Silvio Berlusconi's government has presented a controversial new media law to the Italian Parliament, which clears the path for the privatisation of state broadcaster RAI in 2004 and will allow the media mogul-premier to retain all three of his free-to-air Mediaset channels.

Shares of RAI will be offered to the public from the end of January 2004 and some divisions of the broadcaster could be sold off to private investors at the end of 2005, according to Communications Minister Maurizio Gasparri's draft law.

No private investor will be allowed to own more than 1% of the company. Most proceeds arising from privatisation will be handed over to the Treasury while around a quarter will be used to fund the transfer to digital broadcasting technology.

Shareholders will be responsible for electing the nine members of the board of directors. The board currently has five members who are appointed by the Houses of Parliament.

"The government feels it has fulfilled its task of proposing a draft law as a basis for discussion in Parliament. It is not untouchable," Gasparri said Friday evening.

However, criticism from the opposition came fast and furious. The law's naysayers pointed out that as RAI's main shareholder, the Treasury Ministry - and therefore the Berlusconi government - will have a direct role in appointing RAI's managers and will heighten its influence on the nation's airwaves.

Berlusconi already owns Mediaset and its three channels, RAI's only rival.

"It's scandalous. It goes beyond even the most pessimistic forecast," said opposition politician Vincenzo Vita.

But the main point of contention for Vita and other critics regards what is widely seen as maneuvering on Berlusconi's part to ensure that he retains control of all three of his networks.

Indeed, the previous left-wing government had passed a law stating that no-one could own more than 20% of all terrestrial broadcasting licenses and only 10 licenses would be allocated.

As a result, Berlusconi would therefore only be allowed to own two networks.

His Rete 4 channel along with Tele+Bianco were destined to go out on satellite while three minor channels - ReteMia, ReteA and ReteCapri, would lose their broadcasting licenses altogether.

But under his new media law, Berlusconi has demanded for the three minor channels to be reinstated. He has also asked for RAI to introduce two new experimental digital channels.

As a result, the number of channels with terrestrial licenses will be boosted to 15. And the 20% limit on ownership means that Berlusconi will now be able to hold onto all three of his channels.

"Mediaset will remain without any rivals, RAI will be controlled by the government and even [La7 owner] Telecom [Italia] will become a threat," Vita said in reference to a point of law which will allow the telecom to own 10% rather than 5% of media and publishing activities.