On January 13, China’s State Council issued a plan to accelerate the advancement of the three-way convergence, which allows telecom carriers, television broadcasters and Internet firms to enter one other’s respective fields and provide services.
This was the first time the Chinese government provided a clear timetable for the development of triple-play services in the country. Previously, few advancements were made in this area because of technological difficulties and competition, mainly between the Ministry of Industrial and Information Technology (MIIT) and the State Administration of Radio Film and Television (SARFT).
The State Council plan offers a two-year trial period in selected cities before beginning nationwide commercialization of the triple-play services, which would take place between 2013 and 2015.
Meeting the Requirements
According to the plan, if radio and television companies meet the requirements, they will be able to offer value-added telecommunications services along with some fundamental telecommunications and Internet services. If the telecom companies meet the requirements, they will be allowed to take part in the production of radio and television program production and transmission.
The cable operators and telecom carriers can enter each other’s territory in the future. However, there are limits on this competition.
Cable operators are allowed to offer value-added services as well as basic telecommunications services. In contrast, the telecom carriers are allowed participate in radio and television program production and transmission, but still will be unable to generate content. As a result, iSuppli believes telecom carriers engaging in Internet Protocol Television (IPTV) roll outs will continue to face strong regulation.
According to China’s agreement with the World Trade Organization (WTO), telecom value-added services are open to foreign investment, but overseas firms can hold no more than 49 percent of the shares. The radio and television broadcast service obligation is not open to foreign investment. The asymmetric access to triple-play services is politically important for maintaining China’s information security.
The Birth of the Triple-Play Market
The plan to accelerate triple play services will fundamentally, change China’s telecommunication, Internet and broadcasting industries. This is especially true for broadcast operators that are finally able to develop fundamental telecommunication services. As long as the government provides the financial stimulus, broadcast operators are ready to build their own nationwide backbone, metro and broadband access networks.
During the trial period in 2010 and 2011, SARFT is expected to cover 20 trial cities with an investment of about $2.8 billion.
In the most optimistic view, in order to cover all of China’s 164 million cable TV subscribers, the total investment is expected to amount to $42.3 billion. But there are uncertainties ahead.
China has a fragmented cable market, with more than 100 operators and more than 3,000 television broadcast entities. It seems an impossible mission to build an integrated network with so many local cable operators. In order to deploy nationwide services, it is important to consolidate the small local cable operators into one or a few integrated bodies.
Broadcast operators have three years—from 2010 to 2013—to develop their network backbone. After 2013, they will face a fully open competitive market with the telecom carriers. The time left for broadcast operators is short but valuable.
Read More, China Residential Gateways Explode with Multiservice Offerings >