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While the market is mature and competitive, all of the traditional video program broadcasting service platforms are highly regulated in terms of licensing requirements, local presence requirements for platform operators, service terms, foreign investment caps, anti-monopoly restrictions, and guidelines for distinguishing between regular programming and commercials. New generation video programming services, such as Internet Protocol Television (IPTV) and Over-the-Top (OTT) TV have been developing in this market, as well.
Taiwan’s broadcasting regulator, the National Communications Commission (“NCC”), has not yet stepped in to regulate these new generation video program services, most likely because the market size is very small compared to the traditional broadcasting services market. This article will discuss the differences between various legislative acts in Taiwan which govern currently available video program broadcasting services.
Introduction of the Regulatory Framework
There is no single piece of legislation governing all video program service platforms in Taiwan. Traditional video program service platforms are regulated by distinct sets of legislation. Terrestrial broadcasters are regulated by Taiwan’s Radio and Television Broadcasting Law (most recently amended in January 2016). Cable and Satellite Direct-to-Home (DTH) platform operators are regulated by the Cable Radio and Television Broadcasting Law (most recently amended in January 2016) and the Satellite Radio and Television Broadcasting Law (most recently amended in November 2016), respectively.
The NCC also allows licensed, fixed-line telecom carriers to provide video program broadcasting services via their broadband networks without the need to obtain separate broadcasting licenses from the NCC. Over the last several years, efforts have been made to update the requirements and restrictions, as set forth under said laws, to make them more consistent, allowing for a fairer regulatory environment across all of the various broadcasting platforms. The NCC is currently considering replacing the existing aforementioned legislation with a single, all-encompassing piece of legislation.
Licensing, Local Presence Requirements, and Foreign Investment Caps
All traditional video program service platforms are subject to the NCC’s license requirements, and only Taiwan-incorporated entities are eligible to apply for and hold such licenses, with one exception: an offshore Satellite DTH platform operator may apply for such a license via the establishment of a Taiwan branch office or by designating an agent in Taiwan.
In the latter case, the application of such a license shall be filed under the name of the designated Taiwan agent and, if the license is granted by the NCC, the license will be granted to the designated Taiwan agent. Such a license will be effective for a period equivalent to the term of the agency agreement between the offshore satellite DTH platform operator and its Taiwan designated agent, but is limited to 6 years.
If the offshore entity were to change the designated Taiwan agent, a new license would be necessary. When a license is granted to a terrestrial broadcaster by the NCC, the frequency required is also allocated in conjunction with the granted license. The licenses of all platform operators and broadcasters, along with frequencies allocated to licensed terrestrial broadcasters, are nontransferable.
Taiwan licensed terrestrial television broadcasters may not accept foreign investment and their shares may not be held by foreign nationals. Taiwan licensed cable television platform operators are subject to certain foreign investment restrictions.
Direct foreign investment in a licensed cable platform operator shall be less than 20 per cent of its total capital, and the aggregative direct and indirect foreign shareholdings in the said operator shall be less than 60 per cent. A local, licensed satellite DHT platform operator shall not have 50 per cent or more of its shares held by foreign investors. Direct and indirect foreign shareholdings in licensed, fixed-line telecom carriers shall not exceed 20 per cent and 60 per cent of paid-in capital, respectively.
Channel broadcasters, which broadcast television program channels carried by Taiwan licensed cable and satellite DTH platforms and the video program service platforms of telecom carriers, are subject to the NCC’s licensing requirements, as well. The signals of such channels can be delivered to platform operators via satellite, onshore fiber, or any other mechanism. Taiwan-incorporated channel broadcasters are subject to a 50 per cent direct foreign investment cap, while offshore channel broadcasters shall establish their own Taiwan branch office or designate Taiwan agents to apply for and hold the necessary NCC licenses.
The above-mentioned broadcasting legislation defines indirect foreign investment and shareholdings literally, to be counted up to the second tier above the platform operator or the broadcaster at issue. Legally speaking, total foreign ownership in a licensed platform operator or broadcaster is possible, however the NCC might object to such total foreign ownership on the basis that this would damage public interest.
The video programs broadcasting service market of Taiwan is considered highly competitive. In spite of this, the NCC and legislative bodies have continued to strive toward enhancing competition within this market. For example, the number of licenses for video program broadcasting platforms and channel broadcasters are unlimited, with the exception of those granted to terrestrial television broadcasters. Applications for such licenses can be lodged with the NCC without specific time limitations.
