China Network Systems, Quanta form partnership

"We need to try to bring in as many subscribers as possible to entice more content providers ... With service to start in our key market, Taipei City, I believe the target can be reached."

Gary Tsai, vice president of China Network

China Network Systems Co (中嘉網路), one of the nation's digital broadcasting providers, yesterday announced a partnership with Quanta Computer Inc (廣達電腦), which will manufacture set-top boxes featuring a wide array of services for the company.

"With digital broadcasting systems, a TV is not only a TV, but also a platform to exchange information and interact with people," Nelson Chang (張安平), chief executive officer of China Network, told a press conference yesterday.

Through the alliance, Quanta Computer's subsidiary Quanta Network Systems Inc (廣威網訊) will deliver a first batch of 2,000 integrated receiver decoders -- commonly known set-top boxes that decode digital signals -- to China Network by the end of next month.

Quanta Computer shares fell 0.9 percent to NT$58.50 on the Taiwan Stock Exchange yester-day. The company said yesterday that sales fell 1.5 percent last month from a year ago to NT$25.3 billion (US$756 million).

China Network is not publicly listed.

China Network is pinning its hopes on the new set-top boxes to help boost TV commerce, as it plans to launch various services by the end of the year, Gary Tsai (蔡俊榮), vice president of China Network, said at the conference.

The new services include stock trading, banking and shopping, which can be conducted via a TV remote control, Tsai said.

With the rollout of the services, the company expects to extend its coverage from northern Taiwan -- mainly the greater Taipei area, Keelung and Taoyuan -- to the south, and enlarge its subscription base from the current 30,000 households to 200,000 by the end of next year.

The ambition may sound unrealistic, however, given the small number of people who have subscribed to digital TV over the past two years. Two other digital TV providers -- Eastern Multimedia Co (東森媒體科技) and Taiwan Broadband Corp (台灣寬頻) -- also have just 20,000 to 30,000 customers. Multimedia-on-demand (MOD) providers such as Chung-hwa Telecom Co (中華電信) and Seednet (數位聯合) also have few subscribers.

"We need to try to bring in as many subscribers as possible to entice more content providers," Tsai said. "With service to start in our key market, Taipei City, I believe the target can be reached."

Last year the Taipei City Government capped the prices of set-top boxes at NT$3,500, which was NT$1,500 to NT$2,000 less than cable companies wanted. Companies now lend the boxes for free to subscribers.

The strategy has worked to bring in customers in Taipei City who have been longing to see an advanced digital system replace the analog system for a long time, Tsai said.

However, Chiu Fu-sheng (邱復生), president of Era Communications Co (年代網際事業集團), which owns the TVBS and Era News TV stations, said it will take a while for the digital TV industry to take off in this country.

"The key is content," Chiu said.

At present, most basic channels on the digital platform have been shifted from the cable system, giving viewers little difference and thus little incentive for them to make the switch, Chiu said.

He said he will consider producing digital content when the subscriber base is large enough to generate economies of scale.