Faced with frequent regulation, when will Internet TV usher in healthy development?

In July 2016, the State Administration of Radio, Film and Television issued a document to the seven major Internet TV integrated broadcast and control platform licensees, clearly stating that OTT (Internet TV) must be manageable and controllable, that OTT platforms cannot be used to carry out IPTV business in disguise, and that IPTV+OTT business must not be carried out without authorization.

The State Administration of Radio, Film and Television also requires that major Internet TV licensed institutions should strictly control and rectify problems existing on the platforms, otherwise they may face the penalty of license revocation.

It should be pointed out that the previous Internet TV rectification, which started in mid-2015, mainly focused on the public Internet market, with a focus on the non-compliance of content and applications of Internet TV terminals for individual retail. After more than a year of rectification, the cooperation between Internet TV licensees and terminal companies has become more standardized, showing the effectiveness of the General Administration's policy regulation.

As for this new round of Internet TV rectification, the focus is on the Internet TV market developed by telecom operators. The State Administration of Radio, Film and Television clearly stated in the notice:

1) IPTV services cannot be carried out in disguised form using OTT platforms, and IPTV+OTT services cannot be carried out without authorization. 2) Television services carried out in cooperation with telecommunications companies must be regulated in accordance with the provisions on the integration of three networks (Order No. 65) and other relevant IPTV regulations.

The author analyzes that there are two major backgrounds for this latest round of Internet TV regulation.

First, the policy logic. With the latest release of the "Measures for the Administration of Private Networks and Targeted Broadcasting of Audiovisual Programs" (Order No. 6 of the General Administration), new media will be regulated from two dimensions: operator private networks and the public Internet. Previously, the supervision of the operator private network market was relatively loose, and there were some skirting the rules and even violations.

The second is the market background. According to data released by China Mobile and other companies, telecom operators have developed tens of millions of users through OTT, becoming an important player in the TV market. This has also brought about some problems such as piracy and pornography. This channel must be incorporated into a manageable and controllable system as soon as possible.

Different actions for rectification

This rectification of Internet TV, which is mainly aimed at private networks, is very strict. The State Administration of Radio, Film and Television requires that in accordance with the provisions of relevant documents such as Document No. 181 and Order No. 6, non-compliant products and irregular cooperation including content sources, application access, user authentication, and billing management be rectified through upgrades or shutdowns and transfers.

In fact, after receiving the notice from the State Administration of Radio, Film and Television, some Internet TV licensees and telecom operators have already taken action. However, due to the differences in their understanding of the policy and their interests, the pace of rectification is not consistent.

Judging from the progress of rectification, Future TV and CNR Galaxy have a thorough understanding of the policy and are quite thorough in implementing the rectification, fully following the requirements of the State Administration of Radio, Film and Television in terms of end-to-end control, billing authentication, and live broadcast rectification. It is understood that Future TV and CNR Galaxy have communicated with telecom operators and related partners to recover all rights to terminal upgrades and application stores, thoroughly rectify the form of live broadcast products, and carry out technical upgrades in content sources, application access, user authentication, and billing management to meet the requirements of manageability and control.

In comparison, the other Internet TV licensees are more concerned with the market, and their attitude towards rectification is vague, and the progress is relatively slow. Some licensees have even taken no action. It is understood that BesTV has not taken any rectification action so far. Guoguang and Wasu, like BesTV, have not responded positively to the rectification due to their previous marginalization. Southern Media in Guangdong and Mango in Hunan have both chosen to withdraw from the operator market and turn to IPTV, while there are basically no major rectification actions outside the province.

As a telecom operator with a huge user base, China Mobile played a major role in promoting the development of OTT at the beginning. Some provinces have "deviated" from the policy, and market orientation overrides everything. However, in the long run, the current stage of land grabbing will not be conducive to the healthy and sustainable development of the business. As a central enterprise with a sense of social responsibility, China Mobile, which has always been politically sensitive, has realized the risks. Therefore, regarding this rectification, China Mobile Chairman Shang Bing stated that China Mobile's Internet TV business will actively cooperate with the radio and television in this rectification.

However, at the local telecom operator level, although the top management of China Mobile, the leading participant in Internet TV, has expressed its position, the attitudes of different regions vary, and there are also different speculations on the implementation strength of the policy of the State Administration of Radio, Film and Television. Some telecom operators are actively rectifying, while others are indifferent or even continue to commit crimes in defiance of the law.

