The Broadcasting Media Communications Commission will draw up measures to revitalise the pay TV sector by the end of this year. With easing regulation on pricing and terms and conditions cited as a key task sought by the industry, a plan to first ease rules on add-on services, which face relatively less opposition from programme providers (PP), is emerging as a practical alternative.

On Oct. 16, the commission and others said it recently prepared a draft plan to improve the pay TV system and completed an internal report. It plans to announce a final version within this year after internal coordination and consultations with relevant ministries. It will separately hear views from stakeholders such as pay TV operators in non-public sessions.

A commission official said, "Since we have to announce revitalisation measures within this year, we are listening broadly to opinions." The official said it is also reviewing major industry requests such as regulation on pricing and terms and the broadcasting and telecommunications development fund.

The commission launched a public-private consultative body on pay TV revitalisation in August and began discussions on regulatory improvements. The body includes 8 pay TV platform companies, including internet protocol television (IPTV), cable system operators (SO) and satellite broadcasters, and 6 PP companies.

At the time, the industry presented improving regulation on pricing and terms and conditions, which makes it difficult to launch new products, as a key task. It said operators should have greater autonomy in managing products as growth in the pay TV market slows with the spread of online video services (OTT).

One of the main regulations the industry wants changed is the report-and-acceptance system for terms of use. In the case of IPTV, operators must report terms on service fees and conditions to the commission under Article 15 of the Internet Multimedia Broadcasting Business Act (IPTV Act). The same procedure applies when changing existing terms.

The process is not completed simply by submitting a report. It takes effect only when the administrative agency accepts the report. Article 12-2 of the IPTV Act enforcement decree requires the agency to notify acceptance or an extension of the processing period within 7 days of receiving the report. Fees for minimum-channel packages and bundled telecommunications products require separate approval.

The industry is calling for converting the system from a "report requiring acceptance" to a "self-completing report" that takes effect upon filing. It argues that having to go through report-and-acceptance procedures whenever launching a product or restructuring pricing makes it difficult to respond to a rapidly changing market.

An IPTV industry official said, "Products need to change quickly in line with user responses and market changes, but if you go through the report-and-acceptance procedure for terms, there can be a time lag of several months before an actual launch." The official said, "Even if you plan a new product, if the launch is delayed, you are bound to miss market trends."

The industry also argues that unlike competing services such as OTT, pay TV is subject to prior regulation on pricing and terms and conditions, making it difficult to secure product competitiveness. It said that while the statutory processing period for a report is 7 days, it takes considerable time to actually launch a product after planning, consultations with relevant agencies and the report-and-acceptance process.

But it is not easy to broadly ease the report-and-acceptance system. This is because both pricing and channel line-ups, which are key elements of pay TV products, involve complex, intertwined interests.

In particular, it was reported that PP are strongly opposed to a shift to a self-completing report system because it could allow pay TV operators to freely programme channels or exclude specific channels.

A pay TV policy expert said, "If pay TV operators can freely add and drop channels, it would inevitably be a considerable burden for PP." The expert said, "PP opposition is one of the biggest obstacles to improving terms regulation at present."

Easing price regulation is also seen as unlikely to immediately improve operators' profitability. That is because pay TV operators would find it difficult to raise prices amid competition with OTT, and there is a large policy burden tied to fee changes.

As a result, easing regulation first on add-on services that are not directly related to channel line-ups or fees is being cited as a practical alternative. At present, some add-on services provided by pay TV operators through channels are also subject to reporting obligations for terms.

The expert said, "If you fully ease regulation on channel line-ups or fees, interests can collide, but with add-on services there is no business that is disadvantaged even if rules are lifted." The expert said, "It is worth considering improving terms regulation related to add-on services first so new services can be introduced freely."

The scope of any improvement to terms regulation is expected to be a key issue in the revitalisation plan the commission will announce by year-end. The question is how far to expand autonomy for launching new products while maintaining regulation to protect PP and viewers.