Copyright 2005 Xinhua News Agency
Xinhua Economic News Service
May 17, 2005 Tuesday 7:00 AM EST
From Lexis Nexis
Since the Shanghai Media Group (SMG) got China's first license of Internet Protocol (IP) TV service this month, major broadcasters and telecom operators have been agitated by the breakthrough in this potentially lucrative field.
Unlike traditional cable or wireless TV, IPTV enables broadband Internet users to access TV broadcasting services on their computers or TV sets with a set-top box. Some advanced mobile phone users can also be IPTV users with the technological progress.
China now has about 320 million mobile phone users, 100 million cable TV subscribers, and nearly 23 million broadband Internet users. Analysts expect the country's broadband users to hit the 40 million mark this year.
The potentially booming IPTV market is an emerging big money-maker for telecom operators, equipment and software makers and broadcasters.
The license approved SMG, the major rival of China's Central Television (CCTV), to broadcast their own programs or introduced programs on TV sets and mobile phones through the IP network, according to the State Administration of Radio, Film and Television (SARFT). The SMG said that it has established two separate companies responsible for TV receivers and mobile phones.
An IPTV company under CCTV said they had been allowed to operate pay-TV programs on computers and TV sets via broadband Internet last February. It declared this week that its IPTV service has expanded to eight provinces.
SARFT said the IPTV company under CCTV was only approved to broadcast their IP program on computers and TV sets, not on mobile phones. It said that broadcasters must apply for separate licenses for IPTV service on different terminals.
The character of IPTV means that its operation needs close cooperation between broadcasters and telecom operators, but the latter is controlled by the Information Industry Ministry in China.
A central regulation issued in 1999 prohibits any operational involvement between telecom operators and the broadcasting industry, and the controversial policy poses a major challenge for the possible IPTV boom.
While broadcasters hope to benefit from the promising IPTV, telecom companies in charge of broadband Internet are eager to enlarge their broadband subscription base and generate revenues from related value-added services.
Under current regulations, telecom operators cannot broadcast their own video products on the Internet, and all video programs must come from legal broadcasters. SARFT said that only provincial TV broadcasters can get IPTV licenses, which means that telecom operators have to rely on broadcasters in the video contents.
"The prospects for IPTV lie in the convergence of the telecom companies and broadcasters, which need further improvement of the central policy," said Chen Jinqiao, research fellow of the China Academy of Telecommunications Research.
Many professionals have been calling for the establishment of a super-supervision body which combines the functions of the Ministry of Information Industry and SARFT.
"It's inevitable that services and technologies will converge. It will be against the trend for different networks to be regulated by different bodies," Chen was quoted as saying in Saturday's China Daily. He said he believed that regulatory barriers would be eventually torn down with the development of IPTV technology.
Most analysts here believe a "competitive co-operation" will shape up between telecom operators and broadcasters in the IPTV business. But they pointed out that a reasonable business model and a revenue-sharing scheme acceptable to both parties will be necessary for the sound development of IPTV business.
In addition, media production firms treat IPTV as a great opportunity to expand their markets. Currently, their products that are supposed to be run on TV face fierce competition from ones made by broadcasters themselves.
The huge content vacancy of IPTV is expected to stimulate the related media production companies to produce more specialized video products for the new generation of TV customers.
In order to meet the increasing demand of TV broadcasters, foreign broadcasters have been allowed to set up joint ventures to produce and sell TV programs, according to a temporary regulation of SARFT.