China cable network body to spur integration

China has designs to bring about 1,000 of its regional radio and television networks under the banner of a single, national cable television network company body in order to better integrate its telecommunications, Web and broadcasting systems, said reports.

According to Chinese news agency China Every day, the State Administration of Radio, Film and Television (SARFT) has said that the new body will be in operation “by the finish of the year” and will also help drive expansion in to new business opportunities in mobile TV and online videos.

When asked why the SARFT is embarking on this project, agency official Tao Shiming said: “The cable television network at present is managed locally, and is lacking in organization and scale.”

The editorial also noted that the 1,000 radio and television networks in China are run by different operators at varied administration levels. The absence of a unified network is delaying the country’s designs to compete with others for opportunities stemming from the convergence of technologies.

To overcome this fragmentation, there needs to be national consolidation, the document said. The completion date, however, may take up to four years, said Zeng Huiming, deputy secretary-general of the cable TV committee of the China Radio and Television Association.

The document also pointed out that the new consolidated company will have a start-up investment fund of around 80 billion yuan (US$11.8 billion) contributed by both the government and broadcast and television companies.
However, analysts are skeptical about the consolidation designs.
Telecom analyst Xiang Ligang, for one, told China Every day that they was not sure what returns can be had from the whole exercise.

“It’s hard to earn profits if the new company offers lower prices, but simultaneously, it is also hard to win more users if it charges high fees,” they said. The four local telcos–China Mobile, China Unicom and China Telecom–have invested over 2 trillion yuan (US$294.2 billion) on telecom networks and will still have an advantage in the market, Xiang said.

Another analyst, Adrian Tong from Hong Kong’s Media Partners Asia, told Bloomberg in a separate document that it won’t “be easy” for China to integrate all the smaller players and that the “consolidation will take years” because its industry is fragmented. This is unlike the situation in the U.S. where several bigger cable operators are dominant, they added.

China Every day also mentioned that the government last month launched a pilot project in 12 cities to check the convergence of the networks, with trials expecting to last until 2012. The project will focus on connecting the broadcasting and telecom networks, it added.