Telecommunications Industry Advocates for Deregulation

As online media and streaming services continue to grow, the telecommunications industry requires further rate deregulation to remain competitive. In its position paper in the American Chamber of Commerce in Taipei’s recently released 2017 Taiwan White Paper, the Chamber’s Telecommunications & Media Committee addressed this need for further deregulation by recommending the National Communications Commission (NCC) discontinue their tiered pricing scheme for cable TV basic pay channels.

The tiered pricing system relies on a basic package of at least 11 channels, with payment for additional channels based on an a la carte pay per channel basis. The NCC contends that the pricing scheme will increase channel options for users, fuel industry growth by allowing for more operational flexibility, and “enable the cable TV market to establish a brand-new operating and pricing model in preparation for the trend of four-in-one digital streaming (i.e. data, audio, video, and mobile”.

The Telecommunications & Media Committee, however, doubts that the NCC’s expectations can be fully met, since there is no comprehensive impact assessment backing the NCC’s tiered pricing policy. The committee recommends delaying implementation of the system until the scheme is explicitly grounded in law and backed by a comprehensive industry impact report. Under the Cable and Radio Television Act, which the Legislative Yuan implemented in early 2016, there is no article sanctioning NCC involvement in tiered pricing schemes for cable TV services. “The NCC should therefore avoid direct involvement in stipulating the basic channels or types of channels to be offered by cable providers, as well as the applicable rates, review procedures, and other requirements,” the Telecommunications & Media Committee states in the 2017 Taiwan White Paper.

The committee also recommends the government avoid involvement in price determination. Market forces, not government regulations, should determine pricing rates and platform operators should determine fee collection rules. Today’s developing audio-visual technologies operate on various platforms, including the internet, Internet Protocol television (IPTV), apps, and Over-the-Top (OTT) services. The various platforms offer a range of viewing options, programming, and flexible fee collection models. Despite competition between the operators of these platforms and cable providers, the authorities have attempted to regulate pricing rather than set up rules on the management and control of various platform services.  “A sound market where channel operators co-exist relies on fair competition, but the authority’s involvement in rate setting for cable TV services may cause the competition to be unfair” the committee contends in its position paper. The committee supports the right of cable TV providers as well as the providers of IPTV, OTT, and other new services to set pricing.

The paper cites cable TV rate regulation as another regulation that is in need of serious revision or removal. The current rate regulations for cable TV in Taiwan were introduced in 1990, when multiple video visual services – IPTV, OTT, etc. – had not yet challenged cable TV dominance in the video visual service market. Rate regulation was intended to protect consumer rights. However, competition between the various video visual services eliminates the need for rate regulation as the consumer can choose between a wide range of service providers. Additionally, the 1990 rate cap for cable TV service of NT$600 per month per household has remained the same since its initial installment despite a substantial rise in the consumer price index since 1990.  The committee recommends either removing the rate cap or increasing the level to reflect the increase in the consumer price index.

To read the full Telecommunications & Media position paper, click here.

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