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Abstract
This study compares policy history and the development of cable television in South Korea and Israel. Tracking the evolution of cable policy in each country, it assesses effects on the market and draws conclusions that may be applied in other countries. The study adopts a model created by McQuali, de Mateo, and Tapper (1992) and the industrial organization model as its descriptive tools. The study focuses on market performance in two countries that made a transition from an old order of government planning to a new order of increased market autonomy, with similar goals in mind and in response to similar pressures, while employing different market structures. Although the policies adopted and their outcomes differed in terms of competition structure, market conduct, and performance, similar outcomes patterns were observed. These differences and similarities can help explain success and failure in regulating cable markets.
Notes
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In addition to these economic similarities, the two countries exhibit cultural similarities. Both South Korea and Israel emerged out of a restructuring of borders that followed World War II. Both countries place great emphasis on national sovereignty, surrounded as they are by culturally and politically dominant neighbors. Both countries are strongly aligned with the United States, without whom their viability lies in question. Both are homogenous societies in which ancient tradition plays a major role, although Israel is also home to a large minority. Because of their demographics and their cultural distinction from their neighbors, the Israeli and Korean markets have a limited potential in terms of the number of subscribers and the scope of content and advertising.
In an earlier version of their study, they discussed other possible explanations, such as the vision for the information society and the global logic of deregulation, for the change in policy (McQuail & Euromedia Research Group, 1990).
There were intense debates on several issues regarding this legislation such as government involvement in franchise licensing, the licensing requirement for program networks, the limits on the Korean Cable Television Commission's role in delineating content, cross ownership rules, and so forth.
Some of then arrowband cable companies had been upgrading their networks upto 300Mhz by 1994. They retransmitted five Korean terrestrial broadcast channels and a few foreign satellite channels.
As with penetration rates, multichannel television prices in the early years of cable service were not publicized systematically. Growing consumer awareness and the emergence of competition since 2000 have made these figures more readily available. In the 1990s, evidence of cable prices was mostly a result of media reports regarding regulatory intervention in pricing.
The Knesset State Comptroller's Committee requested that the minister of communications impose a lower price cap on cable prices following a review of the state comptroller's annual report that exposed irregularities in the cable council's operations (CitationZrachia, 1994).
Poor after-sale services, fuzzy pictures, frequent outages as a result of bad networks, limited content, and so forth.
The data regarding penetration levels of cable television service in Israel in the early years are imprecise, since no official numbers exist, and the numbers cited by different sources are inconsistent because they rely on different methods of calculation and different definitions of penetration rates. In later years figures were published by two official sources: the cable council and the Central Bureau of Statistics. But since these two sources used different methods of calculation, their numbers are not necessarily similar.
The Central Bureau of Statistics (CBS), however, only started documenting cable penetration in 1997, at which time it set the rate at 66.6% of households. The cable council only started publishing official figures on penetration in 2000 when satellite service was introduced. At that time it put the total number of households subscribing to cable and satellite service at 1,317,000, of them 1,230,000 cable subscribers (71.6% of all households), almost matching the figure of 70.1% published by the Central Bureau of Statistics. More than 76% of Israeli households subscribed to cable and satellite service in 2000, with satellite service accounting for less than 5% of the total.
The revision of the broadband cable television law was delayed because of political infighting between the country's ruling and opposition party.
Cable system operators are required to obtain a license from the Ministry of Information and Communications to provide cable telephony services, according to the Chonki T’ongsin Kibonbop (i.e., Electronic and Telecommunication Basic Law). However, there is not any regulation for a cable system operator to provide cable Internet services through telephone company networks.
The term minorities is loosely used here, referring mainly to minorities within the Jewish population.
The programming registry came into effect in March 2001.
http://www.kbc.go.kr/data/part_view.asp?number=128&page=2, in Korean, accessed in July 21, 2005.
Korean Kyungki Cable TV v. Korean Broadcasting Commission, 2002HeonMa445.
A figure calculated by averaging figures provided by the Cable Television Council and by the CBS.
In 2001, the CBS for the first time released figures on cable and satellite penetration combined, putting the rate at 73.2%. According to the cable council, however, the correct figure was 79% and still on the rise.
According to the CBS, 71.9%; and according to the council, 76.1%.
Cable operators did not pay reasonable fees for content to program networks, in particular, to the stations with weak bargaining power, their justification being they could not pay the fee because they provided services free of charge. The Korean Broadcasting Commission concluded that this behavior was unfair.
28,000–46,800 Won (= US $23.33–$39.00) in 2001 (Korean Broadcasting Commission, 2001a), 18,000–47,300 Won (= US $15.00–$39.42) in 2002 (Korean Broadcasting Commission, 2002), 13,000–58,000 Won (= US $10.83–$48.33) in 2003 (Korean Broadcasting Commission, 2003), 17,000–64,000 Won (= US $14.17–$53.33) in 2004 (Korean Broadcasting Commission, 2004).
The number of Internet subscribers has been documented since the mid-1990s. The available official figures, however, refer only to dial-up services. The figures on broadband Internet access have been documented separately and do not allow identifying of consumer upgrading trends. Both dial-up and broadband access are better documented, however, than multichannel television penetration, and the shorter time line allows simpler and more accurate analysis.
Total Internet subscriber figures beyond 2002 have yet to be published.
As mentioned, regarding cable in Israel, transborder broadcasts were mentioned as a concern in initial policy documents, however the eventual policy allowed for their retransmission.
In Israel they were required and allowed to broadcast local news but not national news.
Audience, program, and content fragmentation will be discussed in a separate study.
Previous research on Israeli society has found that the infatuation of Israelis with technology had motivated their acquisition of communication technologies, such as televisions, VCRs, and cellular phones (CitationCohen & Cohen, 1989; CitationSchejter, 1996; CitationSchejter & Cohen, 2002). This explanation may hold here as well. It is notable that while Israelis were not connecting to multichannel television in greater numbers, their migration from cable to DBS was far more impressive than in Korea although the price was not lower. This phenomenon is congruent with the technological hypothesis.