TVB supported the legislative approach proposed by the Government, given the review of the broadcasting environment planned for 1998.
Regarding video-on-demand (VOD) regulation, TVB was concerned about issues of programme standards, definition of "broadcasting" in relation to the provision of a programme service, transmission requirements for VOD programme services and level playing field for broadcasters set out in TVBs submission.
In the long term TVB considered that the Government should address issues such as formulation of a comprehensive information policy, review of the regulatory framework on broadcasting to cater for technological and infrastructure development and ways to enhance competitiveness of local TV broadcasters in the international TV market. TVB looked forward to working with the Government in addressing these issues in the upcoming review of the broadcasting environment in 1998.

Views of Asia Television Limited (ATV)

(LegCo Paper No. CB(2) 923/96-97(02))

3. Representatives of ATV shared TVBs views and was particularly concerned about the competitiveness of local TV broadcasters in the TV market of the Asia Pacific region. ATV understood that one of the main purposes of the Governments introducing VOD services to Hong Kong was to give viewers more programme choices. Such purpose could not be achieved if the nature of programmes broadcast by VOD service operators was the same as that provided by conventional TV broadcasters. As such "television programme" should be clearly defined in order to differentiate VOD from conventional TV broadcasting.

Views of Wharf Cable Limited

(LegCo Paper No. CB(2) 923/96-97(03))

4. Whilst supporting the legislative approach proposed by the Government, Wharf Cable opined that there was a change of policy vis-à-vis that set out in the consultation paper on regulation of VOD in 1996. Wharf Cable did not consider it appropriate to pre-empt any change of policy or regulatory framework in the review of the broadcasting environment planned for 1998. As such the proposed regulatory framework under the Bill should not be considered an interim measure as submitted by the Hong Kong Telecom IMS Limited.

5. Wharf Cable highlighted the following points on the Bill -

The Bill proposed a new form of pay TV broadcasting called "programme service" which was to be distinct from subscription television. However, Wharf Cable was concerned that the definition of programme service, which was based on a technology definition, should be drawn more precisely to achieve that distinction, i.e. to prevent programme service from encroaching upon subscription television services. In this connection, Wharf Cable suggested the definition should be revised to -
1. make clear that simultaneous transmissions were not included; and
2. add "provides control of play functions (that is, pause, fast forward and rewind)".
The definition of programme service restricted VOD broadcasts to transmissions within Hong Kong. This meant that transmissions from outside Hong Kong were unregulated and therefore bypassed Hong Kong legislation. In this connection, Wharf Cable suggested that the definition should embrace all VOD services terminating in Hong Kong. This could best be achieved by removing the phrase "within Hong Kong" from the definition.
The definition of "programme service" should include both pay and free service (including service sponsored from advertising revenue) and VOD should be specified in the definition.

Views of Hong Kong Telecom IMS Limited (HK Telecom IMS)

(LegCo Paper No. CB(2) 923/96-97(04))

6. Representatives of HK Telecom IMS went over their submission and highlighted the following -

HK Telecom IMS agreed with the regulation of VOD under the Television Ordinance as an interim measure, pending a comprehensive review of the television environment planned for 1998.
HK Telecom IMS endorsed the provisions of the Bill and hoped that the Bill could be enacted in the first quarter of 1997 with the licensing process commencing immediately afterwards. HK Telecom IMS had announced its intention to launch VOD commercially in mid-1997 subject to the obtaining of the necessary licence from the Government. It was hopeful that the licence was granted in time.
The proposed commercial launch of VOD by HK Telecom IMS would label Hong Kong as the world leader in the provision of VOD. A range of interactive multimedia services including home shopping and electronic games would be offered at the same time as VOD. Hongkong Telecom had committed very substantial investment to roll out a major broadband infrastructure to support the development of the interactive media services environment in Hong Kong. This was a world unprecedented investment in broadband telecommunications infrastructure and would establish Hong Kong as the pre-eminent hub for multimedia services in the Asia Pacific Region.

7. HK Telecom IMS did not agree with Wharf Cables proposal to exclude simultaneous transmission from VOD programme service definitions for the following reasons -

Technically, pay TV was a point-to-multipoint one-way transmission while VOD programme service would be a point-to-point two-way transmission.
VOD transmission could be simultaneous or non-simultaneous. Technically, it was correct to say that VOD was transmitted non-simultaneously since each VOD transmission coming from the server was separate and distinct, and that if more than one person watched the same movie at different times. However, one could argue that VOD was simultaneous in that it was possible for more than one person to watch the same movie at roughly the same time, even though they might be separated by a few seconds, or even milli-seconds. It could also be the case that the same movie was downloaded by more than one person from two or more servers spontaneously at the same time. In the judgement on the judicial review concerning pay TV and VOD, Mr Justice SEARS did not qualify the timing of transmission by saying whether VODs transmission should be simultaneous or not. This showed that time was not an issue to describe what was VOD.

