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Convergence moves to bolster investments
By Wang Xing (China Daily)
Updated: 2010-02-05 10:05
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Stimulate investment
Although still shadowed by regulatory ambiguity, many remain optimistic about the prospective plan and expect the project to spark huge investments by Chinese telecom operators and broadcasters such as Beijing Gehua and Hunan TV.
Some industry watchers estimate investments to run upwards of 600 billion yuan ($87.89 billion) over the next few years.
"We expect to see increased capital expenditures by both telecom carriers and cable operators to upgrade their network capabilities in the coming years," Helen Zhu, an analyst at Goldman Sachs, said in a research report last month.
"Such investments will enable new services which can expand the total combined broadcast and telecom revenue pie," she said.
According to Zhu, TV broadcasters may need to invest more than their counterparts in telecom, since cable network upgrade requirements are dramatically different depending on the geographic location, while telecom companies have already been steadily expanding bandwidth and fiber-optic rollout.
Zhu did not offer an estimate for the cost of these investments.
Compared with telecom conglomerates, China's broadcasting market players are not centrally located.
"In China's telecom industry, China Mobile, China Unicom and China Telecom are the major players with subsidiaries across the country," said Xiang.
"But who are the major players in China's broadcasting industry? Even China Central Television doesn't have a nationwide cable network," he said.
In fact, broadcasters may need to engage in consolidation before the three systems can converge.
Wayne Shiong, a partner with WI Harper Group, a venture capital firm, said his firm is slightly cautious about investing in converged media opportunities simply because he couldn't picture different government department's easily bargaining with each other.
Shiong said that merging the technologies is not the problem, but rather whether regulatory overlap issues could be resolved.
"We are still watching how things unfold, and will probably begin investing after everything is settled at the top," he said.
