Taiwan to bar local agents from representing Chinese OTT services

CNA file photo

TAIPEI (CNA) — A new Ministry of Economic Affairs (MOEA) regulation that will soon take effect will bar Taiwanese agents from helping Chinese over-the-top (OTT) service providers operate in Taiwan.

The regulation, expected to take effect on Sept. 3 after a 14-day public review period, will prohibit Chinese OTT service providers’ agents from collecting fees, providing customer service, or advertising on their behalf of Chinese providers, the ministry said.

OTT refers to audio, video and other media content delivered via the Internet rather than a cable or satellite provider.

At present, Chinese OTT service providers such as iQiyi are not allowed to operate in Taiwan, but there is no regulation that explicitly bars Taiwanese agents from acting on their behalf and offering their services.

When the new regulation takes effect, agents who partner with these banned Chinese OTT service providers could be fined up to NT$5 million (US$170,000) based on provisions in the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area.

IQiyi has been a test case. In 2016, it applied for permission to set up a subsidiary in Taiwan, but the MOEA rejected its request because Chinese people or companies are not allowed to invest in Taiwan’s broadcasting industry, including OTT operations.

But it still has been offering video content directly to viewers in Taiwan via the Internet by bypassing traditional cable and satellite TV platforms, the ministry said, which led to the new regulation on video streaming services, including OTT media services.

OTT Entertainment, iQiyi’s agent in Taiwan, said Tuesday that because the new regulation has not yet taken effect and could still be adjusted, it would not comment on it at present.

Lai Hsiang-wai (賴祥蔚), a professor in National Taiwan University of Arts’ Department of Radio and Television, questioned whether the regulation would be effective.

Lai argued that if agents for cross-border OTT services were eliminated and Chinese service providers dealt directly with local consumers, it would be difficult to settle disputes.

Instead, measures to complement the new regulation should be devised that both distributors and consumers of OTT services could follow, Lai suggested.

The professor said the government needed to realize that banning OTT platforms was not the same as fostering domestic industry players, and that the best way to fight off Chinese competition was for domestic service providers to improve their content and services.

Taiwan has been grappling with how to keep Chinese OTT service providers out of the market for quite some time.

The National Communications Commission (NCC) has worked on legislation to achieve that, finalizing a proposal in July aimed at cutting off market access to Chinese OTT service providers such as iQiyi and Chinese tech giant Tencent Video’s WeTV.

The proposal stipulates that Taiwanese telecoms and Internet service providers (ISPs) cannot offer telecommunication services or equipment, Internet data center services, content delivery network services or cloud services to Chinese audiovisual service operators or they would face a fine of NT$500,000 to NT$5 million.

The proposal still has to be submitted to the Executive Yuan for approval and then forwarded to the Legislative Yuan for final passage, making it unlikely it will become law by the end of the year.