Shanghai. January 14. INTERFAX-CHINA - Premier Wen Jaibao has urged the acceleration of triple network convergence in China at a State Council conference on Jan. 13, domestic media reported on the same day.

According to Xinhua news agency, as a result of the conference, cross-industry operations will be encouraged between the telecommunications, broadcast and Internet fields through limited trials over the next two years, with the aim of promoting full network convergence by 2015.

Chinese broadcasters are no longer banned from providing value-added telecom services and basic communication and Internet services, like broadband, as in the past. Telecom operators will be now permitted to operate TV and radio production and transmission.

There was also mention of subsidy provisions and preferential tax policies from the State Council to further jump start the process.

"Content producers will benefit the most from network convergence," Wan Jianjun, an industry analyst with Shenyin & Wanguo Securities, told Interfax on Jan. 14.

According to Wan, broadcasters and telecoms companies will have similar network capacities in the long-run, as both have deployed national network infrastructures, and the battlefield will shift to the content front.

"The cost of legitimate content will continue to rise in the short term, and there will be increased competition among operators to obtain high-quality content," Wan said.

Xu Yaowen, an industry analyst with Galaxy Securities, said that equipment vendors will also benefit from an accelerated pace of network convergence.

"There are still roughly 100 million cable TV users awaiting the migration of their cable signals from analog to digital format, while of approximately 160 million digital cable TV users, nearly 150 million are still awaiting network upgrades to support interactive TV services. The market for related infrastructural equipment is expected to be worth nearly RMB 60 billion ($8.8 billion) following convergence, while the cable operation and set-top box manufacturing markets will be worth an estimated RMB 35 billion ($5.13 billion) each," Xu said.

Yang Yu, an independent industry observer, said that network convergence will also boost demand for new media services and related terminal products.

"With an increased demand for mobile TV services, the demand for related mobile TV chips and devices will rise in correlation," Yang said.

The concept of triple networks was first raised in 1998. China's State Council has since been discussing a practical approach to network convergence, but has not been able to reach a conclusion, due to an existing conflict of interest between the Ministry of Industry and Information Technology (MIIT) and the State Administration of Radio, Film and Television (SARFT).

01/14 13:46
Tagged as: triple network convergence digital telecommunications Internet broadcast content infrastructure commentary