By Leila Abboud and Gwénaëlle Barzic
PARIS (Reuters) - France's media regulator on Monday proposed a switch to a new broadcasting technology which could make it harder for smaller players to prosper and delay new channels.
He recommended that bidders for new TV channels must adopt a system known as DVBH-V2, which is better suited for high-definition and 3D broadcasts.
The final decision will rest with the French government.
The switch from analog to digital television transmission in France threw up a debate on how to distribute newly-available frequencies and the overall effect new channels would have on the health of the TV market.
The CSA regulator was lobbied intensively by media groups such as the largest private broadcaster TF1 and its smaller rival M6, as well as by smaller companies like NextRadio and NRJ trying to break into the TV market.
The bigger companies largely sought a pause in the creation of new channels to protect their share of advertising dollars, while new groups wanted to be able to launch as quickly as possible.
Michel Boyon, the head of the CSA, acknowledged that requiring new entrants to launch channels in DVBH-V2 would cost broadcasters more in transmission equipment and likely slow the pace of new arrivals.
It would also mean that eventually viewers would have to replace set-top boxes and TVs to see the new channels.
"It will mean a short period of difficulty for some but the benefits we will get in the long-term seem worth the temporary inconveniences," Boyon told a news conference.
His recommendations will likely delay the timetable for the launch of up to eight more channels, analysts said.
But the country's big broadcasters such as TF1 and M6, as well as pay TV operator Canal+, are not necessarily celebrating.
Under a French law, the three companies each expected to be allocated a so-called bonus channel for helping pay for the transfer from analog to digital broadcasting.
But the European Commission says the move violates its rules on state aid.
Boyon recommended that if Brussels declared the bonus channels to be against European law, then the French government should repeal the law that accorded them.
"I'm not sure TF1, M6, or Canal+ are going to be very happy with the outcome since although the recommendations likely delay the arrival of new channels, they also mean that they could lose their bonus channels," said Philippe Bailly, a media consultant at Paris-based NPA Conseil.
(Reporting By Leila Abboud and Gwenaelle Barzic; Editing by David Cowell)