ITV and Channel 4, which formed the Digital Terrestrial Alliance, put forward a bid to the Independent Television Commission, which would have seen the creation of a free-to-air service and an additional low-cost pay-TV option.
"We genuinely believed the bid was the strongest but naturally we respect the ITC's decision," a spokesman for the two broadcasters said.
The ITC opted for the BBC's offering, which it believed "supported the long-term development of the platform", according to a statement.
However, some will say that ITV's handling of the ITV Digital fiasco will not have helped their bid in the eyes of the ITC.
The BBC's option of a free-to-air service was based on the belief that it would make it easier for an already confused public to grasp initially.
It has indicated that it will look at developing the service once the initial confusion about digital terrestrial television following the collapse of ITV Digital has died down.
The BBC's bid is supported by transmission provider Crown Castle and by BSkyB, which is providing three channels.
BSkyB said it "welcomes the bid and looks forward to participating in the diverse line-up of channels". BSkyB will initially provide Sky News, Sky Sports News and Sky Travel to the offering.
Indications are that Sky One may also be part of a future line-up. If the BBC does develop the service to include a pay-TV option, the inclusion of Sky One is almost certain.
It is thought that Channel 4 and ITV will now have to go back to the negotiating table with the BBC to discuss their involvement with the new digital service.
The bid sees the tables turned on ITV and Channel 4, which were last week inviting the BBC to join their alliance.
ITV claimed it could reduce the cost of transmitting the BBC's channels at a saving of £51m of licence-fee money over the 12 years of the contract.
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