Internet TV brings opportunity
By Liu Baijia (China Daily)
Updated: 2004-06-16 14:54

Hong Yan, a graduate college student in Beijing, is a TV enthusiast.

At eight o'clock every evening she watches a popular Beijing TV romance programme.

But what makes her different from other viewers is that she sits in front of a computer instead of a TV set.

Internet TV, which allows users to watch TV programmes through software, is attracting more and more operators. It may mark the real beginning of the convergence of TV, telecommunications and Internet networks in China.

A customer talks with a clerk at China Netcom's outlet in Zhengzhou, in Central China's Henan Province. China Netcom, a major fixed-line telecommunications service provider has stepped into the Internet TV business. Tiantian Online, in which China Netcom is the biggest stakeholder, last month won a licence to broadcast audio and visual programmes on the Internet. This means Tiantian Online has become the only enterprise with a telecom operator background among 66 providers who are allowed to conduct Internet TV business.[newsphoto]

Breakthroughs

When Li Tao started the first Internet TV channel Chinatvfm three years ago, he did not expect that it would take so long for Internet TV to make a real start in the world's biggest TV market.

In recent years, more operators launched Internet TV services, but most were free of charge and on a small scale. The majority of content on these services did not have proper copyright licensing.

A real breakthrough came with the entry of China Central Television (CCTV), the dominant State TV agency.

Zhao Huayong, CCTV president, said on the opening of CCTV's Internet TV channel on May 31: "According to the State Administration of Radio, Film and Television (SARFT), 2004 is the year of network development. So the provision of audio and visual programmes on the Internet has become one of our core works and we will spare no effort to develop the Internet TV business this year."

The service will be open to Beijing users of China Netcom's broadband network, one of two fixed-line telecommunications operators along with China Telecom, from May 31.

It will be expanded to Shanghai and Tianjin municipalities, and Guangdong, Jiangsu, Sichuan and Shandong provinces in the second half of the year through co-operation with China Netcom and China Telecom.

Subscribers can watch 12 channels of TV programmes on the Internet free of charge from May 31 to July 20. From then on, they need to pay 30 yuan (US$3.60) a month to watch selected CCTV programmes on the Internet.

Shanghai Media Group (SMG), the second largest TV group after CCTV, also signed a memorandum of understanding on June 6 with the Shanghai and Jiangsu branches of China Mobile, the largest mobile telecom operator in the world, to broadcast TV programmes to mobile phone subscribers on the two companies' high-speed GPRS (general packet radio service) network.

Phone users can watch programmes from SMG TV channels, including TV series, business, sports and entertainment news.

Zhang Dazhong, assistant president of SMG, said: "Broadcasting of content from our current TV resources is only the first step for us. We will launch more tailored programmes for broadband and mobile phone users in the future, to transform us into all-round content providers, instead of only focusing on the TV broadcasting platform."

Zhang said his company will extend similar co-operation to China Telecom and China Netcom on their broadband platforms later.

While TV groups move to broadband telecom networks to broadcast their programmes, telecom operators are also expanding their influence into the territory of Internet TV.

Tiantian Online, in which China Netcom is the biggest stakeholder, said on May 27 in Beijing that it had won approval to broadcast audio-visual programmes on the Internet from SARFT. This makes Tiantian Online the only telecom operator among 66 providers allowed to conduct Internet TV business.

Chinese Internet companies, which have grown up in a competitive market environment and have the advantage of existing user bases, are also warming up for Internet TV.

Sina Corp built up its online audio-visual content resources three years ago by acquiring stakes in Hong Kong-based TV broadcaster Sun Media Group Limited. Recently Sina launched an online audio-visual channel and began to offer TV programmes from Travel Satellite TV in Beijing and Southeast Satellite TV in East China's Fujian Province.

The NASDAQ-listed Sina, China's biggest Internet portal, also formed a partnership with the State Sports General Administration's China Interactive Sports to conduct online audio-video reports from the coming Olympics Games in Athens.

Since CCTV is the only TV broadcaster in China with the right to broadcast the Olympics live, Sina and China Interactive Sports' online interviews with Chinese champions are very attractive to other Chinese TV broadcasters.

Sina CEO Wang Yan said more than 30 TV broadcasters had already signed agreements to broadcast the companies' video reports on their channels.

Influence of the market

The emergence of Internet TV has been hailed as a strong push by market forces towards the convergence of telecom, broadcasting and Internet networks in China.

"In the future, telecom and broadcasting networks will be unified and both telecom operators and broadcasters will provide each other's businesses," said Zhou Hongduo, director of the Media Economy Research Centre at the Beijing Broadcasting Institute.

According to a 1999 State Council regulation, neither telecom nor broadcasting operators should penetrate into the other's territory.

The Chinese Government has been intending to promote the convergence of telecom, broadcasting and Internet networks to improve efficiency and avoid repetitive construction. But the two sides have tried to exclude each other from their monopolized business, claiming convergence may endanger national communications security to Chinese people.

However, commercial interest in the broadband network has drawn the two sides together.

"The future network will be ubiquitous. But the TV broadcasting network is limited, since it relies on TV sets, so co-operation with telecom operators will help solve this problem," Zhou said.

According to the official China Internet Network Information Centre (CNNIC), the number of broadband users in China almost quadrupled to 17.4 million in 2003 from 4.6 million in 2002.

Henry Yang, president of the market research firm Shanghai iResearch Co Ltd, believed the growth in broadband users has greatly stimulated the demand for movies and TV programmes on the Internet.

A recent report on the online movie and TV market from iResearch said the number of people watching these programmes online reached 13 million in 2003.

The broadband population is expected to further grow to 33.8 million this year, and 63.5 million next year.

Yang predicted Internet TV will lead to unprecedented co-operation between market participants. Telecom operators will provide bandwidth resources and users, TV broadcasters will provide programmes, and Internet companies their experience in running portals.

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