Regulatory mountains obscure the view

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Yamanashi Prefecture, just two hours west of Tokyo, offers video broadcasting on its website and optical-fibre connection in many parts of the mountainous region.

But this summer many Yamanashi residents will be missing one thing that all this advanced technology cannot deliver: live coverage of all the World Cup soccer games on television. Those who do not have satellite or cable services will have to watch some of the games on their PCs instead.

This curious situation in a country renowned for its technological prowess is one of the many peculiarities that Heizo Takenaka, minister for Internal Affairs and Communications, wants to set right – he wants all Japanese to enjoy the benefits of an increasingly networked society. Having masterminded both the financial reforms that revitalised Japan’s then ailing banks and the privatisation of the post office, he has set up a study group with a brief to come up with ideas on how to restructure business practices and regulation in the telecoms and media industries.

He believes that Japanese consumers are not reaping the full benefits of technological advances due to business structures, practices, attitudes and regulations that are no longer relevant.

For example, in Japan it is not possible to deliver regular TV programmes on the internet – a service available in both Hong Kong and South Korea.

Were this possible, users would be able to use one optical-fibre line for their
telephone, TV and internet connection.

Some telecoms groups, such as KDDI, are already offering web TV services.

But the contents of these broadcasts are restricted to specialised programming, such as the National Geographic TV channel. Programmes that are shown on terrestrial TV cannot be webcast due to royalty issues as well as strong resistance from broadcasters who fear their control over content will be threatened.

“Japanese broadcasters – long protected by a licensing system that restricts competition – are worried that internet broadcasting will spawn a multitude of broadcasters, and this will change their business model,” says Fumiaki Sato, electronics analyst at Deutsche Securities in Tokyo.

After attempts last year by internet start-ups to take over two large TV networks, some of the five major networks based in Tokyo are taking tentative steps into webcasting services.

But the very survival of the financially weaker local networks, which rely on licensing programmes from the big five, would be threatened if internet broadcasts of the same programmes were allowed in their territories.

More problematic than the broadcasters’ opposition is the resistance of talent agents, which fear a loss of revenue and copyright control, says one MIC official.

Furthermore, under current law, the delivery of programmes on the internet is considered a telecoms service, rather than a broadcasting service. These are some of the issues Mr Takenaka’s study group must address to ensure the media and telecoms sectors are encouraged to take advantage of technological trends and develop new services. Even if the obstacles hampering the development of such services are removed, it is far from certain the media and telecoms sectors will be able to generate much higher revenues, as Mr Takenaka hopes.

About 14 per cent of household income is spent on information, a figure that has not changed much for the past 30 years, says Shinsuke Iwasa, media analyst at Nomura Securities.

He says unless incomes rise spectacularly, consumers are unlikely to spend enough to double and triple the revenues of the media and telecoms industries, as Mr Takenaka suggests.

But the one thing everyone agrees on is that the spread of broadcasting on the internet is a trend that cannot be stopped.

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