Convergence of Broadcasting and Telephony and Its Policy Implications: A Case Study of Video Dialtone (VDT)


Yang, Chung-chuan


Due to advances in video compression and transmission technologies, competition for broadband multichannel video services has unfolded in the United States since 1992. Regulations on prohibiting telephone company’s entry into video programming market have also been relaxed by the recent Video Dial Tone Rules of the FCC and H.R. 3636 of the Congress in the United States. Although the Directorate General of Telecommunications (DGT) is still a state-owned telephone service provider in Taiwan, future deregulation and privatization in the telecommunications market are likely to create the same regulatory quagmire as encountered by the United States and other countries that have already deregulated their telecommunications market. Therefore, the regulatory frameworks that other countries have adopted to regulate video dialtone may help shape future telecommunications policy in Taiwan.

This paper will examine the policy issues stemmed from the convergence of broadcasting and telephony. Video dialtone (VDT) is the technology that has been most vehemently discussed and debated by stakeholders in the cable industry (NCTA), the telephone companies (RBOCs), consumer interest group (CFA), policy-makers (FCC and the Congress), and telecommunications scholars. 

This paper will be divided into three sections. First, an overview of video dialtone (VDT) technology will be presented to provide background needed to understand the discussions. In addition, current VDT trials in the United States will be discussed. 

In the second section, the advantages and disadvantages of video dialtone(VDT) will be analyzed. Although VDT will provide competitions in the local distribution of video programming, promote efficient investment in the national information infrastructure, and increase the availability of different video services, it is likely to lead to the rate-hiking for basic telephone service users, redundant deployment of transmission infrastructure, and market monopoly. Therefore, this paper will also summarize the major positions of each stakeholder in current policy debates. 

Third, this paper will analyze the regulatory issues caused by video dialtone services. After examining various literature and government documents, several issues have been identified: 1) the treatment of must carry provision; 2) public interest concerns (i.e., cross-subsidization and market monopoly); 3) channel capacity issues ; 4) a “will carry” preferential access proposal; 5) an “incubation period” to ensure fair competition; 6) challenge to current regulatory and jurisdictional frameworks. This paper will discuss these issues in details. 

Finally, the building of the National Information Infrastructure (NII) will be conducive to the competition in the multichannel video marketplace. Therefore, the convergence of broadcasting and telephony, as exemplified by video dialtone (VDT), is a question that regulators and policy-makers need to ponder.