Tying Up the Tube

If a single company could control all the foreign broadcasts everyone in China watched on TV, it would make a lot of money. If that company was owned by the communist government, the vast Chinese masses might only see and hear what those authorities wanted them to. But in the messy modern world of information anarchy, could Beijing’s overlords ever succeed in such a plan?

They’re trying. Last week, in an article buried in the Chinese-language newspaper Hong Kong Economic Journal, Beijing revealed a blueprint to create a powerful new government company that will hold a monopoly on all satellite broadcasts in China. The next day in the capital, officials quietly briefed media executives of their agenda.

Here’s the idea: the new company, China Broadcast Satellite Transmission Co., will receive all foreign and domestic satellite feeds at a special government facility in Beijing. It will encrypt the signals, uplink them to a satellite and beam them down to the public. The objective is a double dose of control: the state will be the monopoly provider of satellite television broadcasting on the mainland, and foreign networks will have to pay to get their signals into China. In addition, authorities will be able to censor foreign satellite broadcasts with a simple push of a button. “It’s one way to control foreign satellite broadcasts, but it also has all kinds of economic advantages,” says Jeanette Chan, a Hong Kong-based broadcast attorney. Says a top executive at one leading foreign broadcast channel: “It’s the ultimate control. They are the gatekeepers. They decide who gets in and how much they pay.”

For much of its modern history, of course, Beijing has had that power: most Chinese could only get broadcasts by the communist government, except those on the border of foreign countries or the brave souls who listened surreptitiously to shortwave radios. But in the decade since satellite television blossomed in Asia, all that has changed: foreign broadcasters are eager to get into the China market, Beijing is willing to have them (if it can control content) and the market is one of the world’s biggest plums. Whether China will actually allow direct-to-viewer foreign television transmissions is another matter. The technological bottleneckand potential filtercreated by a centralized uplink facility could soothe the anxieties of China’s political mandarins. Such a policy change would surely be good for business. Goldman Sachs expects TV advertising revenues in China to grow from $2 billion today to $7 billion in 2010. And someday, additional revenues may come from the use of China’s upgraded cable network to access the Internet. First though, warring broadcast and telecom regulators have to sort out who would control such transmissions.

China has made it clear that it wants foreign broadcasters to pay. Beijing officials are talking about uplink fees of as much as $400,000 a year per channel. That’s more than some broadcasters earn in China now, but it may be worth it if China eventually pays the broadcasters subscription money from Chinese consumers. (Cable is now connected to 90 million households in China, out of 320 million residences with televisions.) Currently the only subscription revenue earned by broadcasters like CNN or ESPN is from hotels and foreign residential compounds. The vast majority of Chinese people who watch satellite TV get it from cable operators known to use bootleg decoders, sometimes smuggled in from Thailand, to capture the signals illegally.

So foreign broadcasters might play along, and possibly even self-censor their programs, to keep the Chinese monopoly happy. Far less clear is whether Beijing has the power to control the 1,200 municipal cable operators scattered across the country or to crack down on those who pirate encrypted signals. “I don’t think it really changes the present situation for receiving unauthorized programming,” says William Wade, an executive at Hong Kong-based satellite operator Asiasat. For one thing, the satellite programs now being received in homes are relatively uncensored and subscriptions for illegal cable service are dirt cheapthe government’s monopoly is bound to be pricier. Still, bureaucrats have a plan for that too: they aim to buy up all the cable operations run by a hodgepodge of local authorities and bring them under a single national owner.

Currently the only outfits affected by the plan are fancy hotels and compounds where foreigners live, but media executives assume that Beijing will try to funnel all satellite television through its company. Foreign TV types are already grumbling about the monopoly’s proposed uplink charges. “The fees are prohibitive,” says one foreign broadcast executive in China. “But if the market was going to grow in some exponential fashion through this, people would be willing to listen to anything.” An executive from a rival company has similar thoughts. He declares that he won’t change editorial content to please China’s censors. “But,” he adds, “given the size of the investment, the new policy does encourage broadcasters to be cautious. No one wants to ruin their chances.” If the plan goes through, China’s couch potatoes are in for a whole lot more programmingthough it might be so mild they’ll yearn for the good old days of pirated signals.