Chinese cable TV operator wins broadband license

Iris Hong
Telecom Asia

In a small victory for China's grand plans for cable and telecom integration, Jiangsu Cable, China's largest pay TV operator, has won the right to provide telecom services. Yet the issue of new licenses by the Jiangsu Communication Administration underlines the huge distance between the government's ambitions and the limited convergence between cable operators and telcos to date. Jiangsu Cable operator has the right to deliver broadband access and other "value-added telecom services" but cannot provide voice or other data services. "Three-network integration" between the telecom, cable and internet sectors does not exist, despite official prodding from the highest levels. China's State Council last year issued a call for broadcasters to provide value-added telecom services and telecom operators to construct digital TV access networks.

To date SARFT has not issued an IPTV license to any telco. More than 20 Chinese cable operators have ISP licenses, yet very few of these deliver commercial broadband and those that do are mostly niche players. The two ministries, the MIIT representing telecom and broadcast regulator SARFT, jealously guard their own turf.

Yu Zhoujun, an analyst at CCID Consulting, said that telcos face more restrictions in entering the broadcast market than broadcasters trying to tap telecoms. The government favors the broadcasters because they own and operate only segmented networks and are smaller and less competitive than the massive telcos. "The regulatory barriers are unlikely to be broken in the near future. It is unlikely that telecom operators will be granted licenses to offer broadcasting services, or broadcasters be granted licenses to offer voice call services," he said.

Rather, the "three-network integration" means integration of services, such as the transmission of IPTV content over telecom operators' broadband . James Fu, an independent telecom analyst, said the competitive environment in telecoms was extremely hostile to newcomers. In order to compete, cable operators were pitching their broadband services at low prices, he said.  "However, China Unicom and China Telecom are able to provide more stable bandwidth that are attractive to the users. Without their own international gateway and sometimes backbone networks, cable operators have to pay large fees to telecom operators. This has taken a heavy toll on their businesses." However, consolidation of cable operators is underway. Jiangsu Cable was founded just a year ago through the merger of ten city-level cable players and has approximately 10.66 million subs, the largest of any Chinese cable operator. Analysts have said that telecom operators will call for more leeway to penetrate into the broadcasting market when such consolidation nears completion.



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