It is understood that Jiangxi Mobile is a place with a relatively positive attitude towards rectification. It has cooperated with the Internet TV licensee and started the upgrade work in late September. After the upgrade is completed, the telecom operator will only serve as a sales channel for China Internet TV platform terminals and membership services, mainly promoting membership services in business halls, while all systems such as user management, billing authentication, and content operations will be fully controlled end-to-end by the licensee.

In comparison, there are also telecom operators such as Shandong Mobile, which violated the law in its bidding requirements after the SARFT issued a rectification notice, and the provisions on cooperation model and cooperation agreement in the bidding documents were clearly contrary to the regulations and policies of the SARFT. Even so, except for Future TV, CNR Galaxy, and Wasu, BesTV, CNR, Mango, and Southern Media all responded to the bid.

Of course, it is undeniable that the attitude of Internet TV licensees will have a correlated impact on the telecom operators that cooperate with them.

Fair regulatory enforcement

It must be acknowledged that Internet TV has become an important player in the TV market due to its advantages such as massive content and portable viewing. According to statistics from Aowei Cloud Network and others, by the end of 2015, the number of Internet TV terminals in my country had reached 165 million, and will further increase to 213 million in 2016, with a penetration rate of more than one-third of household TV terminals.

The relevant regulatory authorities such as radio and television are obviously aware of this. Their policies on Internet TV have never been to suppress its development, but have always been aimed at regulating its development. The relevant policies they have issued are also to hope that the entire industry will enter a healthy development track. This starting point is beyond doubt, and it is also the motivation for rounds of rectification.

It should be noted that with the rectification targeting the public Internet last year and the rectification targeting private networks this time, Internet TV has become the best channel for managing terminals and users at a controllable level among many new media business forms.

However, it should also be noted that the Internet TV market has developed on the basis of broadband Internet. In addition, there is obvious competition among the seven Internet TV licensees. This determines that telecom operators have a higher voice in the Internet TV market and Internet TV licensees are relatively weak.

Telecom operators' requirement for Internet TV business is to attract users through more live broadcasts, on-demand services and applications, so as to serve their broadband and family strategies. This starting point is not completely consistent with the "manageable and controllable" demands of radio and television. As a result, telecom operators, Internet TV licensees and regulators have formed a complex "triangle relationship".

Judging from the developments over the past few years, it is precisely because of the demands of all parties and the differences in the structure that the phenomenon of bad money driving out good money in the Internet TV market has occurred repeatedly, which ultimately harms the future of the entire Internet TV industry.

Therefore, the subsequent effect of this round of Internet TV rectification must rely on all major Internet TV licensees and telecom operators to continue to implement the relevant policy requirements of the State Administration of Radio, Film and Television, so that the telecom operators' Internet TV platforms can fully return to the track of compliance and ultimately maintain the healthy development of the Internet TV market under control.

Otherwise, the inconsistent understanding and implementation of the policy by different Internet TV licensees and telecom operators will inevitably lead to an "honest man suffers a loss" effect, making law-abiding people the biggest victims and ultimately leading to a regulatory dilemma of "death if controlled, chaos if let go".

The focus of big video is to look at the bigger picture of big video. The main participants in large-screen TVs include cable TV, IPTV and Internet TV. Relevant policy supervision should perhaps take into account the entire big video market landscape.

There is no need to be shy about saying that there has always been a voice in the industry that the rapid development of Internet TV is the main reason for the loss of cable TV users, and the related pure OTT and even IPTV+OTT have also disrupted the normal regulatory order of IPTV. This is the logic behind the regulation of Internet TV.

On the contrary, legal and compliant Internet TV and cable TV do not have much similarity in product form, there is no competition, and there is even complementarity. In recent years, broadcasting and television operators have launched DVB+OTT services one after another, and even used DVB+OTT as a corporate development strategy, and have also carried out extensive and in-depth cooperation with some Internet TV licensees, which is very telling.

As for OTT and IPTV, in terms of network attributes, OTT is based on public Internet transmission, while IPTV is based on virtual private network transmission; in terms of business system, IPTV and DVB are more homogeneous, while OTT does not have live broadcast; in terms of technical system, there are obvious differences between OTT and IPTV in front-end architecture, content distribution and other aspects.

The following figure is a comparison between DVB, IPTV and OTT:

From the perspective of business model, OTT is positioned as a supplement to IPTV and DVB.