Views of Hutchison Telecommunications (Hong Kong) Limited (Hutchison)

(LegCo Paper No. CB(2) 923/96-97(05))

8. Representative of Hutchison briefed members on his submission and highlighted the following points -

Hutchison considered that VOD programme services should not be required to be licensed. The inclusion of VOD in the Bill appeared to run counter to the principle of deregulation, by increasing rather than decreasing regulation with no evidence of even a minimal impact on broadcasters. A review in 1998 was not an appropriate check. The objective of regulating the content of VOD was better achieved by relying on the general application of the Control of Obscene and Indecent Articles Ordinance (COIAO) in the same way that they would apply to films distributed through video rental stores.
Hutchison opined that no case had been made for the Governments proposed numerical limitation of the number of programme service providers. The introduction of such a restriction via a licensing regime raised many complex technical and policy issues, but that these should not be dealt with in the context of broadcasting legislation.
Hutchison considered that the Bills approach of essentially piecemeal amendment to the Television Ordinance might have consequences in other contexts. Hutchisons specific comments on the Bill were as follows -
1. Regarding the definition of a transactional service under para 3 of Schedule 1A to the Bill, it was not clear why "affording facilities" and "using the same means of telecommunication by which the service is provided" were included and the words "that includes" were ambiguous. An alternative definition was suggested as follows:
  "The provision of a transactional service (which may include a service provided through the use of television programmes) under which the person receiving the service may, from the place of reception of the service, enter into a transaction for the receipt of goods or services. A transactional service does not include a service which permits the ordering or receipt of a service of which television programmes constitute an essential feature."
2. The meaning of receive, directly or indirectly, any fee and essential feature in Schedule 1A, paragraph 5, were likely to become increasingly problematic as video content on the Internet increased. The Internet (for which access fees were levied) should be subject to a specific express blanket exemption for any service delivered over it. A new definition for the Internet was suggested (Para 8(c)(i) of these minutes referred).
3. The definition of "disqualified person" was used in the existing Ordinance to impose ownership restrictions and included a company which "transmits sound". It was arguable that the transmission of "sound" included the transmission of voice traffic by fixed network and mobile operators, in which case, such operators might be regarded as "disqualified" under the Ordinance. Hutchison recommended that this ambiguity be addressed by excluding all telecommunications operators from the definition of "disqualified person" unless they were otherwise disqualified.

Views of New T & T Hong Kong Limited (New T & T)

9. Representatives of New T & T considered that the issue of a VOD programme service licence to HK Telecom IMS, a member of the Hong Kong Telecom group of companies which included, inter alia , the Hong Kong Telephone Company Limited (a fixed telecommunications network services (FTNS) licensee), would entrench the dominance of that group in the local access market (i.e. market for the supply of electronically provided information, transmission and/or entertainment services to residents in Hong Kong). This was because local competitors would not be able to break into the local access market through the inertia of customers. As such, if a programme service licence was issued to HK Telecom IMS, customers confronted with an imbalanced set of choices would be more likely to stay with Hong Kong Telecom than to move to its competitor(s). Hong Kong Telecom Group might bundle products which would further multiply the effects of customer inertia on the new competitors. Hong Kong Telecom Group might then be able to control what its competitors could effectively do to compete, as well as controlling what customers purchased, and from whom. New T & T therefore submitted that Hong Kong Telecom IMS should not be issued with a programme service licence.

Views of New World Telephone Limited

10. Representatives of New World Telephone Limited opined that as many new entrants should be encouraged to enter the market for VOD services, in order not to suppress the development of the technology. This could create robust competition to achieve the Governments objective of providing choice to consumers and maintain Hong Kong as the telecommunications hub in Asia. In this connection, the new entrants to the FTNS market should be provided an opportunity to provide VOD programme service.

Members views/questions

Encroachment on subscription television licences

11. In response to a members enquiry, Wharf Cable considered that the definition of point-to-point which included the phrase more than one at the same time could be (mis)interpreted to mean that simultaneous point-to-point transmissions were to be allowed. This would enable a VOD programme service licensee to provide Near VOD services (i.e. similar to the Super Cineplex service provided by Wharf Cable) which were in fact subscription television services. A pay TV licensee was, however, not allowed to apply for a VOD programme service licence and therefore could not provide such programme services.

12. Representatives of the Administration stressed that, from a technological point of view, pay TV service was a point-to-multipoint transmission while a VOD programme service would be a point-to-point transmission. Super Cineplex service broadcast at regular intervals on a point-to-multipoint basis was not a VOD programme service which was provided at any time on a point-to-point basis and at the request of the viewer. Provisions governing cross-ownership, which was not a technological issue, were set out in the Television Ordinance and the Bill.

Bundling of programme services with other franchised telecommunication services

13. Some members enquired whether there would be, as put forward by New T & T, bundling of programme services with other franchised telecommunication services whereby creating embedded monopoly. Representatives of HK Telecom IMS pointed out that the commercial operations of HK Telecom IMS was distinct and separate from the Hong Kong Telephone Company Limited which was an FTNS licensee.

