Seven companies have been awarded full or provisional licences to provide the NHS with over 150,000 bedside TV and phone systems in a contract which could be worth up to £500m.
The system will allow each patient to receive advertising, hospital information and terrestrial and satellite television.
However, with Internet links, each bedside TV has the potential to provide full electronic patient records, X-rays and other diagnostic and patient feedback systems, including pain monitoring.
The NHS plan requires every English hospital bed to have individual TV and phones by 2004.
But insiders say the deadline may be too tight.
Three companies have been awarded full licences: Patientline, run by former prisons boss Derek Lewis, Wandsworth Electrical Ltd and Hospital Telephone Services.
Four companies have been given provisional licences to work with specific trusts: Unicorn Hospital Communications, Static Systems Group, Syntec Telecom and Sodexho. Managers will be able to talk to suppliers at a series of regional roadshows.