Italian parliament blocks analog decree

Silvio Berlusconi allies switch sides

ROME -- The newly installed government led by media tycoon Silvio Berlusconi suffered its first major setback Tuesday, after parliament blocked a decree that would have allowed Rete 4 -- a network that Berlusconi controls -- to keep its analog frequencies despite charges that it attained them illegally.

The measure failed by the slimmest of margins, 240-238, which means that at least 25 Berlusconi allies switched sides. The Italian press had treated it as practically a done deal given the government's majority.

Berlusconi was sworn in for a fourth term May 9.

The case is based on a suit filed by would-be Italian broadcaster Centro Europa 7, which said that Rete 4 illegally refused to give up its analog frequencies when the communications regulator required it to do so in 1997. The refusal forced Centro Europa 7 out of business.

Rete 4's parent company, Mediaset, said Rete 4 exploited a loophole in the ruling and that Centro Europa 7's fate should be blamed on the communications regulator and not on Rete 4.

Berlusconi's government had dismissed Centro Europa 7's complaint, giving Rete 4 the right to hold on to the frequencies and quashing any chance that Centro Europa 7 could be resurrected. But Tuesday's vote means the case is still open.