Why the transforming of cable operators in China is delayed

China’s national cable operator should be established by the end of 2012 while it has not been accomplished so far. This paper analyzes the key factors in the transformation of China’s provincial cable operators and explores answers to the question why the transforming of cable operators in China is delayed. An empirical analysis on the transformation speed and quality was performed using data from 1999-2010. The results are not only about speed but tradeoffs between speed and quality. First, the capital-driven model was positively determined to affect both transformation speed and quality. However, the complete control by capital-driven entities could only promote the transformation speed but not quality. The government-driven model positively affects transformation speed but negatively affects transformation quality. Second, the competition with telecom operators delayed cable’s transformation but enhanced the transformation quality. Third, close cooperation between cable operators and content improved transformation quality while slowing down the speed of transformation. To a limited degree, these findings provide suggestions for well accelerating ongoing transformation of China’s national cable operator, including the well-balanced combination of capital-driven and government-driven entities, the exploration on the comparative advantage of cable operators over telecom companies and the cooperation between cable companies and upstream content partnerships.

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