MS, Daum to Begin IPTV on Leased Network
By Cho Jin-seo
Staff Reporter
Microsoft is joining the heated competition of the Internet-Protocol TV market in Korea with two local partners by piggybacking on existing networks of other telecommunication firms.
It is the first time for the world's largest software maker to set up a broadcasting service company. But the new IPTV service, which will be the fourth of its kind in Korea, has a bumpy road ahead as it needs approvals from the government and the Internet line owners, such as KT, Hanarotelecom and LG Dacom, which hardly welcome new entrants.
On Tuesday, Microsoft Korea said that it will launch an Internet-Protocol TV service, tentatively named ``Open IPTV,'' in a joint venture with Web portal operator Daum Communications and set-top box manufacturer Celrun.
``While preparing this project, I regretted not starting this one or two years ago,'' Yoo Jae-sung, president of Microsoft Korea, said during the press conference at Plaza Hotel in Seoul. ``There are already 20 IPTV providers in 18 countries that use Microsoft's platform, so it is quite late to do it now in a country like Korea, which has a well-established IT infrastructure.''
The three firms said they will set up a joint venture firm in February, start the demo service in July, and the subscription service in around December, only if they get the license from the government by November. The amount of initial investment from each company will be announced later, but Daum will take the leading role, said Brian Jeong, Daum's Convergence Biz team leader.
IPTV uses high-speed Internet lines instead of cable or satellite network to broadcast TV programs. More than 1 million households have already subscribed to the service in Korea.
Many TV, Internet and telecommunications firms have raised investment in the field and the market is expected to boom once the government allows real-time broadcasting of popular terrestrial channels on IPTV sometime this year.
The Microsoft consortium will face tough competition in the Korean IPTV field with three big, well-financed telecommunication powerhouses, Hanarotelecom, KT, and the pair of LG Dacom and LG Powercom. The fact that it does not own its own Internet network will exacerbate the situation.
The three telecom firms use their well-established nationwide broadband Internet lines for the IPTV services. And they also entice customers by offering discounts for multiple subscriptions of home phone, Internet and the IPTV products ― called ``triple play'' in the industry, which the Microsoft-Daum-Celrun trio cannot offer.
Like almost all other telecommunication issues in Korea, the government holds the key to solving the problem. Since last year, the government and lawmakers have been working to enforce telecom firms to open their network to others like the Microsoft-Daum-Celrun consortium. But it has yet to be decided how it will do so without damaging fair competition in the market.
KT, the dominant Internet line operator in Korea, does not welcome such an open-door policy, an official of its rivaling company said. KT said it's too early to talk about it.
``All we can say now is that we will talk with related parties once the new regulations are set up in around April,'' said KT spokeswoman Alice Park.
Nevertheless, Microsoft and Daum remained optimistic that time will be on their side. Daum's Jeong said that they can make the line lease contract either a lump sum, or in a pay-per-use plan.
``We want to build a win-win business model,'' said Microsoft senior manager Yoo Jae-gu.
The so-called Open IPTV will use Microsoft's Xbox 360 video game console as the set-top box and its Mediaroom system as the software platform. Daum, the second largest Web portal, will provide various entertainment contents and set up advertisement revenue models. Celrun will provide its set-top boxes to Microsoft for overseas markets only, because it is already supplying similar devices to KT and Hanarotelecom here, the firm said.
It will also allow users to view foreign TV channels via Microsoft's global network, they said.
indizio@koreatimes.co.kr