Challenges for Korean IPTV Industry

SUMMARY

Guideline for the report:

As the digitalization of broadcasting contents, the speed of telecommunications, and consumers' demand for convergence between telecommunications and broadcasting services are increasing, service providers are keen on converging their telecommunications and broadcasting services. Against this backdrop, a new media, IPTV, so called Internet TV gains much attention. IPTV is a converged telecommunications/broadcasting service provided by fixed operators. While mobile TV is a wireless digital broadcasting service enabling viewers to use multimedia services and data while on the move, IPTV is a fixed digital broadcasting service allowing users to enjoy multimedia services and data information at homes or offices. Fixed operators take the lead in preparing IPTV service in Korea like other countries, but due to unprepared institutional frameworks and controversy over fair regulations between cable TV operators and IPTV service providers, the commercial launch the service has been delayed. Since Korean IPTV service is expected to be provided based on high-speed networks, 100Mbps FTTH, and the government-led BcN, the service is likely to have strong market power in Korea. Telecommunication companies such as Korea Telecom (KT), Hanaro Telecom and Dacom are preparing IPTV service as a business model of BcN project and they already started a pilot service in the latter half of 2005.

KT is the most active player pioneering the domestic IPTV market. KT is preparing IPTV service as a strategic application of its home network business, simply beyond providing broadcasting service. Prior to the launch of IPTV service, KT implements the following three IPTV strategies; HomeN service, TV portal and IP media. Supposed that IPTV commercial launch begins in 2006 in Korea, it is projected that the number of subscribers would reach 570,000 in 2006 and increase up to about 3 million by 2012. In addition, sales would record 160 billion KRW in 2006 and increase to 770 billion KRW by 2012.

IPTV is expected to bring considerable effects on telecommuni-cation and broadcasting industries. The biggest impact that IPTV brings would be a change in industrial structure. IPTV is likely to be transformed from non-real-time services such as information and VOD into two-way services through real-time transmission of broadcasting contents. Briefly, the boundary between telecommunications and broadcasting industries would be faded out by a converged platform called IPTV. Fixed broadcasting/telecommunications convergence TV represented by IPTV and digital cable broadcasting, and mobile broadcasting/telecommunications convergence TV represented by Digital Multimedia Broadcasting (DMB) will lead the future broadcasting/telecommunications services in Korea. Along with this, not only video services including VOD but also various home-networking services such as Home Automation and Home-security services are expected to be realized and widely spread through IPTV. As two-way feature, a major character of telecommunications service, is added to those services, various value-added services such as video phone, t-commerce, e-learning and customized TV portals would be developed. Such development of various value-added services will lead to the expansion of home appliances market. In order for those services to get realized, IPTV set-top box connecting high-speed Internet with TV is necessary. If VoIP function is added, set-top box would be developed as TPS (Triple-Play Service) set-top box which provides telephone, high-speed Internet and broadcasting services at the same time.

Scope of the Report:

This report analyzes and prospects the IPTV market in Korea. More specifically, the report covers the reasons for the IPTV service delay and estimates a possible market size after the service launch. In addition, it explores the status and the progress of carriers such as SKT, Hanaro Telecom and Powercomm in preparing IPTV service. Lastly, it prospects the possible effects that IPTV service brings to telecommunications and broadcasting industries. The development status of IPTV market in other countries is provided in the appendix.

Who should read this report?

This report targets broadcasting and telecommunications industries. Since the Korean IPTV service is expected to need FTTH-level Internet infrastructure and various contents, it would be a useful material to those who are interested in the Korean IPTV and contents markets.

TABLE OF CONTENTS

Executive Summary

I.INTRODUCTION TO THE KOREAN IPTV MARKET

• 1-1 The Spread of Converged Broadcasting/Telecommunications Services
• 1-2 What is IPTV?
• 1-3 Background for the Emergence of IPTV

II.MARKET SITUATION OF KOREA'S IPTV

• 2-1 Introduction of IPTV Service
• 2-2 Policy and Regulations
  • 2-2-1 Disputes over Policy
  • 2-2-2 Oppositions from Broadcasters
  • 2-2-3 Obstacles to Convergence-Conflicts between Regulatory Agencies
• 2-3 IPTV Service
  • 2-3-1 Characteristics of Korea's IPTV Service
  • 2-3-2 IPTV Service Providers in Korea
    • 2-3-2-1 KT (Korea Telecom)
    • 2-3-2-2 Hanaro Telecom
    • 2-3-2-3 Dacom
  • 2-3-3 Korea's IPTV Equipment Manufacturers
    • 2-3-3-1 Set-top box Manufacturers
    • 2-3-3-2 VOD Server Manufacturers
  • 2-3-4 Korea's IPTV Network Infrastructure
    • 2-3-4-1 Fiber To The Home (FTTH)
    • 2-3-4-2 FTTH Technology
    • 2-3-4-3 Broadband Convergence Network (BcN)

III.THREATS AND OPPORTUNITIES IN THE KOREAN IPTV MARKET

• 3-1 The Biggest Competitor -- Cable TV
• 3-2 Key to the Success of IPTV Service
• 3-3 Effects of IPTV Service Launch
• 3-4 Outlook for the Korean IPTV Market

Appendix

• 1. The Status of IPTV Service in Other Countries
• 2. List of the Korean IPTV Service-related Companies

List of Tables

• Table 1: MSO's Plan of Digital Cable Broadcasting Service in 2006
• Table 2: Broadcasting Services by Service Providers
• Table 3: Background for the Emergence of IPTV
• Table 4: Characteristics of IPTV
• Table 5: Preparatory Work for Launching IPTV Service
• Table 6: Controversy over Policy between KBC and MIC
• Table 7: IPTV-related Acts Presented to the National Assembly
• Table 8: HomeN TV Service by KT
• Table 9: TV Portal Service by KT
• Table 10: IP Media Service by KT
• Table 11: Major IPTV Set-top box Manufacturers
• Table 12: Subscribers of Broadband Internet and Apartment LAN
• Table 13: Comparison between WDM-PON and GE-PON
• Table 14: Consortia to Take BcN Trial Operation
• Table 15: The Comparison of IPTV and Cable TV (Korea)
• Table 16: Analysis of Strengths and Weaknesses of IPTV Service
• Table 17: The Status of IPTV Service Launch in Major Countries

List of Figures

• Figure 1: IPTV Screen Sample (Main Menu)
• Figure 2: IPTV Screen Sample (Broadcasting Screen)
• Figure 3: The Concept of IPTV Service
• Figure 4: Number of IPTV Service Subscribers and Revenues Outlook
• Figure 5: Investment Amount for IPTV
• Figure 6: Industrial Ripple Effect of IPTV
• Figure 7: Obstacles to Broadcasting/Telecommunications Convergence (Multiple Answers)
• Figure 8: Legal Approach to Broadcasting/Telecommunications Convergence (Multiple Answers)
• Figure 9: KT's IPTV Strategy
• Figure 10: Service Items of HomeN
• Figure 11: KT HomeN TV
• Figure 12: KT HomeN PC
• Figure 13: KTCAST
• Figure 14: VOD Service Flow