August 26, 2002
Staff Reporter of THE WALL STREET JOURNAL
BEIJING -- It seemed like a good idea at the time.
Chinese television viewers aren' permitted access to foreign programming, but some manage to kick back in front of CNN or the BBC anyway. The government, vexed by illicit viewing through the piracy of satellite signals and the purchase of unlicensed receiver dishes, sought in February to tighten its grip on the TV clicker by ordering all foreign channels to beam their signals into China only via Sinosat-1, a state-owned satellite.
Here' how it has turned out so far: The [..] Falun Gong hijacked Sinosat' output for a week, the illegal market for satellite TV technology is thriving as never before, and both the state regulator -- which has the official equipment-sales monopoly -- and approved foreign broadcasters are losing business, in a potentially lucrative market where more than 300 million households boast a TV set.
Launched to extend the reach of state television channels into remote or mountainous regions, Sinosat wasn' exactly keeping viewers glued to their seats. Since the February edict, however, major American, Hong Kong, Japanese and other regional sports, news and entertainment channels have signed on to the viewing platform. Even before February the pirates were skulking about the satellite straits, but with all those interesting foreign signals now conveniently gathered together on Sinosat, they are dashing about so fast to meet demand that the parrots are fairly falling off their shoulders.
Ordinary Chinese today can watch 26 foreign channels, as well as dozens of domestic ones -- hardly the control of content the government had in mind. Already about 45 million people view foreign channels picked up on large, illicit satellite dishes, according to James Mitchell, a media analyst with Goldman Sachs in Hong Kong, and their number is growing rapidly as sales of
pirated Sinosat decoders take off.
Foreign broadcasters, including the British Broadcasting Corp. and AOL Time Warner Inc. Cable News Network, Home Box Office and Cinemax, are on the losing end along with Beijing. Many blame a recent slowdown in orders on the pirates. Some express their dismay bluntly (though few are willing to risk their relations with Beijing by being named). "Inflexible government policy, combined with an inability to police and enforce that policy, has left the field open to pirates," says an executive with a foreign TV company. "That's the story of business in China today."
It isn't hard to understand what the broadcasters fear -- that they could share the fate of their Hollywood brethren, whose work is savagely pirated in China, with copies of prerelease blockbuster digital videodiscs selling on the street for about a dollar apiece.
What Beijing fears, apart from losing revenue to illicit equipment vendors, is losing control. That' why, by law, foreign satellite channels may be made available only to hotels that rate at least three stars, catering to foreign guests, and to apartment blocks and office buildings designed for use by expatriates. Each hotel or building has contracts with foreign broadcasters to receive their channels, delivered from Sinosat to a big dish often mounted on the roof.
The Sinosat regimen was supposed to lift, say, the BBC' finger from the On/Off switch and replace it with Beijing' -- and it has. If the Propaganda Department sees anything it doesn' like, it can cut off the broadcast. It can even strike at a broadcaster' advertising revenues by keeping it off the air for a period.
But the government system' outdated encryption technology opened an irresistible route of attack to pirates. Installing a satellite dish and set-top box takes about two hours. The hookup can easily be adapted to feed apartment buildings connected to the local cable network, and it is relatively cheap. In Beijing, one salesman estimates, it costs under 2,000 yuan ($240); in southern China, where competition is keener, about 800 yuan. A foreign company typically used to be able to charge $4,000 to $5,000 a year to supply one channel to a 200-unit apartment complex. "Multiply that by 20-plus channels," says the foreign-TV executive. "It' a lot of money." [..]
Write to David Murphy at [email protected]
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