In fact, IPTV, another valuable area under the supervision of the State Administration of Radio, Film and Television, also has many behaviors that violate policy regulations. In terms of IPTV broadcast control rights, the State Administration of Radio, Film and Television has formulated a two-level IPTV broadcast control platform operation system, and the integrated broadcast control platform adopts a central and provincial structure. In April last year, the State Administration of Radio, Film and Television issued Document No. 97, requiring that "provinces cannot provide program signals without authorization before they have built IPTV integrated broadcast control sub-platforms that meet the requirements of the General Administration's documents and have not connected with CCTV's IPTV integrated broadcast control platform in accordance with the specifications." In fact, some provinces still go their own way for various reasons. For example, Jiangsu Telecom IPTV has not achieved the "dual billing and dual authentication" connection between the radio and television integrated platform and the telecommunications transmission system; nor has it developed education, music, information and other audio-visual VOD services without authorization through the content broadcast control of Jiangsu Radio and Television General Station.

Therefore, in addition to maintaining the same standards and scales within Internet TV, the same standards and scales must be maintained in regulatory review for the entire big video industry. Both Internet TV business and IPTV business should be strictly implemented in accordance with the relevant policy requirements of the State Administration of Radio, Film and Television.

Practice has shown that if we continue to indulge in some behaviors that are not in compliance with orders and prohibitions, it will damage the authority of the policy and impact the regulatory system, thus triggering the profit-seeking impulse and further violations in some places. On the other hand, the most important thing for the policy to win the support of the public is to be fair and just, and treat everyone equally. Violators should be severely punished, and law-abiding people should be treated fairly and justly, so that the story of "the boy who cried wolf" will not continue to be played out.

Only in this way can supervision be effectively implemented not only in the Internet TV industry, but also in the entire big video industry. Otherwise, there will always be "motivation to violate regulations."

Good development in the future

We have talked about so many regulatory issues, but if the Internet TV industry is always in the storm of rectification and reform, this shows that there are some deep-seated reasons.

It must be recognized that in addition to its media attributes, Internet TV also has Internet attributes that cannot be ignored. Internet technology is developing rapidly, and business forms are emerging in an endless stream, which is bound to be reflected in the form of Internet TV, including multi-screen interaction anytime and anywhere, and an open interconnected system.

Therefore, compared with DVB and IPTV, Internet TV is very consistent with the habits and needs of young users in terms of technological advancement, business model and user experience. Therefore, the emergence of Internet TV has brought young people back to the TV and played an indispensable role in maintaining the mainstream cultural form. General Secretary Xi Jinping attaches great importance to the guidance of new media, the integration of new and old media, and the dissemination of mainstream voices through new media, and Internet TV is obviously a path that can be relied on.

But the reality is that due to excessive regulation of the Internet attributes of Internet TV, its media function has been castrated, which has put Internet TV in a very embarrassing situation.

First of all, from the current perspective, Internet TV has become a neutered media product because it cannot provide live broadcast services. According to the relevant requirements of Document No. 181, "At this stage, the Internet TV integration platform mainly supports video on demand and graphic information services, and the technical interface for live broadcast services of radio and television programs shall not be opened for the time being." Imagine that a young person turns on the Internet TV after returning home at 7 o'clock every night, but cannot watch the "News Broadcast", and he will not necessarily turn to DVB, IPTV, etc. to watch.

Secondly, although the number of Internet TV users is increasing day by day and the media value is becoming increasingly apparent, due to concerns about the attributes of the Internet, the existing regulatory design of Internet TV not only removes live broadcasts, but also makes Internet TV completely closed to participants other than licensees under the idea of ​​being manageable and controllable. As a result, the business model of Internet TV is too single and licensees do not have a mature profit model.

The dual attributes of Internet TV as a media and the Internet have brought about a contradiction between industrial development and supervision. On the one hand, Internet TV needs to act as a "vanguard" in seizing the public opinion front, but on the other hand, it is difficult to have a profitable business model under the existing framework. It is not difficult to understand why Internet TV licenses are caught in a dilemma, as reflected in repeated violations of regulations.

Over the past decade, Internet TV has been regulated mainly from the perspective of media attributes and has initially formed a system. Next, regulators should perhaps adjust the regulatory system from the perspective of industry and market development to allow Internet TV to move towards a mature and healthy development path as soon as possible.

Development should be the new normal for Internet TV!

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.