Government officials are sounding out technology companies about the best way to expand the reach of free-to-air digital television as a Cabinet decision on the shutdown date for analogue TV approaches.

The Ministry for Culture and Heritage has this week asked companies in the broadcasting technology industry for their views on the most cost-effective way to extend the country's existing digital terrestrial television (DTT) transmission network.

The ministry will use the information to plan spending of up to $6.3 million which the Government has set aside to expand the reach of DTT beyond the 75 per cent of the population now able to receive the broadcasts.

Viewers can receive free-to-air broadcasts over the Freeview platform, launched in 2008, either using a UHF aerial - if they are inside the DTT broadcast coverage area - or via satellite reception, which covers the whole country.

Analogue television broadcasting is due to be switched off some time between 2013 and 2015, although the Government has yet to fix a precise date.

There is pressure to switch off the broadcasts so the radio frequencies they use can be redeployed for high-speed wireless communications services.

Seventy-five per cent of the population can receive free-to-air television at present through the DTT service which is broadcast across networks of "terrestrial" or earth-based transmission towers and picked up by UHF antennas in the home. Viewers outside the DTT coverage area can receive digital TV signals through a satellite service.

"Extending DTT coverage could potentially act as an incentive for digital television take-up, and, thus the earlier achievement of [analogue TV shutdown] as set-up costs for consumers are cheaper," the Ministry for Culture and Heritage said in a pre-tender document distributed to technology companies this week. "DTT also allows for high-definition content and regionalised content."

The Government's commitment to provide up to $6.3 million to expand the reach of DTT is conditional on the coverage being extended from 75 per cent to about 87 per cent of the population.

The ministry's discussions with technology companies are in part aimed at sounding them out on whether the expansion can be achieved on the Government's budget.

Prime Minister John Key said this week the Cabinet had yet to decide when the analogue TV signal would be switched off.

While detailed discussions still needed to be held on the subject, his "instinct" was that switch-off would be in 2015, he said.

Setting the switch-off date is a hot political potato.

Scrapping the analogue service will enable the frequencies to be used for eagerly awaited new data communications services and will net the Government welcome funds through licensing fees to broadcasters or telecommunications companies wanting to use those frequencies.

On the other hand, the death of the traditional analogue broadcast service will anger some voters who do not see the need to replace their existing TV sets with new models capable of receiving a digital signal.

One of the Government's state-owned enterprises, transmission technology company Kordia, has also warned that it faces a major financial headache if the move is made sooner, rather than later.

In a letter to State-Owned Enterprises Minister Simon Power, obtained by the Dominion Post newspaper under the Official Information Act, Kordia chairman David Clarke warns "the impact [of an early shutdown of the analogue network] on the financial performance of the company will be severe".

Clarke said the switchover date was "a serious issue for the company as Kordia's banks have expressed concerns as to the impact on Kordia's financial performance should DSO [digital switchover] move forward from 2015 to 2013".

Kordia, previously a high-earning division of TVNZ which pulled in significant revenue from building, maintaining and running analogue broadcast networks, has suffered financially in recent years as it has attempted to diversify its business.

It is under increasing pressure from the Government to show a return on taxpayer investment.

"I know they are under tremendous pressure," Key said when asked about the Kordia letter at this week's post-Cabinet press conference.

"I have certainly seen in terms of the SOE reporting that they have financially been not in a position to pay a dividend."

DIGITAL SWITCH-OVER
* The analogue TV off switch is due to be flicked some time between 2013 and 2015, although the Government is yet to fix an exact date.
* Viewers with suitable equipment can currently receive free-to-air television over the Freeview platform via either a digital terrestrial (DTT) signal or a satellite service.
* The DTT network now covers 75 per cent of the New Zealand population in nine main centres: Auckland, Waikato, Tauranga, Hawkes Bay, Manawatu, Kapiti, Wellington, Christchurch and Dunedin.
* The Government has set aside up to $6.3 million to extend DTT coverage to about 87 per cent of the population.
* The Ministry for Culture and Heritage has begun consulting technology companies about the best way to achieve that target.