Shanghai Media Group (SMG) confirmed yesterday that one of its subsidiaries has secured the first license to produce and broadcast content for internet protocol TV (IPTV) and mobile phone TV.

An SMG executive named Gao declined to give more details, but the State Administration of Radio, Film and TV (SARFT) said on its website on April 30 that Shanghai TV had been awarded the license.

"Licensing is a big question for any player in the market," said Zeng Huiming, president of the SARFT's Radio and TV Information magazine.

The SARFT announced last July that it would strengthen supervision of all broadcast content on the internet, TV and mobile communications networks with a new licensing system. Companies had to make applications in the six months from October, but this is the only result to have been published so far.

SMG set up two subsidiaries to broadcast via IPTV and mobile TV networks.

IPTV is especially suitable for providing value-added services through TV sets with digital set-top boxes or on the internet. It is regarded as a growth area for broadcasters, who are seeking new channels since TV reached over 95 percent market penetration.

Telecom operators, which have built several nationwide broadband networks, also need multimedia content for their high-speed networks and are poised to enter the market with huge financial capital.

An executive from the China Central Television (CCTV) subsidiary CCTV Network TV Development Co Ltd said yesterday that his company was still working for a license, but said it was a "very sensitive moment" and declined to reveal any details.

The company was believed to be a hot candidate for the first license along with Shanghai TV, but now several other CCTV subsidiaries are competing for licenses.

Luo Ying, an executive with Tiantian Online, a company backed by telecom operator China Netcom and the first telecom-backed firm to bid, confirmed they were in the race for a license but could not give a timetable.

Industry sources said the country's biggest fixed-line carrier, China Telecom, ordered 200,000 set-top boxes and required provincial subsidiaries to give them away free of charge to subscribers to encourage use of IPTV.

An anonymous industry analyst in Beijing said that, due to the interest groups behind many applicants, the SARFT needs to evaluate every application carefully. Applicants were right to remain silent during the process, he added.

Zhang Haitao, SARFT vice-minister, said in March that his administration would adopt an open attitude to the IPTV license issue.

Cable TV and telecom operators were previously forbidden from operating in each others' markets, but now a trend of convergence is becoming clear.

While releasing the first license, SARFT said it will increase regulation on broadcasting through set-top boxes and mobile phones. "We must promote development, but we also need to regulate market access and daily supervision," it said on its website.

Broadcasting through a TV set can only be conducted by provincial-level broadcasters or their subsidiaries. On other platforms like the internet, operators must get appropriate content provider and broadcaster licenses.

The SARFT regulations issued in October ruled out the participation of foreign investment in the operation of audio and video content broadcasting on TV sets, the internet and other platforms.

(China Daily May 11, 2005)