Given that cable television broadcasting platform penetration rates are very high in Taiwan, cable broadcasting laws set restrictions on the total number of subscribers that each multiple-system operator (“MSO”) may have. Taiwan’s existing broadcasting laws, however, do not contain any provisions directly addressing fair competition among these platforms, nor across different platforms, and leaves fair competition to be dealt with mainly by Taiwan’s general competition laws.
Satellite DTH platform operators, along with the major local telecom carrier providing broadband-based video programming services, Chunghwa Telecom, have voiced concerns about local cable television platform operators illegally restricting channel broadcasters, whose channels are carried by such cable television operators’ platforms, from being carried by other platforms. However, Taiwan’s general competition law regulator, the Fair Trade Commission (“TFTC”) has not taken any serious action against such cable platform operators, stating violations lack strong and compelling evidence.
The NCC and Taiwan’s legislators have been working on new legislation to address such anti-monopoly issues, across all media, including broadcasting and even newspapers, to ensure diversification of differing voices. With this in mind, the newly proposed legislation is expected to set forth restrictions on cross-ownership between, and among, media platforms if such consolidations were to meet specific thresholds.
Broadcasting Content Regulations
Pre-broadcasting censorship is not required for any broadcaster in Taiwan. The content of various program broadcasters is, however, regulated to differing degrees by applicable law. The content provided by terrestrial broadcasters is, generally speaking, subject to the most stringent restrictions and requirements.
These include distinguishing between programming and commercials, a limit on commercial airtime, local production requirements, and time requirements for broadcasting specific categories of programs, such as educational programming. The content aired by channel broadcasters is also regulated, but the limits set on terrestrial broadcasters are considerably higher. The program content of cable, satellite DTH, and telecom carriers is not subject to such regulation, as these platforms are considered a vehicle by which the content of third party broadcasters is distributed. These three platforms are, however, required by law to carry only content and programming from duly licensed channel broadcasters.
New Generation Broadcasters
IP TV and OTT service providers, which broadcast video programs via an open and public Internet, are not yet regulated by Taiwan broadcasting laws, and are, therefore, not yet subject to any licensing or regulatory requirements or restrictions, as discussed above.
Such providers do not need to establish local presence, and registration requirements applicable to such providers are limited to registering with Taiwan’s tax authorities to pay Value-Added Tax, but only for companies that reach the sales volume threshold set forth under the law. Recent debate, however, has intensified as to whether or not IP TV and OTT services should also be regulated similarly to the other classes of broadcasters; however, the NCC has thus far been reluctant to extend regulations to companies utilizing an open and public Internet infrastructure.
Trends and Forecasts
The popularity of IP TV and OTT services has been increasing steadily, and this trend is likely to continue. As the popularity of such services rises, pressure on the highly regulated traditional broadcasting services also rises. Given that the NCC has resisted regulating Internet-based services, and the unfeasibility of such regulations, deregulation of traditional platforms to relieve this pressure is currently under consideration.
One problem faced by terrestrial broadcasters, for example, has been difficulty in meeting the requirement that 70 per cent of programming be locally produced; therefore, changing this regulation would help to relieve such pressure. Dialing back other regulations regarding the amount of broadcast time allowed for commercials and specific programming categories would also be welcomed by traditional
In addition to deregulation, the government may move toward acquiring more of the existing Taiwan licensed terrestrial broadcasting companies, of which it already owns approximately half. Given the government’s stated goal of encouraging local programming and certain specific categories of programming, such acquisition would allow for government resources to be used toward such goals. As the market share of new media increases, the pressure on the NCC by traditional broadcasters to deregulate will also increase.
Given the current trend in popularity of new media, changes in the form of deregulation, or government acquisition of terrestrial broadcasters, are becoming more likely.
New and Traditional Broadcast Media in Taiwan:
A Comparison of Regulations
Robert C. Lee
Taiwan has what may be considered one of the most active and competitive video program broadcasting service markets in the Asia Pacific region. Viewers have access to more than 200 channels, including certain premium international channels, such as ESPN, HBO, CNN, and the Discovery Channel, at a fixed monthly fee of not more than USD20 and delivered via traditional cable television platforms.
Robert C. Lee currently leads the telecom and media practices of Yangming Partners. Being known as one of the few experienced telecom and media counsellors in Taiwan, Mr Lee has represented the world’s top telecommunication broadcasting and internet services companies for regulatory and transactional matters in Taiwan. Mr Lee has also advised numerous buy-out transactions within the telecommunication and broadcasting industries, some of which were the largest buy-outs in Taiwan over the past several years.