14. Representatives of the Administration said that the regulatory frameworks for a VOD service provider (under the Bill) and carrier (under the Telecommunication Ordinance) were separate. The framework under the Bill required all licensees to conform to much the same conditions as other licensees under the Television Ordinance. The Telecommunication Ordinance and the FTNS Licences required the carrier to provide a telecommunication service to the future programme service licensees under tariffed terms and conditions. In other words, the commercial operations of a programme service licensee and an FTNS licensee would have to remain distinct and separate. Programme service licensees would be obliged to make use of the fixed telecommunication networks to transmit their service to subscribers, and any FTNS licensee transmitting a programme service would be obliged to transmit other programme services on the same terms and conditions. The proposed regulatory framework was even-handed, and would not favour one applicant over another.

Regulation of VOD

15. The Chairman asked the reasons for regulating VOD services under the Bill rather than bringing them within the ambit of COIAO. The Administration considered that VOD programme services would have an impact similar to other television services for the following reasons -

Like television, VOD programme services were transmitted directly to the home, so that subscribers could access them direct from their television.
Like television, such services would offer a range of programming, including films, documentaries, childrens programmes, comedy and variety shows.
Like television, such services would offer the same choice of programming to all subscribers, albeit at times of their own choice on a point-to-point basis.

16. The Administration considered that VOD television services should be regulated in the same way as other television services on the following grounds -

Television was an immensely powerful medium with direct access to the home.
It was therefore important to ensure that the content adhered to standards reflecting the views of the community.
Ownership of television services should not be allowed to become concentrated in a few hands.

17. In response to the New T & Ts suggestion that HK Telecom Group should be disbarred from offering VOD services, the Administration stressed that the regulatory framework under the Bill was intended for companies seeking to apply for VOD programme service licences rather than tailor-made for a particular company. A transparent and consistent regulatory framework was required to allow those companies which were ready and willing to develop VOD programme services to tender for licences. If no regulatory system was established, uncertainty about possible furure restrictions would create an unfavourable climate for the very considerable sums of investment required, which could delay the introduction of VOD services. The absence of a regulatory system would also lead to inconsistencies in the way the content and control of different television services were regulated, undermining the level playing field that the Government sought to provide, and which facilitated fair competition.

18. A member would like to have deputations views on the number, terms and conditions and vetting criteria of VOD programme service licence(s); and the timetable for issuing the licence(s). New T & T and Hutchison undertook to write to the Bills Committee on these issues.

Regulation of Internet

19. On the question of regulation of Internet, representatives of the Administration said that the Administration would revert to the Broadcasting, Culture and Sport Panel on the outcome of the public consultation exercise and Governments policy decision on the regulation of obscene and indecent materials transmitted through the Internet. Internet developers were working to make it possible to transmit television programmes on the Internet in real-time (or near real-time), and it was likely to become possible within a few years (though not before 1998). The Government considered that it should allow room for technological development while providing a clear regulatory framework on television services. The impact of technological development on television services and the regulatory experience it learned (if VOD programme service licence(s) could be issued in 1997) would be taken into account in the review of television environment in 1998 when the Government hoped to take further measures to deregulate the television market.

(Post-meeting note: The Administrations paper on the regulation of obscene and indecent materials transmitted through the Internet was circulated to members of the Broadcasting, Culture and Sport Panel and Information Policy Panel vide LegCo Paper No. CB(2)1030/96-97.)

20. A member agreed with the Administrations review of television environment in 1998 in the light of the rapid technological development and considered it important to maintain a level playing field for existing television broadcasters and new entrants to the television market.

Timetable for the enactment of the Bill

21. On the question of the urgency for enactment of the Bill, representatives of the Administration said that, with the early enactment of the Bill and granting of the programme service licences thereafter, Hong Kong was likely to be the first place in the world where VOD television services were provided on a commercial scale. This was an exciting prospect which would help to develop Hong Kongs technological base, as well as providing consumers with a wide range of choice.

22. The Chairman welcomed deputations to send in further submissions, if any, and requested those who had not sent in written submissions to the Bills Committee to do so. The Administration undertook to set out in writing its views on the main points raised at the Bills Committee meeting.

Admin

(Post-meeting note: The Administrations paper, submissions from ATV and New T & T, and further submissions from HK Telecom IMS and Wharf Cable were circulated to members vide LegCo Paper Nos. CB(2) 987/96-97 and (for ATVs submission) 991/96-97.)

II. Date of next meeting

23. The next meeting would be held on 20 January 1997 at 2:30 pm in Conference Room B of the Legislative Council Building.

24. The meeting ended at 4:15 pm.

LegCo Secretariat
14 February 1997

Last Updated on 15 October 1997

Bills Committee on Television (Amendment) Bill 1996

Minutes of the 2nd Meeting held on Monday, 13 January 1997 at 2:30 pm in Conference Room B of the Legislative Council Building

I. Meeting with deputations

Views of Television Broadcasts Limited (TVB)