IPTV Operators Await Real-Time Broadcasting
By Cho Jin-seo
Staff Reporter
The Broadcasting and Communications Commission (BCC) plans to produce its first draft this week on how to regulate Internet-protocol TV, while arguments continue between IPTV operators and traditional cable TV firms.
The regulation scheme on whether to allow IPTVs to air real-time broadcasting of popular terrestrial channels will be a critical in whether this new form of broadcasting can become a profitable business or will go bust.
The legislation process has been delayed several times since last year, costing IPTV firms dearly. But confidence is high at KT, the underdog in the IPTV sector, that the presidential commission will take its side.
``The BCC is preparing its IPTV bill. We will be able to start complete IPTV service in the fourth quarter of this year,'' KT's chief finance officer, Mang Su-ho, said during a conference call with investors on Friday; ``complete'' means that it will start real-time broadcasting of terrestrial channels, which is not yet legal.
IPTV uses broadband Internet lines to receive pay TV signals instead of traditional cable lines or satellite dishes. Telecom firms such as KT, Hanarotelecom and LG Dacom are trying to make similar inroads into the broadcasting sector, where terrestrial and cable TV operators have been profiting easily.
Real-time broadcasting of terrestrial TV content has been a sensitive issue. Currently, more than 60 percent of content viewed by IPTV users are reruns of programs from three terrestrial channels ― KBS, MBC and SBS, which means that airing those popular channels real-time is a big attraction to the IPTV business.
The association of traditional cable TV operators is fiercely opposing the scheme, saying the deregulation will devastate the cable industry.
``We are worried that the IPTV Law is deteriorating into KTTV Law,'' the association said in a press release last week. ``It is true that the legislation process has been much delayed. Still, the BCC should not haste and should listen to the voice of the industry.''
Telecom companies hoped IPTV would become their new profit source, as the old businesses of telephone and Internet service have stopped growth in the saturated market. KT and Hanarotelecom have made big investment in expanding and improving their high-speed network for IPTV service and offering free set-top boxes and subscription coupons to customers.
The firms say that it is impossible to make profit from the IPTV business without real-time terrestrial broadcasting. ``I believe that it will be difficult for us to profit from the IPTV business for the next three to five years because of competition in the market,'' Hanarotelecom CEO Cho Shin said in last week's press conference. The company has drawn some 860,000 subscribers, but Cho says that it will need 2 million to reach the break-even point.
Despite uncertainties in the power game between IPTV and cable TV operators, pundits say that IPTV can become the mainstream broadcasting platform in the long run.
The Hana Finance and Economic Research Institute draws a rosy picture that more than 7.5 million households will watch IPTV in 2013, accounting for about half of the total pay TV service market.