According to the contract requirements, Prasar Bharati has to produce the entire television and radio content in the digital format. Otherwise it will lose the contract.

A sub-group constituted at the instruction of the Prime Minister's Office is looking into the process of digitisation of India media. The digitisation plan has also been linked with the roll out of the Conditional Access System, which came into effect in Delhi, Mumbai and Kolkata on January 1.

In its recommendation to the sub-group headed by Rajeeva Ratna Shah, member secretary, Planning Commission, the Prasar Bharati has outlined requirement of capital investment of Rs 3,531 crore (Rs 35.31 billion) for DD during 2007-15, while AIR will require investments of Rs 5,900 crore (Rs 59 billion) over the next 10-year period.

The ministry of information and broadcasting has also recommended complete transition from analogue mode of production and transmission to digital for Doordarshan and All India Radio.

According to the recommendations of the sub-group, Delhi will go digital by 2010. This will be followed by all other metros by 2011 and the rest of the country by 2013.

"Turning digital could lead to a big annual savings for Prasar Bharati. Post-digitisation, five to seven DD channels can be hosted on transponder as opposed to one or two now," an industry source said.

Digitisation will also help reduce the cost of setting up TV transmitters. According to the initial estimates of the I&B ministry, digitalisation will help reduce the number of terrestrial transmitters from 1,400 to 700.

Digital technology enables transmission of information through lesser bandwidth as compared with the analogue mode.