Digital cable TV stations offered tax holidays

PUBLISHED : Thursday, 06 January, 2005, 12:00am
UPDATED : Thursday, 06 January, 2005, 12:00am

A mainland digital cable television broadcaster has been granted a three-year tax holiday by the central government as part of a campaign to boost subscriptions nationwide.

Qingdao Cable TV Network will be exempted from sales tax, estimated at about 5 per cent of total turnover, on its digital service from January 1 to the end of 2007.

'Cable operators in other cities can also apply for sales tax exemption when they switch to digital broadcasting,' the State Administration of Radio, Film and Television (Sarft) said on its website.

Qingdao Cable, a pioneer in digitalisation in the northeast of the country, charges a monthly tariff of 22 yuan for its cable subscription against 12 yuan for analogue services. It has an estimated 150,000 viewers out of a total two million cable users in the province.

Digitalisation allows for the transformation of a fragmented free-to-air-based utility into a consolidated pay-TV franchise. It creates business opportunities for content providers and advertisers as well as firms providing value-added services such as mobile messaging, video games, real-time information and distance learning.

Mainland digital broadcasting trials began in 2001 - under the Sarft's direction - and were extended to 33 pilot cities two years later. The 2008 Beijing Olympics is scheduled to be aired on digital networks. By 2015, the country will cease analogue transmission.

'The tax exemption is definitely a good incentive to cut the financial burden of local cable networks,' said a spokeswoman for Motorola-owned, Hong Kong-based DVN (Holdings), which supplies digital cable set-boxes to more than 20 city networks.

'It will encourage local broadcasters to upgrade their network,' she said.

China is estimated to have only 3.5 million digital cable subscribers at present but the government has set a target of 30 million by the end of this year.

To that end, it has been pushing banks to arrange billion-yuan loans of longer than 10 years for manufacturers of set-top boxes.