By Kim Tong-hyung
Staff Reporter

The country's leading broadband Internet carriers, including industry giant, KT, were awarded licenses for Internet protocol television (IPTV), while a joint venture involving Internet portal Daum was left to bite the dust.

The Korean Communications Commission (KCC), the country's broadcasting and telecommunications regulator, granted the IPTV licenses to KT and its fixed-line rivals Hanarotelecom and LG Dacom. Open IPTV, a 50-50 joint venture by Daum and equipment maker, Celrun, was disqualified with KCC officials expressing concerns over the company's financial capabilities.

IPTV is about the delivery of conventional television broadcasts over broadband networks, allowing subscribers advanced features like video-on-demand, online commercial transactions and data transfer with a lot more interactivity.

KT and Hanarotelecom are all planning to start their IPTV services in October, while LG Dacom will have a late start next year. The companies will combine to spend more than 3.2 trillion won (about $ 2.9 billion) in the next five years to develop infrastructure for the next-generation television services.

``Open IPTV is capitalized at 10 billion won and submitted a plan to increase the investment to 300 billion won eventually, but there was skepticism among the committee's reviewers whether that plan is probable,'' said Park No-ik, an official at KCC's convergence policy department.

The KCC will receive license applications for IPTV operators at any time starting on Oct. 1, and claimed that Open IPTV would get a fair chance if it bids again with a new plan.

KT Desperate for Breakthrough

KT, which controls more than 90 percent of the country's fixed-line telephony market and nearly 45 percent of the broadband Internet market, has been struggling to retain growth in the saturated domestic market.

The company believes IPTV will be a reliable source to gather more customers and increase its average-revenue per user (ARPU). KT's IPTV service will provide 100 channels, including 30 audio channels, and about 39,000 movies and television dramas for video-on-demand content.

The channels will increase to 120 next year, while the video-on-demand content will reach over 40,000. The company has 720,000 customers for its Mega TV services, with a prototype-IPTV service that provides video-on-demand but not real-time television.

KT spent more than 1.7 trillion won so far to prepare for the IPTV services, such as upgrading its network and securing content.

The company plans to spend another 2 trillion won through 2012 on upgrading its infrastructure, developing terminals and on research and development.

Hanaro Confident, LG Dacom in Wait-and-See Mode

Hanarotelecom, which has 780,000 customers for its Hana TV video-on-demand services, is confident that it provides the most differentiated service among the three IPTV operators.

The company has already secured contracts with major Hollywood movie distributors such as Warner Brothers, Walt Disney, Sony Pictures and 20th Century Fox and also domestic companies like CJ Entertainment and Showbox, which gives them a content pool of more than 80,000.

Hanarotelecom, which plans to spend 1.6 trillion won on its IPTV business through 2012, is also hoping to use the dominating market presence of its parent company, SK Telecom, the country's No. 1 wireless carrier, to gain an advantage in the new market sector.

LG Dacom has been the least enthusiastic among the three companies in their ambitions for IPTV. The company plans to rationalize its investment in IPTV, while trying to differentiate it services that will be more focused on data transfer, in comparison to their entertainment-heavy rivals.

However, the advanced broadband network of subsidiary, LG Powercomm, is clearly an advantage. More than half of LG Powercomm's broadband customers, or about 1.1 million people, are subscribed to services providing over 100 mbps in connectivity, making them ideal potential customers for IPTV.

Securing Content Still a Problem

According to a report by the KCC, the country's broadcasting and telecommunications regulator, the IPTV industry will generate production of 8.9 trillion won (about $7.9 billion) and create 36,000 new jobs over the next five years.

However, there seems to be a significant gap between the enthusiasm of government and industry and the actual acceptance of IPTV by customers.

The combined customers base of about 1.5 million for the current vide-on-demand services is nothing to be excited about.

And the telecommunication companies are struggling to reach a deal with national television stations to secure their content for IPTV. Industry sources say broadcasters have been demanding an annual fee of about 30 billion to 50 billion won ($44.7 million) for the rights to use their content.

thkim@koreatimes.co.kr