Page 1 of 2 Beijing battles with unauthorized TV
By Peter J Brown
Like the personal computer and the Internet, the satellite television dish
represents both a significant threat and an important tool to the Chinese
government. Last June, the new Zhongxing-9 (Chinasat-9) satellite was launched.
It will allow the government to provide government-sponsored satellite TV
services to millions of households for the first time, broadcasting dozens of
standard-definition and high-definition TV channels to otherwise unserved areas
throughout rural China.
According to Brendan Murray, market analyst in Space and Telecommunications at
Maryland-based Futron Corp, Chinasat-9 distributes China Central Television
(CCTV) channels as well as
local/provincial channels as part of China's "Cuncuntong" project, which aims
to deliver state-run radio and TV to as many as 60 million families who do not
now enjoy high-quality terrestrial TV services.
"The Zhongxing-9 satellite can provide 150-200 standard definition TV channels
- 48 are currently in use - and the service is free to users. The government
covers the cost of the satellite and part of the cost of set-top boxes," said
Kevin Li, director of telecom research at In-Stat China. "[As for the remaining
and currently unused satellite capacity], there are two possible scenarios.
Satellite operators will either charge content integrators, who will then
provide customized programming to people in rural areas, or consumers will have
to buy another set-top box with encryption and authentication capabilities [if
they want to view channels from an expanded menu of new premium services
provided for a monthly fee]."
China Direct Broadcast Satellite Co Ltd (China DBSAT) operates Zhongxing-9.
This company began operations last year as China's lone state-owned provider of
satellite TV services following its creation in late 2007 via the merger of
certain assets belonging to China Satellite Communications Corp, Sino Satellite
Communications Co Ltd and China Orient Telecommunications Satellite Co Ltd.
According to a report prepared by Lisa Hulme-Jones, senior analyst for North
Asia at BuddeComm, an Australia-based independent global telecommunications
research and consultancy company, China DBSAT is now the second-largest
satellite fleet operator in Asia with total assets of 7 billion yuan (US$1
billion).
While the company's main business consists of satellite TV services including
those broadcast direct to individual homes, it also provides satellite Internet
access and telecommunications services. China DBSAT transmits programs for 169
TV and 40 radio stations. The company's total revenue was expected to reach 800
million yuan last year with about 10% contributed by overseas clients.
There are more than 140 million Chinese cable TV subscribers. In contrast, more
than 300 million households in China - and perhaps as many as 350 million - are
located in relatively underserved or unserved regions, according to a report
from China's State Administration of Radio Film and Television (SARFT), which
Hulme-Jones has examined.
"The majority of the population still lives outside the coastal crescent where
cable TV is dominant. There are around 350 million people there, so by
implication this leaves around 900 million people outside that area. If the
Cuncuntong project is a success, it could lead to further demand for TV
services. The question is whether the Chinese government will go to the next
stage and create a national [fee-based] satellite TV platform, which would
satisfy the increasing demands from households in China for more advanced
digital TV services," said Hulme-Jones.
China's introduction of its own state-sponsored satellite TV services was
delayed considerably by the loss of the Sinosat-2 satellite in 2006. It failed
shortly after its launch due to a problem with its solar panels. The plan was
for Sinosat-2 and Zhongxing-9 to be operating together in tandem in order to
maximize satellite TV coverage for the 2008 Olympic Summer Games in China.
Zhongxing-9 is also capable of transmitting radio and TV channels to Hong Kong,
Macao and Taiwan.
"A pay model for [satellite TV] in China with additional programming or
value-added services may have to wait until the launch of Sinosat-4, which will
replace Sinosat-2, provided that the government officially relaxes regulations
regarding the use of satellite dishes by the general population, not just the
underserved. Sinosat-4's launch has now been delayed from 2008 to 2011," said
Murray.
Apparently, the Chinese government is prepared to spend over 3 billion yuan to
provide satellite TV and radio services by the end of 2010 to approximately
700,000 villages. Each village will be required to have electricity and at
least 20 households, according to the National Human Rights Action Plan of
China (2009-2010), which was released in early April by the Information Office
of the State Council.
