SARFT Facing Internal Crises as Net Closes in from All Sides
BEIJING --- Over the last four years and especially since 1998, the Chinese cable TV industry has developed rapidly with some cable TV stations in southern China planting firm feet into the telecom industry, in order to expand their functions and develop new markets. But, despite recent WTO announcements, the latest news from inside the country is not good for cable operators.
Conflicts between the radio & television industry and the telecom industry in Hunan relating to allocation of profits in the Summer led to the Ministry of Information Industry (MII) lodging an official complaint against the radio and television industry (represented by SARFT) with the State Council.
In October this year, the State Council issued Document No. 82 ("Suggestions On Strengthening the Construction of Radio and TV Cable Network", see 'State Council Resolution Shys from Decisions on Convergence Issues'.) that stipulates that the cable TV industry should make a clean market break from its telecoms ambitions while SARFT plans to merge the cable TV industry with the terrestrial TV industry.
Neither directives are welcomed by the cable operators which have been attracting a lot of investment into their networks precisely on the basis that they will be used to expand the Internet and telecoms businesses. CMM-I sources within SARFT suggest that Document No. 82 is mainly aimed at solving profits issues between the radio & television industry and the telecom industry. The source said that telecom departments have invested huge sums in recent years that have yet to be recouped, so they certainly don't want the radio & television industry to bite into their markets.
Secondly, the telecoms and radio & TV industries have both developed rapidly leading to an unbalanced market and conflicts between the two giants which has caused the current market disorder.
Thirdly, there are multiple issues regarding the import and the copyrights of TV programs screened via the Internet.
Currently, the cable TV stations in many large and medium-sized cities have already transformed their networks and started to transmit by high capacity, high speed fiber optic cable capable of handling all household information needs. The inevitable trend is towards convergence of cable TV and telecom networks, but the SARFT source suggests that "this is not the time to talk about this, we will have to wait until the telecoms industry has made enough money and the market has become standardized".
As for the merging of cable TV and terrestrial TV at local levels, other officials at SARFT told CMM-I that since the State Council has issued the merger order it must be put into effect. As a direct result, SARFT has required (in principle) that each city complete the merger by the first half of next year. However, the problems of implementing this order are formidable, since different cities have different administrative arrangements and different management structures.
Some terrestrial TV stations now exist in name only with channels managed directly by the local radio & television bureau (eg. Fuzhou, Changsha). Some local cable TV stations are more powerful than their sister terrestrial TV stations (eg. Beijing). Meanwhile, some local cable TV stations have already been assimilated into terrestrial TV stations (eg. Haikou) and others have always operated under unified management (eg. Shenyang).
Subsequently, some are insisting that the merger should end in combined TV systems led by the cable TV stations, while some have the opposite opinion. Some suggest that the local radio & television bureau should become involved in channel management directly, leaving TV stations a memory of the past. Consequently, SARFT has not worked out a complete plan at all.
According to one SARFT official, after the merger, TV program production and broadcasting will be totally separate with the exception of news. SARFT will take the opportunity to enhance central management of co-productions and imported productions and take back the import rights for films and TV dramas as well as censorship responsibilities.
SARFT has issued a relevant document emphasizing the "two unity" relationship between import and censorship. The message used to be "three unity" ie. unity of importing, unity of censoring and unity of distribution, but there are simply too many distribution companies in the country and each has its own distribution channel. So the third "unity" has been dropped.
According to officials at a wide number of broadcasters polled by CMM-I, the general consensus is that where cable TV already operates modern networks, the telecom industry should come to an arrangement to share the resources. They also agree that the Document issued by the State Council is just an expedient measure and that both telecoms and television industries will continue to engage in the Internet industry bringing both together.
As for the WTO, the terms signed with US include opening up the information industry which suggests that the radio & television industry may continue to be labeled "ideological industries" with no foreign investment.
Whatever happens in the long term, the reality is that the merger of cable TV and terrestrial TV can reduce many unnecessary costs and contradictions.
This reality makes SARFT's 1998 decision to allow prefectures and counties to establish cable TV stations seem more ridiculous than it was at the time. Most of the relevant prefectures and counties now have their own small-sized cable TV stations - how will these merge? With SARFT facing pressure from all sides, we can only look forward to hearing what clever moves they will come up with next.