A vicious circle of distrust between cable television companies and their customers needs to be broken before they can roll out new digital services and be freed from tight government regulation, industry watchers and analysts said yesterday.
"The Taiwan public needs to be educated," said Vivek Couto, executive director of independent Hong Kong-based research firm Media Partners Asia Ltd at a press conference in Taipei yesterday.
Couto is in town to host a seminar on Taiwan's cable TV industry on Monday.
"Digital television subscription has been growing at a rate of only about 5 percent per annum and new channels and content for consumer-focused [packages] are becoming scarcer due to the lack of progressive market regulation," he said.
One lawmaker agreed.
"We are facing very traditional consumption behavior," said PFP Legislator Pang Chien-kuo (龐建國) at yesterday's event. "People have very negative stereotypes of the cable television industry. We have to change the opinions of the people."
Pang sits on three committees in the Legislative Yuan, all of which are looking at proposed changes to the laws regulating the cable television industry under the so-called "three-in-one" Bill. The bill aims to strike a balance between consumer rights and the development of the industry.
After years of abusing consumers by charging high fees for low-quality content, the Government Information Office stepped in to regulate the chaotic cable industry, Couto said.
But the government has gone too far in restricting how cable TV companies operate, he added.
And it is not just central government -- local governments are also involved. Only on Tuesday, the Taipei City Government capped the amount cable operators can charge for new descrambler boxes needed to decode the latest digital services at NT$3,500 after consumer groups complained that the suggested price of the boxes was too high.
The three leading cable providers -- China Network Systems Co (中嘉網路), Eastern Multimedia Co (東森媒體科技) and Taiwan Broadband Corp (台灣寬頻) -- said that the boxes cost them around NT$5,000 each as they come with digital and interactive hardware and software.
Capping the price "is to deny them any meaningful return on investment," Couto said.
The price cap has scuttled the government's plan by 2006 to have 80 percent of households using broadband digital services, which offer more television and information channels, electronic mail, electronic shopping from home and fast Internet services.
"China Network has now put its digital television service on hold until next year, and the others are reconsidering their plans," said Arthur Shay (謝穎青), director of the Cable Broadband Institute in Taiwan (台灣有線寬頻產業協會) which represents the major providers.
Taiwan currently has less than 20,000 digital TV subscribers as of the end of last month, or 0.4 percent of households according to Media Partners figures. That is only 10 percent of the government's target of 200,000 for the first half of this year.
In response to this week's events, the government revised its 80-percent target by 2006 down to 50 percent yesterday, Robert Ho (何吉森), a section chief at the Government Information Office confirmed.
But a digital TV industry stifled by rules could hurt Taiwan's economy at large.
"We can't ignore the fact that Taiwan is a very important manufacturing center for set-top boxes in Asia," Shay said. "If the `three-in-one' Bill is not passed in time, we have heard from two major hardware manufacturers that they will shift their manufacturing centers to North America or China by the first half of next year."
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