On Jan.31, 2008, a new regulation governing Internet broadcast of video and audio program services went into effect that significantly changed registration requirements and procedure. The Administrative Rules on Internet Video/Audio Program Services (“New Rules”) are jointly published by the State Administration of Radio, Film and Television (SARFT) and the Ministry of Information Industries (MII) of China.
Although in many ways, the New Rules do not differ from the existing Administrative Measures on Video/Audio Programs Broadcasted Via Internet and Other Information Networks, published by SARFT in 2004 (“2004 Measures”), the New Rules introduce changes that may affect existing privately owned Internet audio/video program service providers and allow minority participation of foreign investment.
The New Rules do not replace or invalidate the 2004 Measures. However, in case of any inconsistency between the provisions of the New Rules and those of the 2004 Measures or any other regulations promulgated prior to Jan. 31, 2008, the provisions of the New Rules will prevail.
Dual registration requirements
Like the 2004 Measures, the New Rules require an Internet video/audio program service provider to obtain an Information Network Broadcast Permit for Video/Audio Programs (“Permit”) from SARFT and set forth similar technical and professional requirements that Permit applicants must meet.
A significant registration change under the New Rules is that the provider must now also apply with MII for a permit to engage in telecommunication businesses and to complete all corresponding business registrations with the State Administration of Industry and Commerce. The New Rules, therefore, appear to be broader and more demanding than the 2004 Measures, since they are jointly published by SARFT and MII to address both the video/audio-content and broadcast side of the business as well as the Internet-access and value-added telecommunications side.
Ownership requirements and implications
The 2004 Measures explicitly preclude wholly foreign-owned enterprises and Sino-foreign cooperative or equity joint ventures from engaging in the business of broadcasting video/audio programs via information networks. However, the New Rules, which require Permit applicants to be “State-owned or State-controlled” service providers only, appear to allow participation of Sino-foreign joint venture Internet video/audio program service providers with a State-owned partner who either owns a majority share of its equity interests or controls its management.
Efforts to consult with SARFT for confirmation of this literal interpretation of the New Rules have so far been unsuccessful. Meanwhile, the New Rules have raised issues regarding existing Internet video/audio program service providers, most of which are privately owned enterprises operating without a Permit. Some of these businesses even contain elements of foreign ownership. Only a few existing service providers are State-owned and operating with a Permit.
Purportedly, a detailed rule for the implementation of the New Rule will come out soon, which will “grandfather in” Internet video/audio program service providers with a Permit who were already operating before Jan.31, 2008, by allowing them to continue operation within the remaining term of their Permit, even if they are not State-owned or State-controlled. These existing service providers are also allowed to renew their Permit upon expiration, but the renewal will likely be governed by the New Rules and their new requirement of State ownership.
Following are some major highlights of the New Rules:
- The New Rules cover the provision of video/audio program services to the public in China via wireless Internet and mobile devices.
- “Internet video/audio program service” is defined as a business that makes, edits or integrates video/audio programs for broadcast to the public via the Internet, and that uploads and broadcasts video/audio programs of others on the Internet.
- A Permit applicant must have no record of legal violations or non-compliance with laws for three years prior to the application date.
- Providers of news related, or TV talk show- and forum-type video/audio program services via the Internet must obtain additional and applicable permits from the State Administration of Industry and Commerce for news broadcast, Internet news publishing or making broadcast TV programs.
- Providers of Internet video/audio program services must display the Permit and filing number in a prominent place within the program.
- A business (and/or its investors and operators) that provide services in connection with Internet video/audio program-related fee collection, signal transmission, accommodation for server or other financial and technical services to another service provider without a Permit are subject to severe penalties and fines.
Content requirements and implications
The New Rules emphasize, among other things, encouragement of the development of video/audio programs that are “better suited for the consumption of a new generation.” It holds the investors and operators of Internet video/audio program services responsible for the content of their programs, and requires the programs to be kept on file in their entirety for at least 60 days after broadcast.
These positions seem to echo an official notice of MII issued a few weeks before the New Rules were enacted, strongly demanding a crackdown on “spooky ghost- and extraterrestrial-type” video/audio products. Unlike acceptable video/audio products that are based on traditional Chinese fairy tales such as “The Journey to the West” and “Bizarre Stories from a Lonely Studio (liao zhai shi yi),” or science fiction stories, such as “Harry Potter” and “Chang Jiang No. 7,” as explained by MII officials, the so-called spooky ghosts are found to lack healthy imagination, meaningful thoughts or moral principles, and to convey terror, cruelty and violence that endanger the mental development of minors.