KT, SK Broadband Doubling IPTV Investment

By Kim Yoo-chul
Staff Reporter

KT and SK Broadband plan to double their investment in the Internet-based TV business this year from a year ago.

The nation's top two fixed-line and broadband operators also aim to double the number of IPTV subscribers this year from 2009 as they are heavily betting on higher growth potential in the local Internet TV market.

"We are looking to increase the number of IPTV subscribers to 2 million by the end of this year from last year's 1 million," a KT spokesman said, Wednesday.

Kim Yeon-hak, chief financial officer of the company, also said KT is aiming for 200 billion won in total sales from its IPTV business this year, up from 99.4 billion won in 2009.

An SK Broadband spokesman said the operator is seeking to increase its number of IPTV subscribers to 800,000 from 402,000 during the same period.

"For IPTV, SK Broadband will primarily focus on external growth. With its partnership with SK Telecom, SK Broadband will promote a 'three-screen' (TV, PC and Mobile) package to smartphone and IPTV users," Lee Joo-shik, chief of SK's new media business unit, said.

LG Telecom has been in the progress of reviewing a detailed IPTV strategy and will increase spending on marketing, a spokesman said

Research firms forecast the number of IPTV subscribers nationwide to rise to 3.5 million by the end of 2010 from 1.74 million as of the end of 2009.

"IPTV operators, which were bleeding from a massive initial investment, are seeking a turnaround from the currently money-losing business. Increasing the number of subscribers would be one possible option," a senior official of the telecommunication bureau at the Korea Communications Commission (KCC), said.

"While KT CEO Lee Suk-chae recently pledged further external growth of its IPTV business, the remainder are busy looking at their bottom lines," according to the official.

During 2009, South Korea's principal fixed-line and broadband operators made significant progress in migrating traditional telephone subscribers to IP-based broadband alternatives, such as IPTV and VoIP internet telephony services.

KT accounted for the vast majority of new additions, enabling it to grow its market share considerably.

Although the Korean broadband market has reached saturation in terms of household penetration, IPTV is driving broadband usage and demand, particularly when it is bundled together with fixed-line and mobile services, telecom analysts say.

"Operators are increasingly moving to bandwidth-supporting platforms over fiber-to-the-home, although LAN and HFC cable continue to be the most widely used," Choi Yong-jae, an analyst at LIG Investment said.

"Broadband subscriptions reached some 16.6 million with a penetration rate of 34.2 percent at the end of 2009. By the end of 2014, we forecast the rate to soar to 40.6 percent," Choi added.

But some are raising questions over a possible marketing competition for new customers as the local pay-TV market has already saturated.

"IPTV operators are likely to pour a massive amount of money just for marketing to attract new customers. Competition will be fiercer among IPTV operators, cable TV players and satellite players," the KCC official said.

Also, IPTV players are being squeezed over securing the right for IPTV content, and further investment into telecom infrastructure.

As of the end of last year, the nation’s three IPTV operators had invested a total of 700 billion won, but their combined revenue was some 200 billion won.

"Four years and 10 years will be needed for a satellite broadcasting and cable TV company to enjoy profits, respectively. To reach a break-even-point, IPTV operators should wait at least three years," a representative of a local satellite station said.

yckim@koreatimes.co.kr

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