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Convergence moves to bolster investments

By Wang Xing (China Daily)
Updated: 2010-02-05 10:05

Regulatory overlaps may delay merging of telecom, TV, Internet

The government's recent efforts to promote the advancement of a three-system convergence - telecom, Internet and TV broadcasting - is expected to boost investments by both telecom carriers and cable TV operators in the coming years.

But experts say regulatory ambiguity and long-held turf wars between government departments may thwart the real coming together of China's telecom, Internet and broadcasting industry.

During a meeting of the State Council on Jan 13, Premier Wen Jiabao decided to accelerate the advancement of the three-way convergence, which allows telecom carriers, television broadcasters and Internet firms to enter each other's respective field and provide services.

That meeting gave industry firms the green light for a two-year trial period starting this year in selected cities. It decided that nationwide commercialization would take place between 2013 and 2015.

It is the first time that key Chinese authorities have provided a clear timetable for the convergence of the three systems. The idea has been out there for over a decade, but few advances were made 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), analysts said.

"The project, if it made a substantial breakthrough, would fundamentally change the playing field for China's telecom, Internet and broadcasting industries," said Xiang Ligang, one of China's leading telecom experts.

"But that's also the reason why the advancement of the project has faced so many difficulties."

According to Xiang, users will only need to subscribe to one provider to get access to the Internet, watch television and make phone calls once the three systems converged.

The cost of services to consumers should be significantly reduced due to new market competition.

The rise of new technologies like 3G and digital media has intensified competition among the three convergence-plan players.

This trend would bring more innovative services such as mobile TV, online video and VoIP (Voice over Internet Protocol), and also serve to break down the traditional boundaries between many industries.

In China, the three markets are strictly separated by industry-specific licensing systems, but in reality this methodology has often served as a tool for industry regulators to protect firms under their control.

This so-called turf war came to its climax in 2005, when a project on Internet Protocol Television (IPTV) - a system through which digital television service is delivered via the Internet - was launched by Shanghai Media Group and China Telecom in Quanzhou, Fujian province, but was strongly opposed by the local broadcaster.

At the time, the broadcaster was promoting a competitive service allowing users to surf the Internet on television.

Pang Jun, an analyst from research firm GFK China, said authorities need to redefine the market territories for industry regulators to assure the success of the confluence of the three systems.

"But that has proved to be an extremely difficult task," he said.

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