IPTV to Change Basic Concept of Entertainment
By Kim Tong-hyung
Staff Reporter
Internet TV is set to invigorate the saturated Korean IT industry market and bring changes to basic entertainment concepts this year.
The telecommunications industry is hoping that Internet protocol television (IPTV) will make new strides in the New Year, with optimists predicting the number of subscribers to triple to six million within 12 months.
IPTV provides viewers with a wealth of interactive features, including video-on-demand (VOD), e-commerce and online banking services, as well as conventional television programming.
The country's three IPTV operators ― KT, SK Broadband and LG Dacom ― have about 1.8 million customers.
KT has been providing real-time broadcasting since last month, and SK Broadband and LG Dacom, which had been relying on VOD services, also began conventional television services today.
It bears further watching to see if broadband television lives up to its hype as the future of household entertainment or ends up in the massive pile of other interactive-TV platforms that blazed onto the scene only to fizzle out.
The IPTV industry faces lengthy disputes between telecommunications companies and television networks over content prices, as terrestrial television stations agreed to provide their content to the IPTV operators ahead of fixing the price to be paid, one of the most unusual settlements ever in a market economy.
The talks will resume in March and IPTV operators aren't sure how much they will end up paying for content, although industry watchers predict the national channels to settle for an annual fee of 40 to 50 billion won each.
The lavish expenses for content could limit the profitability of IPTV as a business, already competing in a crowded pay-T.V. market. But telecommunications companies can't afford a half-hearted commitment when they are struggling to gain on their broadband investments with their traditional markets nearing saturation.
KT, the country's largest telephone company and Internet service provider, is reeling from skidding profits, with cheaper Internet telephony services eroding its fixed-line customer pool.
The aging telecom giant hopes that leadership in IPTV, as well as other new businesses such as WiBro wireless Internet services, will help make up for its decline in the voice industry.
SK Broadband and LG Dacom will use IPTV as another weapon to steal customers from KT.
Uniting with their sister partners, the companies will bundle their IPTV offerings with other services, such as mobile and fixed-line telephony, broadband Internet and voice-over-Internet protocol (VoIP) to provide customers a discounted rate on one bill.
KT currently has 850,000 subscribers to its ``Mega TV'' services, followed by SK Broadband's ``Broad & TV'' services, which has 780,000 customers. LG Dacom has about 50,000 households receiving their ``myLGtv'' services.
KT, which currently charges 16,000 won per month for Mega TV, recently agreed with nine regional channels to expand coverage nationwide.
SK Broadband and LG Dacom have yet to agree with regional broadcasters, which means that their IPTV subscribers outside of Seoul and the metropolitan area don't receive SBS programming.