Sky's Picnic has been put on hold, with the broadcaster blaming Ofcom's lengthy review process for the decision.
Picnic was Sky's attempts to bring pay TV to the terrestrial airwaves, as a direct competitor to Freeview, but the process has been held up by an Ofcom consultation.
That process started 18 months ago, and the lengthy wait appears to have forced Sky's hand.
No end in sight
A Sky spokesman told TechRadar: "We want to invest in Picnic because it will be good for consumers and a good opportunity for Sky.
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"But the blunt truth is that Ofcom has spent 18 months looking at our proposals and there is no end in sight.
"The Picnic team have done everything they can to prepare for launch and there's nothing left to be achieved until Ofcom makes its mind up.
"While regulation works at its own pace, no business can go on like this indefinitely so we've had to take some pragmatic decisions. We will decide whether to reactivate the project when we have regulatory clarity."
Picnic was intended to contain a mix of premium and regular broadcasting which took the capacity of the three channels that Sky currently occupies on Freeview.
Sky had indicated that they would switch to MPEG4 compression in order to squeeze in a fourth channel.
What Satellite's deputy editor Grant Rennell believes that Ofcom's delays may force Sky down a different avenue, telling TechRadar: "With Ofcom dragging its feet, one option for Sky might have been to make Picnic an IPTV offering.
"Presumably it didn't want to give up its foothold in the terrestrial multichannel market where its rival Freeview has been such a success."
We've contacted Ofcom for their view on the matter.