The National Communications Commission yesterday thwarted multiple system operator Kbro Co’s plan to branch out into the cable TV market in eastern Taiwan by rejecting an application by one subsidiary, Fengmeng Cable TV Co, to offer cable services in Hualien County.
Kbro Co is owned by Dafu Media, which counts Fubon Financial Holding Co chairman Daniel Tsai (蔡明忠) among its shareholders. Fengmeng is a Taichung-based cable service operator.
The commission has also turned down an application by DigiDom Cable TV Co, a New Taipei City-based cable service provider, to operate in Yilan County.
Industry observers said the decisions were a major rollback of the commission’s long-standing policy since 2010 to boost competition among cable service providers by allowing operators to branch out into new service areas.
Previously, most cable service areas in the nation had only one service provider.
Commission specialist Huang Jui-ti (黃睿迪) said that Fengmeng claimed to be planning to source a large percentage of its revenue from cable service subscription fees.
However, commissioners reviewed its business plan and found that the cable channel packages it planned to offer were not substantially different from those of the existing service provider, Hualien Cable TV Network, he said, adding that commissioners questioned how many subscribers would switch if they offer almost the same content.
“The commission also doubted whether Fengmeng would earn enough revenue in the initial stage of operations to pay for infrastructure costs,” Huang said.
Hualien has two cable service areas with a total of 52,000 subscribers, he said, adding that Hualien Cable TV Network has a monopoly in one of the service areas.
However, the commission’s decision does not mean there is no room for competition in Hualien, Huang said.
Cable service providers in Hualien have to compete with Chunghwa Telecom’s multimedia-on-demand (MOD) system, which has about 40,000 subscribers, he said.
Commission spokesman Hsiao Chi-hung (蕭祈宏) said that the commissioners also consulted the Fair Trade Commission, which found that the deal, if approved, would boost Kbro’s bargaining power with channel operators on content authorization fees and other operating costs, and have an unfavorable influence on the nation’s broadcast industry.
DigiDom’s application to offer its service in Yilan was denied because its New Taipei City operations have incurred a huge deficit in the past four years, equivalent to almost half of its founding capital, he said.
In addition to loans that it has yet to repay, the cable company has several disputes with channel operators over content authorization fees, he added.
“What we have seen since 2010 is that cable operators have engaged in malicious competition by launching a price war and stealing customers from one another,” Hsiao said.
“The practice would only lead to a chaotic market, causing cable operators to lose subscribers to the MOD system and over-the-top content providers,” Hsiao said.
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