The State Administration of Radio, Film and TV (SARFT) yesterday made an unusual move, giving the green light for private capital to be invested in the digitalization of China's TV network. This is an attempt to push forward the slow transformation from an analog system to a digital one.

SARFT yesterday published a circular on its website that requires all digital TV trial cities to speed up the transformation from analog TV programmes to digital TV programmes.

The administration said State-owned TV broadcasting and production organizations can introduce private capital into the transformation process on condition that the State-owned organizations take 51 per cent of the joint ventures.

TV broadcasters are also allowed to co-operate, invest, or even acquire counterparts in other regions to expand their business. This is another major development as broadcasters and network operators are usually allowed to conduct businesses only in their own regions.

"SARFT is very dissatisfied with the progress of the deployment of digital TV, so the circular is just a step to accelerate that process," said Zeng Huiming, editor of the Radio and TV Information (RTI) magazine, under SARFT.

Zhang Haitao, vice-minister of SARFT, said in March that digitalization is something vital to the TV and radio industry, which should use it as a tool to speed up their reforms and increase competitiveness in their competition against telecom operators and new technologies.

In 2003, SARFT planned to have 30 million digital TV subscribers by the end of 2005, but according to RTI there were only 1.07 million households watching digital TV programmes by the end of 2004.

SARFT, trying to accelerate the pace, decided to launch a total transformation strategy based on the Qingdao model, in which TV viewers in one city or residential area are encouraged to adopt digital TV. They get a free set-top digital box if they promise to pay subscription fees for a number of years.

However, money has become a problem for cable TV operators because a set-top box usually sells for 500 yuan (US$60). Firms do not have sufficient capital to buy those boxes first and then wait to get repaid from subscriptions.

The introduction of private capital aims to ease this situation.

At the same time, the SARFT circular also encourages cable TV operators to apply for loans under an agreement between SARFT and the China Development Bank to encourage the deployment of digital TV.

They can also apply for an exemption of business tax, which has already been achieved in Qingdao, a coastal city in East China and a pilot city.

SARFT also encourages operators to talk to their local governments about subscription fees, which vary from 12 yuan (US$1.4) to 18 yuan (US$2.17) per month.

(China Daily July 22, 2005)