Question: Tessa Jowell still believes the 2010 target for an analogue switch-off is attainable. Is this position credible?

David Elstein: I don't think anyone who knows anything about the situation believes that 2010 is credible.

Even Barry Cox, who is the chairman of the digital stakeholders group, admits that, at best, some analogue switch-off may have started by 2010 - whatever that means.

But the notion that it will be complete is extremely far-fetched and, to be perfectly honest, I don't believe any of the ministers who continue to utter these phrases really believes any of them. But unfortunately it is very difficult for them to backtrack, having nailed themselves so firmly to the mast.

Question: What are the main obstacles to meeting that 2010 target?

David Elstein: It's never been a credible target. Bear in mind that the government set this target in complete violation of all the advice that it had received - certainly any published advice that anyone had seen. There have been two published opinions as to how and when analogue switch-off might be achieved.

The first was by National Economic Research Associates (NERA), which published in January 1998, a report suggesting that the earliest date which might be contemplated was 2013.

But this was on the basis of a huge number of assumptions about digital terrestrial television (DTT) take-up which have proved to be completely false - and, also, ignoring the entire video recorder factor, which is between a third and a quarter of the total problem depending on what your estimation is of the number of TV sets in people's households.

When the ITC responded to the NERA report in September 1998 they offered the opinion that the very earliest that analogue switch-off could be contemplated was 21 years after the launch of DTT - that's either 2018 and 2019 depending on when you think the launch of DTT was.

What the ITC said was that that was an optimistic assumption simply based on the past experience of the last switchover that was attempted from 405 line to 625 line TV. The ITC's view was that analogue switch-off would be far, far harder that that 405/625 switchover. So 2018 was a very optimistic date in itself.

Therefore 2010 bore no relation to anything other than a political statement - and 2006 was ludicrous. You would have had as much chance of getting to Mars and back by 2006 as switching off analogue television.

Question: Ministers and the broadcasting industry appear to have reached a cosy consensus around DTT. You don't share in this. Is there a conspiracy between government and the industry at play?

David Elstein: Of course, that's how DTT was launched in the first place. Basically it is a private agreement between politicians, regulators and the civil servants on the one side, and the incumbent terrestrial broadcasters on the other. They are the people who stand to benefit from the launch of DTT. It otherwise has no other conceivable economic purpose.

Really it is a way of reinventing spectrum scarcity - those are the people who benefit from spectrum scarcity. Politicians, administrators, civil servants and regulators benefit from controlling limited spectrum and imposing all kinds of conditions - that's why politicians love spectrum scarcity.

The incumbent terrestrial broadcasters were the beneficiaries of the spectrum that was released to them. So they all had a vested interest in trying to ignore technological advances like cable and satellite and reinvent a different form of scarcity. Admittedly not five channel, but 15 to 20-channel scarcity - and that, in the end, is what has happened.

By any normal standards of consumer benefit this is a complete fraud on the consumer. The interested parties are trying to palm-off on the consumer a sub-standard technology in their own interests. It is little short of a national scandal that this has happened - not least when the cost to the consumer and taxpayer of digital terrestrial television is a. so vast, and, b. completely unacknowledged and unadmitted.

Question: Is there any real public demand for DTT?

David Elstein: Of course not. DTT is about as relevant to the consumer as a pedal is to a fish. It's a sub-standard technology, it's an old-fashioned technology. Nicholas Negroponti would die laughing if you suggested to him that we should, in the 21st century, be creating a new broadcasting system using terrestrial transmission.

Terrestrial transmission may be OK for telephony. But for television, when you have satellite and cable available, or ADSL, it makes no sense whatsoever. And that is because it is a very inefficient technology - because it depends upon core population centres. There, of course, it is efficient because one mast can serve millions of people, but as soon as you leave the core population areas, you eventually get into requiring a new mast or a new transmitter for another 10,000 or even 1,000 homes.

Compared with satellite it is absurdly uneconomic. So you have to ask yourself why anyone would want to offer DTT. Now the simple fact is that politicians were conned into believing that DTT was a. a good way to analogue switch-off and, b. an essential pathway to analogue switch-off - both of which are untrue.

