Chinese DTH Sets Expansion With MIH

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China's nascent direct-to-home (DTH) satellite TV service
appears set to increase its channel lineup fivefold by autumn, to 40, as it continues to
bring TV signals to tens of millions of rural inhabitants for the first time.

China Broadcasting Satellite TV (CBTV) debuted earlier this
year as a venture organized by the State Administration for Radio, Film and TV (SARFT).

It began as an effort to bring the eight China Central TV
(CCTV) channels to the residents of 100,000 rural settlements -- as many as 200 million
people -- who never had access to TV before, following a continuing trial run to 1,000
villages.

After a fierce tendering process in late 1998, SAFRT
awarded the contract to supply set-top decoders for CBTV to MIH Asia, a unit of South
Africa-based MIH Ltd.

Despite considerable skepticism of the project, Neville
Meijers, chief executive officer of MIH China, said SARFT has ordered 20,000 additional
decoders in order to expand the project to more villages. The signals are received by a
satellite-master-antenna TV system.

The system will expand to 40 channels in October, he added.
The newcomers will consist of selected Chinese provincial and urban channels, and as well
as weather and educational services. China prohibits the direct distribution of
foreign-based channels, and MIH will not supply any programming.

It is unclear when the full-blown commercial rollout of
CBTV will begin, Meijers said. He added that China wanted to jump-start its own DTH
platform because authorities were alarmed by programming, including pornography, beamed
into China since mid-1998 by the Taiwanese-based DTH platform C-Sky-Net. The programming
is received in China via illegal decoders.

"The Chinese felt that if they did not have a DTH
platform they would never be able to compete or fight them. So, rather than exclude the
world, it decided to control its entry," Meijers said.

He added that foreign firms hoping to distribute 24-hour
channels into China through DTH will have to wait a few years, due to sensitivities about
foreign programming.

When MIH Asia was awarded the contract to supply CBTV, the
losers in the tender privately criticized the company's winning bid. They speculated
Chinese broadcasting authorities were under pressure from the country's Foreign Ministry,
which wanted to build relations with South Africa after the country broke diplomatic ties
with Taiwan in favor of Beijing.

One Beijing-based observer is dismissive of MIH China's
long-term involvement, suggesting that Chinese authorities might easily switch to another
supplier after the trial ends.

"The [SARFT] was the wrong horse to back in the long
run, because it was a small body caught in the middle of powerful bodies, including the
Ministry of Information Industries [MII] and the Ministry of Culture, each of which
believes it has ultimate control over broadcasting policy," the executive, who asked
not to be identified, said.

The comment was refuted by a Singaporean media executive,
who said he spoke to MII Minister Wu Jichuan in May.

He said Wu was "largely leaving the regulation of CBTV
to the SAFRTV. If you talk to him, he will let this one go. CBTV is not political at this
time."

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