While all of this activity suggests, among other things, that the evolution of
satellite TV services will remain under strict governmental control, and that
satellite TV installations and subscriber growth will remain closely supervised
by the Chinese government, the reality of the situation is quite different.
Indeed, a satellite TV infestation has been well underway in China for a decade
or more. Casual viewing of unauthorized satellite TV services is a routine and
popular activity.
"To my knowledge, there are no 'legal' satellite TV subscribers in China, but
the illegal market is huge - the number often thrown about is around 20
million. There are 1 to 2 million legal satellite TV dishes used for various
platforms in China, but these are technically limited to hotels that serve
foreigners and expatriates in China, foreign-owned buildings, embassies, etc.
But not for Chinese citizens," said Patrick French, senior analyst and head of
the Singapore Office at NSR LLC, an international telecom consulting firm based
in Massachusetts. "China has launched Chinasat-9 for satellite TV services and
it is broadcasting content, but to my knowledge, China has yet to rewrite its
laws to allow people to legally buy a satellite TV dish to get programming off
of this satellite."
One executive who sells satellite TV equipment and services in China - who did
not wish to be identified - described a dynamic satellite TV market which is
growing at a brisk pace despite not being granted official approval.
"This is complicated. Times have changed. The latest government regulations on
satellite TV dishes date back to 1993, and they have not been revised for a
long time," he said. "In terms of international TV channels, there are some
permitted, only via the Sinosat-1 overseas TV channel platform for hotels and
resorts etc. Any re-broadcast to Chinese citizens is not allowed."
Despite this rigid government policy, this executive points to Suzhou, for
example, where for a monthly fee of 295 yuan, people can view roughly 15
overseas channels including CNN and BBC using a digital decoder.
"This is obviously against the central government's laws, but it is happening
on a large scale," he said. His company offers programming packages from
Taiwan, Hong Kong and elsewhere.
"However, the number one headache to the business is piracy because there are
too many pirated systems on the market, which are very cheap. Most people who
actually watch satellite TV here in China are doing so using pirated receivers.
My guess is over 90%, although nobody has the precise number. It may be
higher."
The fact that satellite TV represents a potentially disruptive phenomenon in
China is something that is openly discussed in the Chinese media. In January,
for example, the State Administration of Traditional Chinese Medicine (SATCM)
declared that TCM was under attack from "from illegal ads" and Vice Health
Minister Wang Guoqiang revealed that Chinese authorities had terminated 2,274
illegal TCM advertisements in 2008, according to Xinhua.
"Satellite TV stations" along with newspapers were identified as the major
sources of these ads, and according to the SATCM, "some profit-driven media
advertising departments open the doors to illegal TCM ads". This reference to
"satellite TV stations" leaps out as a clear indicator that legal or not,
domestic satellite TV is well established in China.
Xinhua's reporters have documented what other governments are doing in response
to the flood of foreign satellite TV channels. For example, Xinhua recently
reported that Iran's Minister of Culture and Islamic Guidance Mohammad-Hossein
Safar-Harandi had branded the British Broadcasting Corporation's (BBC) Persian
TV channel in Iran as "illegal" after the BBC launched its Farsi-language TV
channel on January 14. Iran's Intelligence Minister Gholam-Hossein Mohseni
Ejeie described the new TV channel to Xinhua as "detrimental to Iranian
national security".
Xinhua simply reported that, "most of the Iranians from different ethnic
groups, either Persian or others, have access to satellite dishes country-wide
and are following global events through diverse domestic and foreign satellite
channels".
Obviously, the same trend is unfolding in China today. Satellite TV programming
beamed into Chinese households from other countries in Asia via foreign
satellites is abundant and varied. More often than not, this entails the use of
so-called Free-To-Air (FTA) satellite TV reception equipment installed cheaply
and easily in Chinese households. FTA often means that after the user has
purchased the satellite TV receiver and dish, the user pays no monthly fee -
ever.
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