But the BBC persuaded politicians in 1995/96 that analogue switch-off was a good thing, that it was achievable, that it would deliver huge value and that DTT was essential towards it - and therefore you must launch DTT now. Nobody ever did any cost/benefit analysis and none has been done. The first that will be done is in a year's time - and that will not be a cost/benefit analysis of either DTT or of analogue switch-off in themselves - that we will never see - but of the different methods of getting to analogue switch-off, even if every one of them is non-beneficial - which is of course farcical.

DTT was launched for purely political reasons. Barry Cox is now on record as saying it was launched to defend public service television. In my view it was launched to defend the interests of all the terrestrial channels combined, plus the politicians. And, at another level, it was launched in the hope of disadvantaging Rupert Murdoch, which, of course, it failed to do.

Question: The government says DTT will extend the internet into every home and in so doing will bridge the digital divide. Surely this is a laudable objective?

David Elstein: The objective is daft and the mechanism is utterly ludicrous. Getting the internet through DTT is rather like having sex wearing a diving bell. It is completely inappropriate. The internet experience is trivial through DTT.

If you want the internet you get a PC or a high speed connection through a cable modem. To get it through DTT is potty. And I think that most politicians, other than Stephen Byers, who when he was secretary of state at the DTI actually said this, now accept that it is a laughable proposition.

I have to say that closing the digital divide is, in itself, a very spurious objective. As Michael Powell said, 'why don't we close the Mercedes divide, why don't we close the refrigerator divide, why don't we close the being within 10 minutes walk of a bus divide'.

Anyone who wants access to the internet and gets value out of it can get it. People who either can't afford it or don't want it, don't get it. There's nothing special about digital, that you have to have this big public investment campaign. All the analyses that I have seen on attempts to close the digital divide demonstrate abject value for money.

Question: To what extent will DTT simply expand quantity without doing anything in relation to the quality of output?

David Elstein: It's nothing to do with digital - you had the same with analogue satellite and analogue cable. You hugely increase the total volume of output - but you don't do much to increase the volume of original output. Most of the additional channel capacity is devoted either very narrow broadcasting, like Big Brother's Little Brother. Or to archiving, where you switch on Paramount to see the whole of Frasier, you switch on Hallmark you see the whole of Law and Order - which is rather valuable to the consumer.

It's like opening public libraries, you can actually get access to all that material instead of waiting for it to be pumped down slowly through one of the five terrestrial channels. In terms of the amount of original content there is not a huge amount that gets made. All you can say is that there will be more good TV and more bad TV.

There is a legitimate question mark about whether the funding forces of television might be fragmented by the sheer volume of supply. There is an interesting debate to be had about that, but certainly nothing conclusive yet.

Question: Would it be fair to say then that there is a risk that the expansion will simply spread existing advertising revenue across more channels? Are there any new sources of revenue currently untapped?

David Elstein: Well subscription revenue is a completely new source of revenue and £3 billion of it has been added to the spend on TV content in the last decade - which is more than the licence fee and more than advertising.

Given the licence fee has never gone down in its entire history, and although we've had a recent dip in advertising - the first significant dip in the entire history of TV advertising - you could say that the addition of subscription funding has not been to the detriment of other sources of funding.

Certainly all the major channels have increased their budgets since the launch of multi-channel TV and digital TV. BBC1, ITV, BBC2, Channel 4 all have substantially increased there programme spend. Channel 5 has joined the mix, spending £150 million a year.

It's pretty hard to argue that the increase in choice has led to a diminution in the amount available to spend. Whether of course it is spent wisely or, in the views of the great and the good, spent on sufficiently high cultural levels, is an entirely different argument.

Question: To what extent should the BBC as a state-funded enterprise be allowed to gamble on a project such as digital?

David Elstein: Well, of course, it shouldn't. This is the essential iniquity of the current situation. DTT is costing the nation many, many billions of pounds - though politicians don't admit to it.

The biggest single amount of money being spent is on additional free-to-air digital channels for the BBC. We're currently spending getting on for £300 million a year on these - but 60 per cent of the people who pay the licence fee can't receive those channels. So it's already socially iniquitous - especially given that that 60 per cent of the population is tilted towards the lower income groups. They are being forced to pay for things they can't see.

