NCC to Revise Controversial Convergent Law Draft

NCC Chairwoman Nicole Chan. Photo: CNA
NCC Chairwoman Nicole Chan. Photo: CNA

The National Communications Commission (NCC) surprised industry stakeholders in the fall of 2015 when, after years of study and preparation, it abruptly released the proposed text of a series of five new laws intended to promote digital convergence.

The five draft acts cover electronic communication, telecom infrastructure and resources, cable systems, telecom services, and terrestrial television. The NCC designed them to replace the existing Radio and Television Act, Satellite Broadcasting Act, Cable Television Act, and Telecommunications Act.

Sources familiar with the matter say former NCC Chairperson Howard Shyr – his term as chair ended this summer but he remains a member of the commission – was the driving force behind the abrupt rollout of the draft acts. “It’s clear there was a lack of due process,” one observer says. “The whole thing was very rushed. Shyr was overly concerned with ensuring his legacy.”

Shyr voiced strong support for the new legislation prior to stepping down as chair. “The four [current] acts are outdated and do not behoove Taiwan as a nation that is ruled by the law,” Shyr was reported as saying to the media in May. “The new acts were drafted after reflection on the communication policies and trade agreements that have been implemented by the international community and the experience that we have gained over the years…and can be enforced,” he added.

Since taking over as NCC’s new chairperson, however, Nicole Chan has signaled that the commission will further revise the controversial legislation. She told reporters in August that instead of continuing with the legislative package pushed by Shyr, the NCC will merge the proposed provisions covering telecom services and telecom infrastructure, as well as conduct an additional review of the current Telecommunications Act. It will then combine all of the proposed legislation into a single act to regulate the telecom sector.

“There will be conservative measures taken to revise the existing Telecommunications Act,” says Arthur Shay, a lawyer at Taipei-based Shay & Partners and an expert on Taiwan’s media and telecom laws. “The NCC needs to build internal consensus and right now there are different thoughts about how to make the necessary changes. From what I understand, they plan to insert new clauses into the existing Act.”

Shay says Chan will approach her job differently than her predecessor. “She is friendly and good at communicating with people,” he notes. “She seems more willing to listen to industry players and consumer advocates.”

The government first announced its Digital Convergence Development Policy in 2010, designed to create new legislation to reflect technological changes that blurred the lines between services offered by different types of telecom platforms. But the complexity of the task made it a long and drawn-out process.

Kevin Lin, chief legal officer of Taiwan Broadband Corporation (TBC), says he expects the NCC under Chan to address longstanding industry concerns about unregulated over-the-top content (OTT) – media content delivered directly to viewers over the Internet that bypasses traditional cable and satellite TV services, such as Netflix. The telecom and media industry has long urged the NCC to take on the OTT issue because unfair competition is hitting their bottom line, Lin notes. “OTT providers have no physical Taiwan operations; they don’t have to apply for a license; they don’t pay taxes in Taiwan, and yet they are permitted to do business here,” he says.

Shyr, though often zealous, was conservative in how he approached OTT regulation, notes Shay. “OTT is in essence content distribution,” he says. “Shyr argued that no country had ever regulated it, but I believe that’s wrong.”

Industry sources note Chan’s familiarity with Internet technology from her tenure as vice president of the Science and Technology Law Department at the state-backed Institute for Information Industry (III). In August, Chan said the NCC intends to draft a digital communication act to regulate Internet communication, adding that the commission expects to show drafts of the new regulations to the public by the end of the year.

Under Chan, the NCC will enact “relatively light” regulation of OTT while relaxing restrictions on the cable industry to ensure fair competition, Lin predicts. Possible changes to existing regulations may include a loosening of the rate cap on cable providers, so they are able to charge a higher fee to subscribers (the current rate capped at NT$600 monthly is too low, cable providers say), as well as a move to charge cable subscribers by set-top box rather than household. Charging by set-top box could boost revenue, as many Taiwanese households have more than one television, while cable operators could offer tailored subscription packages on the different boxes, he says.

Lin notes that the Taiwan government has traditionally viewed the cable industry as a form of media requiring strict regulation. Looking ahead, “that view will change,” he says. “Cable is a platform, not a media.”