A proposal by the National Communications Commission (NCC) to conditionally allow cable service operators to raise their monthly subscription fees drew a lukewarm response at a public hearing yesterday, with industry representatives saying it would neither help boost revenues nor increase digital cable service’s penetration rate.
The government has set a goal of digitizing all cable television services by the end of this year. All cable television service operators are obligated to offer a la carte pricing starting in 2017, with subscribers choosing from various service packages priced at different rates instead of the current practice of offering a flat rate for a fixed service package.
As a reward to operators that meet the government’s digitalization goal before the deadline, the commission has proposed a “transitional clause” that allows cable service operators to raise their subscription fees, provided they meet five main conditions.
One of the conditions is that subscribers must be able to choose from at least three different service plans — and one of the service plans must be available at a price lower than the flat rate that consumers pay now.
Commission statistics put the average cable service subscription fee at NT$536.70 (US$17.80) per month, with the cap set at NT$600.
HYA Cable TV chairman Wu Chen-lung (吳振隆) said he did not think that implementing the “transitional clause” between now and 2017 for what the commission perceives as “frontrunners” is necessary.
HYA Cable TV, which services Greater Tainan, is the only operator in the country offering 100 percent digital service.
“The nation has yet to reach 100 percent penetration rate for digital cable service, nor has the nation reached a consensus on a la carte pricing for cable services. Under the circumstances, it is unnecessary to introduce a transitional clause,” Wu said.
“In my opinion, very few cable operators will be able to provide full digital services before 2017. In that case, the government should not spend so many resources on operators for complying with the government’s policy,” he added.
Wu said the conditions that the commission has set make the policy a “punishment” rather than a “reward,” as it would affect cable operators’ negotiations with television channel owners.
“The commission says that one of the service packages must be lower than the current price that cable operators offer, which is NT$515 in our case. My question is how much lower we should go before the commission is satisfied. Should we charge NT$5, NT$10 or NT$20 less?” Wu asked.
The price per channel is determined by the number of subscribers, and prices go up when there are few subscribers, Wu said.
If the price of one service package drops by taking out some channels, the cost of offering another package including those channels would rise instead, which would not help raise revenues either, he said.
Wu questioned how many operators would actually take the incentive, as they can all choose not to offer digital service at all and still get monthly revenues.
May Chen (陳依玫), a representative of TVBS, said the network has spent nearly NT$2 billion providing high-definition content, but the commission’s constant policy changes only contribute to uncertainty in the industry.
Chi Hsiao-cheng (紀效正), deputy director of the commission’s planning department, said that while the commission understands the dilemma facing cable operators like HYA, it must also listen to consumers’ demands that they only pay for television channels that they watch regularly.
Chi added that the commission’s “reward” would only go to those that provide all-digital services before 2017.
“We are considering if these operators can be given more flexibility in the way they set the service rate. Based on current regulations, they can only propose one flat rate and have it approved by the government,” Chi said.
The commission would take all the opinions at the hearing into consideration before making a final decision, he added.
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