It should come as no surprise that a regulator’s natural tendency toward an issue is to regulate it, but the National Communications Commission’s (NCC) decision to reintroduce a bill on large over-the-top (OTT) media operators, announced in May, might have surprised some in the private sector.
According to the NCC-drafted legislation and statements from the commission, some of the key objectives of the bill are preventing the distribution of Chinese streaming services, curbing piracy and promoting local content.
The OTT issue reached its peak a few years ago over Beijing-headquartered streaming platform iQIYI. In March 2019, a Mainland Affairs Council spokesperson told a news conference in no uncertain terms that the administration was seeking to ban iQIYI due to concerns about the Chinese Communist Party using it to influence Taiwanese. Shortly after in May 2019, the then-newly appointed NCC acting chairperson said the commission would propose a bill for regulating OTT media services.
A year later in July 2020, the commission unveiled the “OTT TV bill” for public notice and comment. The preamble of the draft clearly indicated its intent to prevent Chinese platforms from providing services without securing approval in accordance with the Act Governing Relations B0etween the People of the Taiwan Area and the Mainland Area (臺灣地區與大陸地區人民關係條例).
A couple of months later in September 2020, the Ministry of Economic Affairs enacted a ban on the distribution of Chinese streaming services in Taiwan, apparently as a more expedient solution to the so-called iQIYI problem.
The legal basis of this ban is in Article 35 of the act, which authorizes the ministry to essentially blacklist the distribution of Chinese goods and services in Taiwan after consulting other government agencies.
A month after the ban, iQIYI’s Taiwanese distributor shut down, but the OTT bill remained on the table, and some stakeholders began scratching their heads in earnest about the bill’s purpose. Public discussion slowly petered out and the bill was put on the back burner until the NCC’s announcement in May.
A document published in July 2020 by the Legislative Yuan’s Judiciary and Organic Laws and Statutes Bureau said that enacting a “special law for regulating the OTT industry” would be globally unprecedented, and apart from clamping down on iQIYI and other Chinese streaming services, there did not appear to be a particular reason to enact the special law.
Article 1 of the draft bill stated that its purpose was to “drive development of OTT media services.” On promoting growth, the author of the document asked, rhetorically, that if a special law were conducive to the growth of the OTT industry, why is it that the US, with the largest streaming platforms in the world, did not have such a special law?
Ironically, while the economics ministry successfully ended the Taiwanese distribution of iQIYI, the platform and its content can still be accessed by Taiwanese. Looking at this outcome, those more cynical might conclude that for the authorities it is not a problem that Taiwanese view content distributed by a Chinese platform, but it is a problem that a tax-paying entity domiciled in Taiwan profits from it.
Although the latest iteration of the OTT bill has yet to be published, the NCC’s announcement reintroducing it did not mention Chinese streaming services, most likely because this is no longer seen as a pressing problem.
The announcement did state that the bill would require platforms to secure the necessary rights for distributing content, and the law would empower the commission to take action against platforms for copyright infringement.
On an aspirational level, some stakeholders perhaps see the bill as a legal instrument specifically for streaming services to potentially stem piracy. However, an equally likely possibility is that the bill would end up regulating law-abiding platforms that distribute content to which they have the rights, while pirate sites outside Taiwan’s jurisdiction remain unaffected.
Is there a need for Taiwan to enact a special law requiring Netflix, Disney+, Prime Video and other similar platforms to secure the necessary rights for distributing content on their platforms?
Regarding piracy, an obvious solution to prevent people from viewing pirated content is to block those Web sites, which a democratic government would rightly be hesitant to do.
If the bill is not designed to end local distribution of Chinese streaming services, which the government has achieved under a separate legal framework, and if not to effectively curb piracy, for which there is also a separate legal framework — the Copyright Act (著作權法) — perhaps the only obvious thing left for an OTT bill to do is establish local content requirements.
Both the bill unveiled in June 2020 and the new bill, as presented in NCC statements, refer to this objective.
For understandable reasons, the government has been careful about how “local content requirements” are worded. A case in point would be the economics ministry’s “industrial relevance program” for offshore wind developers. To a layperson, there is probably no substantive difference between the two.
At a more fundamental level, are offshore streaming services stifling local content? The popularity of Taiwanese TV series Light the Night distributed on Netflix, which came about in the absence of local content requirements, would seem to suggest otherwise. The existence of “made in Taiwan” content on Netflix and Disney+, again in the absence of government requirements, also suggests otherwise.
Disregarding the effectiveness of local content requirements to achieve long-term economic objectives — which many studies indicate are ineffective — it seems counterintuitive for Taiwan to erect more barriers to trade as it pursues closer trade relations with its major economic partners including the US, where many of these large streaming platforms are domiciled.
Naturally, in policymaking, government officials should first define the problem and then find an appropriate solution. If there is no problem, why create a solution? The law of the instrument describes it best: “If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail.”
Adam Kuo is a senior director at Soundline Consulting.
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