A customer of KT’s “Mega TV” service chats with a friend through an instant messaging service provided on television. / Korea Times File |
By Kim Tong-hyung
Staff Reporter
Internet protocol television (IPTV) has gotten a lot of press as the future of home entertainment, touted as the ultimate lovechild between the country's advanced information technology (IT) and television industries.
Just weeks ahead of the scheduled commercial launching, however, it's becoming more likely that the next-generation television services will be born a worn-down infant.
KT, the telecom giant that controls more than 90 percent of fixed-line telephony customers and nearly 45 percent of broadband Internet customers, had originally planned to start its IPTV services next month.
However, with the company failing to reach deals with the country's three national television channels ― KBS, MBC and SBS ― to buy their content for IPTV transmission, the highly-anticipated debut could be pushed to November.
``It's hard to give a date for our IPTV opening, whether it be mid-October or November,'' said KT Vice President Yoon Jong-lok in a news conference last week.
``More than 60 percent of our Mega TV video-on-demand service subscribers said it is inconvenient for them to watch terrestrial broadcasting and Mega TV separately. We are not thinking about pushing IPTV without the content of terrestrial broadcasters,'' he said.
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.
Telecom operators like KT, which have been struggling to sustain growth in a saturated market, hope their move into television could secure them a new revenue source.
Yoon's comments sounded softer, and vaguer, than the words by another KT executive weeks earlier who warned television stations that the company could start IPTV without them, packaging the set-top boxes with antennas to allow subscribers to receive terrestrial broadcasts for free.
This would certainly save the company a lot of money, considering that the television stations are reportedly demanding an annual fee of around 30 billion won (about $ 26.6 million) for the broadband retransmission of their content.
However, it would also render the whole point of IPTV irrelevant, as the television content couldn't be used for interactive services.
KT, which is targeting 300,000 IPTV customers by the end of the year and 1 million at the end of next year, knows it can ill-afford to jump into television without help from national broadcasters.
The failure to secure content from KBS, MBC and SBS sucked the air out of satellite mobile television, another much-anticipated high-tech service that its backer, SK Telecom, now treats like an embarrassing family member.
It remains to be seen whether IPTV would sizzle or fizzle. However, Yoon is confident that his company won't repeat SK Telecom's mega flop, saying that television stations are becoming more convinced of the business potential of Web-based television and wouldn't be interested in killing off the buzz.
``The talks over price are getting more reasonable,'' said Yoon.
KT recently started its IPTV trial services at 200 households in Seoul and the metropolitan area, providing real-time broadcasting of 12 cable and satellite channels, including popular movie channel ``Catch-On,'' and also KBS1 and EBS, which are obligatory public channels. The company said it will charge a monthly rate of 16,000 won for IPTV customers.
KT is hoping IPTV will become a significant revenue source, generating sales of about 900 billion won by 2012. However, even if IPTV does bring an increase in average revenue per user (ARPU), it remains to be seen how much of the extra money would end up in KT's pocket as content providers would need to get paid.
Nothing to Watch on IPTV
A concern for KT is the modest fanfare for ``Mega TV,'' which provides video-on-demand, but no live television programs. Since starting the services last year, KT had only 768,000 Mega TV customers at the end of August.
Rival broadband operator SK Broadband, which also has an IPTV license, has just over 760,000 customers for its ``Hana TV'' video-on-demand services, while LG Dacom, the third IPTV operator, has just over 40,000 customers for ``myLGTV.''
This gives IPTV a start-up customer base of about 1.5 million customers, eerily similar to how satellite mobile television started out.
The video-on-demand service, which allows subscribers to download films and watch them at any time, seemed to generate serious demand at first. In fact the number of Hana TV customers exceeded 910,000 at one point.
However, without securing content from terrestrial broadcasts, estimated to have more than a 45 percent share of television viewership here, there are not enough shows to keep subscribers interested.
``For some cable television shows, it sometimes takes more than a month for them to be updated,'' said Lee Sun-jin, a Mega TV customer.
``And it always seems that you have watched all the CSI episodes that are available, and bore yourself tired waiting for next week,'' he said.
Securing content from terrestrial broadcasters is not the only problem, as the cable television sector is giving IPTV the cold shoulder as well. Cable operators can't be too happy about the emergence of broadband television, which overlaps with its core customer market. This, in turn, has resulted in the reluctance by independent show producers to provide their content to IPTV at the risk of angering their cable television clients.
Of the 186 program providers listed by the Korea Communications Commission (KCC), the country's broadcasting and telecommunications regulator, only 17 of them applied for license to provide IPTV content.
According to a survey by the Electronics and Telecommunications Research Institute (ETRI), 69 percent of program providers said they are concerned about hurting their relationship with cable operators when providing content for IPTV. However, about 63 percent of the companies said they wish to sell their content to IPTV operators.
``It is evident that the program providers have high hopes for the introduction of IPTV, which they believe will give them a larger market to sell content,'' said Kim Seong-cheol, a senior researcher at ETRI.
``However, it is also apparent that they don't feel free enough to commit fully to the new market segment,'' he said.
Another problem is that the telecommunications operators have thus far failed to suggest a business model that could convince content providers to make the IPTV jump.
Despite publishing a massive amount of jargon to explain how IPTV could create an ``ecosystem'' of profit, KT has yet to explain how it will share its IPTV revenue with content providers.
If the securing of quality programs continues to be a problem, the country's IPTV industry could be destined for a similar fate as that of Europe.
According to market research firm, Screen Digest, about 40 percent of European IPTV subscribers are accessing the services for free, with the Web-based television merely reduced as bait for telecommunications firms to sell their broadband Internet services.
Not expecting to create serious revenue from pay-TV, the European telecommunications operators are reluctant to spend too much on securing content. This has reduced IPTV into merely a video-on-demand service for many operators, some of them allowing viewers to received free digital broadcasts on their set-top boxes without any interactivity.
thkim@koreatimes.co.kr
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