In 2010, the Taiwan Authorities launched the “Digital Convergence Development Program” scheduled to be implemented from 2010 to 2015. The basic goal of digital convergence is to enable transmission of the same audio/video content over different delivery systems such as telecommunication, broadcasting and Internet platforms. After Taiwan’s digitalization is completed in 2015, Taiwan’s broadcasting market is expected to generate products and services valued at US$4.4 billion.
Terrestrial (wireless) TV
The Taiwan Authorities are promoting 2012 as the turning point for Taiwan’s High Definition (HD) Digital TV (DTV) systems and equipment. As a result, on July 1, 2012, Taiwan’s terrestrial TV will shift from an analog to digital signal system. Due to digital convergence, fixed line, mobile and Internet networks will gradually consolidate, underlining the importance of a Digital TV (DTV) technology ecosystem. The Taiwan Authorities, for example, have early on requested that key broadcasters’ infrastructure be prepared to broadcast the 2012 Summer Olympic Games in HD. The Summer Olympic Games are just one of the many programs being used by Taiwan Authorities to attract local audiences in purchasing digital set top boxes or new DTV sets.
Since 2003, the Taiwan Authorities have pushed for the digitalization of the terrestrial TV infrastructure. This is because digitalization allows more efficient usage of spectrum, creates more channels and provides more content variety /applications for industry stakeholders. In order to watch digital terrestrial TV, households require digital TV sets or a set top box that converts analog signals to digital ones.
Since January 2012, all TV sets sold in Taiwan were required to be equipped with digital set top box (STB) capacity. As a result, the Taiwan Authorities promoted an island-wide subsidy assistance program providing free set top boxes to low income households (those with annual income of less than NT$120 thousand) predominately in mountainous and remote areas. This subsidy program is expected to be completed in June 2012. The Taiwan Authorities have also requested that Multiple System Operators (MSO) provide more than one free set top box to their cable TV subscribers.
Through its existing high-speed broadband network infrastructure, Taiwan will be able to accelerate the adoption of DTV systems, standards and equipment in order to construct new video services, applications and network system upgrades. By 2015, Taiwan’s goals are to reach 6 million fiber optic subscribers, 2 million wireless broadband subscribers, a Digital Cable TV household penetration rate of 75% and a new video service penetration increase of 50%.
Many countries have developed broadband infrastructure to help stimulate their economies. By October 2011, Taiwan’s combined telecom and cable broadband household penetration rate was 68%, already close to its 2015 goal of 75%. However, according to the latest statistics from last September, the cable TV digitalization rate, for example, has only reached 9.45%. Taiwan regulators continue to urge further digitalization of the cable TV infrastructure as a second broadband information highway.
Taiwan’s cable TV system is divided into fifty-one regions, dominated primarily by 5 major MSOs and basic cable pricing model guidelines are determined by the local regulatory bodies. Currently, pricing differs among regions but Taiwan regulators are now planning a more uniform pricing structure. Subscribers currently pay a monthly average of approximately US$20 for more than one hundred basic cable TV channels. In order to attract premium subscribers, some operators compete in the non-basic channel market by offering higher quality program content for paid premiums above the average monthly fees.
According to Taiwan’s digital convergence policy, new operators will be required to have fully-equipped digital content systems and equipment in place by 2015 before having their licenses renewed.
Internet Protocol Television (IPTV)
IPTV is a system that delivers television services through internet protocol suites over a packet-switched network such as the Internet. There are two IPTV operators in Taiwan: Next TV and the incumbent telecom carrier, Chunghwa Telecom, which operates Multimedia On Demand (MOD). Due to current telecom regulations, IPTV operators are only allowed to function as a content re-distribution platform with no legal rights/permission to produce content for their subscriber’s base. Hence, IPTV’s rate of adoption has been relatively restrained and by 2011, its combined household penetration rate was only 8.5%.
MOD was started by the island’s incumbent telecom carrier, Chunghwa Telecom in 2005, and has already reached its stated goal of 1 million MOD subscribers in 2011. Chunghwa Telecom continues to add more HD channels and content (mainly purchased from abroad) to expand and maintain its MOD subscriber base.
Next TV, owned by Hong Kong's Next TV, entered the Taiwan market in December 2010. Next TV can be accessed by an operator provided set top box, enabling content distribution through the internet. Next TV owns 6 channels, but only two channels, E-News and E-Movie, have been approved by the National Communications Commission (NCC). Due to its adult oriented nature, Next TV may not appeal to many households with children.
There are 172 radio stations (excluding school radio stations) in Taiwan using the 222 MHz frequency band (FM) and 122 MHz frequency band (AM). According to ACNielsen, the total radio audience is 6 million people. In 2000, Taiwan launched the Radio Digitalization Program, utilizing the European Digital Audio Broadcasting (DAB) standard. Although a total of 6 radio stations subsequently applied for DAB licenses, only one DAB radio station remains in operation today. DAB eventually failed to become a widely used standard in Taiwan as was the case in most other countries. The key disadvantage of this European standard was its high cost base, not to mention a lack of audience to support it. As a result, there have been no further policy incentives to develop DAB in Taiwan.
In the U.S., more than 95% of the radio stations use the HD radio standard. Since it has been accepted as a mature technology by the U.S. radio industry, Taiwan’s radio industry is presently lobbying for regulations to change standards from DAB to HD Radio.
The benefit of the U.S. HD radio standard is that it occupies fewer frequencies, while playing the same program on both analog and digital channels. Also, there is no extra cost for creating new programs on digital channels, enabling listeners to stay on the same channel for the same digital program. According to Taiwan regulations, since both analog and digital signals share the same channel, there is no need to apply for another license. Also, the infrastructure cost is also lower since upgrading existing infrastructure means only complementing existing equipment, instead of building an island-wide network of radio transmission stations.
In September 2009, the Ministry of Economic Affairs (MOEA) launched the ‘MOEA Digital Content Industry Promotion Office (DCIPO)’ with the aim to develop Taiwan into a world leader in entertainment and creative multimedia applications. The digital content sub-sector is generally being promoted as a case model from which to draw lessons and apply to other sub-sectors in developing Taiwan’s digital economy. The Industrial Development Bureau of MOEA has thus far committed to invest US$131.7 million from 2009 – 2013 to develop the digital content space.
MOEA is also developing a ’Digital Video Program’ to upgrade broadcast content. Digital video and 3D/4D special effects production (and post-production) will be key concentrations in developing Taiwan’s digital content infrastructure. Post production of digital content, for example, is expected to be in high demand in 2012 due to the recent popularity of Taiwan and other Asian movies increasingly using digital effects. In addition, the demand for post production in special effects is also expected to rise for lighting, cutting and printing equipment.