The BBC would never have been allowed to launch these new free-to-air channels funded out of the licence fee if DTT hadn't been launched. You could never have said you want it to go to cable and satellite - the BBC would have been quickly told that you charge a subscription for those services, like you do with UK Gold or whatever.

So we are only being forced to spend that money on the BBC because of the launch of DTT and the prospect of analogue switch-off. You've got into a kind of self-fulfilling prophecy situation.

The BBC doesn't want to give up its spend on those channels, therefore it spends more of its money on DTT in order to keep alive a platform on which its income depends and in order to maintain the faint prospect of analogue switch-off in any measurable period of time. So we're spending a large sum of public money in order to justify spending an even larger sum of public money in pursuit of a completely pointless objective.

Question: Given the proliferation of the BBC's output shouldn't it be fully regulated by Ofcom?

David Elstein: The BBC ought to be regulated by Ofcom - that's point one. The BBC should not be allowed to launch new free-to-air services funded out of the licence fee. The BBC itself accepted that when the Davies panel published its report in 1999 - which said there ought to be a digital licence fee - the BBC accepted that logic. Indeed, Greg Dyke repeated the merits of that argument last week when he was called as a witness by the Commons culture committee.

So we know it's wrong in principle that those should exist and it is still the correct thing to do to say to the BBC, OK if you launch these channels now they must be funded by a special digital licence fee or injected into UK TV and the licence fee should be reduced by £12 a year. That's what ought to happen - whether or not Ofcom does it, it is still the right thing to do.

Question: To what extent to you think it will be an error to relax the UK's media ownership rules without seeing any similar relaxation abroad - particularly in the US?

David Elstein: Reciprocity is a feeble argument which is basically protectionism by another name. Either foreign ownership if good for UK media or it isn't. If it's good why should we be worried if the US reciprocates - if it's bad why should we want the US to reciprocate. So reciprocity is utterly irrelevant to the argument.

The notion that there is some UK media company waiting to buy NBC is just laughable. The argument for allowing foreign ownership of UK media is that foreign investment may be good for us.

We wouldn't have had a cable industry if we hadn't allowed foreign investment - not that it's done those investors much good, they've lost a ton of money. But at least we have three million cable homes courtesy of foreign investment. When we tried to preserve cable for domestic investors nothing happened, no cable for laid.

What is the worst thing that could happen as a result of foreign investment? The Puttnam committee seems to be suggesting that ITV schedules will be filled with bad US products. Now, whatever else you say about the American media giants, the one thing they don't do is act really, really stupidly.

So it would be a pretty daft thing for them to buy ITV and then destroy it by putting out unpopular programmes. What has sustained ITV over many generations is its reputation for putting out a good quality, mostly domestic product. ITV at the moment doesn't use up even a fraction of what it's allowed to do in terms of foreign content.

We have this fantasy, mostly from people who've never run a business in their lives, that somehow capitalists are determined to damage their own businesses. If our major media companies had shown any significant commercial skills, if Granada and Carlton were run by economic geniuses, then maybe you could ask yourself why exactly at this moment are we opening up the UK media to foreign ownership. It is also mildly bizarre for us to say 'well domestic content is terribly important so it's fine for the French and Germans to own ITV, but appalling for the Americans to do so', which is the current situation.

I assume that the government will ignore the Puttnam committee's recommendations on this front, not least because they're daft, but also because they are counter productive.

Question: How likely do you think it is that Rupert Murdoch will make a bid for Channel 5?

David Elstein: I have always thought there was a very low likelihood. Admittedly there has just been a change in ownership of Bertelsmann, so maybe Bertelsmann will change its mind on ownership of Channel 5. But you still have to ask yourself why would Bertelsmann, having spent so much money and so much time gaining control of 65 per cent of Channel 5, and waiting patiently to buy the other 35 per cent, then sell it onto Murdoch.

Likewise, given that Murdoch has had two or three opportunities to buy into Channel 5 and declined them all, why would he suddenly want to pay a fancy price to get hold of it. The working assumption that just because something is possible it is also inevitable is fine in the leader columns of the Guardian, but in more sensible discourse I don't think it adds up to very much.