Fri, Aug 25, 2006 - Page 8 News List

TV stations being sold off under our noses

By Tien Chiu-chin 田秋菫

The ongoing political strife may have caused many people to overlook other important issues concerning Taiwan's future. One of the most urgent and important things going on currently is a major market realignment of the local cable TV industry. The process has been fraught with open conflict, veiled attacks and complexity. It has also exposed a host of serious problems.

Eastern Multimedia Co (EMC, 東森媒體科技) recently sold a controlling stake to the Carlyle Group, a private US investment bank, for around NT$40,000 per subscriber, making tens of billions of NT dollars in profit. On the surface, EMC was successful in introducing foreign investment to its operations, and the Investment Commission (投審會) even talked about liberalization and WTO principles in opposition to the uncooperative National Communications Commission (NCC). But the crucial issue in this deal is the question of what happened to the interest of consumers.

According to in-depth studies carried out by our party over the last two years, a reasonable cable TV subscription fee should not exceed NT$250 per month per household, since that would give operators a reasonable profit, rather than the current NT$600 prescribed by the Government Information Office (GIO). Excessive subscription fees are the root cause of the problem, and when local governments were deliberating on cable TV subscription fees earlier this year, the result was that the GIO and local governments agreed to a monthly subscription fee of around NT$250.

We don't have to rely on clever accountants to understand that foreign investors have paid sky-high prices for controlling stakes in EMC and China Network Systems Co (CNS, 中嘉網路). In recent years, customers have had to fork out between NT$500 and NT$600 per month for local cable TV services. Leaving aside the issues of service, quality and content, the NT$42,000 per subscriber these foreign companies paid amounts to seven years of subscription fees per household. That is, even if these foreign investors do not spend a dollar, it will still take them seven years to get their initial investment back.

Foreign investors of course have made detailed calculations. They are not willing to sustain long term losses to "aid" Taiwan's consumers. Most importantly, there are many hidden benefits and even chances to earn exorbitant profits that outsiders are unaware of, and this is the reason for this outcome.

Cable TV operators claim that current subscription fees are too low, when the fact is that they have earned back their initial investment and continued to run these firms without investing in technology or hardware. After having earned their fill, they treat their customers like pigs at an auction and sell them off to the highest foreign bidder and allow them to exploit Taiwan's consumers further.

Having seen deal after deal involving staggering amounts of money, I have come to realize how clever these businesspeople are. Many people believe that times are hard, it never occurred to them that their cable TV operators could rake in between NT$40,000 and NT$50,000 per subscriber.

In fact, the problem relating to the cable TV industry results from the erroneous policies of the former KMT government. By letting local big business monopolize the industry, a public utility, at least the money stayed in Taiwan. But now, foreign investors have taken over, gaining a monopoly over Taiwan's cultural independence and choice and the opportunity to practice cultural imperialism. The time is now ripe for the DPP government to give full play to transitional justice and turn the tables on the unjust operations of cable TV firms.

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