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1
Licensing of New
Television Broadcasting Services
4 July 2000Information Technology & Broadcasting Bureau
2
To widen programme choice
To encourage investment
To ensure fair and effective competition
To promote Hong Kong as a regional broadcasting and communications hub
Policy Objectives
3
1998 Review of Television Policy
Policy decisions announced in December 1998
Among others, it was decided that the television market should be opened up for competition
Policy Decisions
4
Guidance Note issued in August 1999 set out regulatory requirements set out assessment criteria
10 applications received in October 1999
Working Group under the Broadcasting Authority (BA)
Evaluation against the criteria in Guidance Note
Invitation of Applications
5
Statutory requirements cross-media ownership restrictions
residence requirements for directors/principal officers, etc.
Compliance with TA Statement on in-building frequency layout plan Employment of spectrum-efficient technology
Regulatory Requirements
6
Assessment Criteria
1. Service coverage of service
speed of service roll-out
2. Corporate competence knowledge about the local broadcasting
environment
quality control to ensure compliance with standards
7
Assessment Criteria
3. Financial size of performance bond
financial capability
sufficiency of investment
feasibility of business plan
4. Technical technical feasibility
employment of advanced technology
technical readiness
8
Assessment Criteria
5. Programming quantity and variety
6. Others benefits to the local broadcasting industry
benefits to the local economy
9
5 successful
4 failing to meet regulatory requirements and/or assessment criteria
1 withdrawn
Evaluation Result
10
Approval-in-principle for the following applicants:
1. Hong Kong Network TV Limited
2. Elmsdale Limited
3. Pacific Digital Media (HK) Corp. Limited
4. Hong Kong DTV Company Limited
5. Galaxy Satellite Broadcasting Limited
Successful Applicants
11
Cable & Wireless HKT VOD Limited
Withdrawn as existing licence deemed a “domestic pay” licence
Turner International Asia Pacific Limited
Existing Hotel TV Services Licence deemed an “other licensable” licence
Others not successful for failing to meet the regulatory requirements and/or assessment criteria
Other Applicants
12
Shareholding of Successful Applicants
1. NETV Sino-i.com Ltd. (100%)
2. Elmsdale Elmsdale Media Ltd. (90%)
Shaw Media Ltd. (10%)
3. Pacific Digital Pacific Digital Media Corporation (100%)
4. DTV STAR TV Ltd. (100%)
5. Galaxy Television Broadcasts Ltd. (100%)
13
Commitments - Launch of Service
From Grant of Licence
1. NETV 12 months
2. Elmsdale 12 months
3. Pacific Digital 6 months
4. DTV 9 months
5. Galaxy 18 months
14
Commitments - Programme Channels
1. NETV 65 channels (24 months)
2. Elmsdale VOD (12 months) +
10 channels (24 months)
3. Pacific Digital 20 channels (12 months)
4. DTV 14 channels (9 months)
5. Galaxy 40 channels (27 months)
Total: 149 channels
15
Commitments -3-Year Capital Investment
1. NETV $140 million
2. Elmsdale $108 million
3. Pacific Digital $23 million
4. DTV $250 million
5. Galaxy $180 million
Total: $701 million
16
Mode of Transmission
Broadband fixed telecom network : 2 NETV and Elmsdale
Satellite + SMATV : 3
Pacific Digital, DTV and Galaxy
17
Galaxy - Considerations
Galaxy has submitted a compliant proposal
Galaxy is subsidiary of TVB
CE in C’s approval for exemption of “disqualified person” restriction, having regard to the following factors:
1. Effect on competition in relevant service market2. Widening of programme choice 3. Impact on the development of broadcasting
industry4. Overall benefits to the economy
18
Galaxy - Special Conditions
To ensure that TVB and Galaxy will not engage in activities involving cross-subsidy or preferential treatment
cross-subsidization between the two companies will be prohibited as a licence condition
TVB cannot show undue preference to Galaxy or vice versa in respect of the supply of programmes, production facilities, programming services and artistes also as a licence condition
19
Galaxy - Special Conditions
To ensure that there will be a level-playing field in the pay TV market
any exclusive programme deals between TVB and Galaxy will be subject to a competitive bidding process in the open market
Galaxy’s proposed pay service may only commence after 18 months from the grant of licence
20
Galaxy - Special Conditions
To ensure that TVB’s free-to-air service will not be adversely affected
The beneficial ownership of TVB and its associates in Galaxy must be below 50% of the total shareholding in Galaxy
TVB may not invest more than 20% of its net asset value in Galaxy
TVB will spend not less than $2.7 billion annually, of which not less than $100 million on capital investment, in its free-to-air service
21
BA may apply to the Court to impose financial penalty for contravention of competition provisions
$2 million; or
a sum not exceeding 10% of the turnover of the licensee in the relevant television programme service market in the period of the breach
(whichever is the the higher)
Sanctions
22
Proposed safeguards constitute an effective “firewall” between TVB and Galaxy
Delayed commencement of Galaxy’s service will give a fair degree of head-start for other new entrants
Galaxy’s service would widen programme choice for viewers without compromising effective competition in the market
Galaxy -BA’s Assessment
23
Liberalisation of TV Market
Open up the TV market Provide a fair and effective competition
environment for the TV market Additional 149 TV channels Total capital investment over $700 million More than 1,000 jobs to be directly
created Service launch within 6-12 months
24
THANK YOU