up lower spending customers.
Grey Harford, national manager of digital transition agency Going Digital declined to discuss the technological specifications for its recommendations to the Government. But the ministry was already involved in "due diligence" for a tender to supply tuners.
A shroud of secrecy makes some sense as news of a subsidy might encourage people to delay buying a digital tuner under their own steam.
But it has wider implications if the Government selects Igloo - and access to pay TV - over Freeview, which offers solely free-to-air content.
The tender for the Targeted Assistance Plan invited expression of interest in providing 50,000 to 60,000 tuners.
Details of the Igloo scheme were released last week. It will provide 11 pay channels for $25 a month on a set-top box costing less than $200.By John Drinnan @Zagzigger Email John