Korea goes digital on TV

The convergence of media broadcasting and communication is spurring the Korean telecommunications iindustry to come up with new business ideas.

The TV world in Korea is going digital.

With the strong push by the South Korean government, digital TV and broadcasting is replacing the old established analog TV technologies. The convergence of media broadcasting and communication is spurring the industry to come up with new business ideas.

Recent trends indicate that the explosive popularity that wireless data has enjoyed is waning, and the high speed Internet market is beginning to stagnate, raising concerns of a shrinking market.

In the broadcasting sector, unlike the struggling terrestrial market, the cable TV arena is showing steady growth across-the-board. The saturated terrestrial market is driving sales and profit margins downward, while the satellite broadcast market has been hit with declining profit margins and poor sales.

In contrast, the cable TV market is gaining more subscribers and supplement sales through high bandwidth Internet access. Also, are not seeing any lights.

As a result, both broadcasting and communication sides are looking to regain momentum through their merger and the TV will no longer limit itself just with broadcasting side but explore new markets through via the communications channel.

Consumers sold on blend of communications and broadcasting
One trend to note is spending pattern of each household--total domestic household spending in telecommunications (Internet and cell phone) rose to all time high US$13.3 billion in the first half of this year alone. It marks the first time communications-related spending weighed more than spending related to eating out.

The figure indicates huge rise in telecommunications spending but the actual growth rate has been trickling down gradually since year 2003. However, airwave fee expense of 0.3 percent from overall expenses in last year has shown 6.1 percent growth rate (partially due to pay-per-view programs) compared to mere 0.1 percent compound annual growth rate (CAGR) in telecommunications expenses.

It's an indication that the telecommunications market has matured but it also signifies that consumers are more willing to spend on low cost airwave fees. Industry affiliates expect to be able to derive benefits from the synergy of linking telecom services. Eventually the TV market should expand into DMB, IPTV and digital cable and run both communications/entertainment businesses.

IPTV, digital cable, DMB bringing new TV era
One of the biggest changes in TV services is the emergence of IPTV. It's using telecom IP networks to transmit data. Hanaro Telecom (HanaTV) and KT (Mega pass TV) are two main TV portals providing IPTV services presently. When combining future demands from ETRI and stock markets by year 2010, IPTV subscribers are expected to be somewhere between 3.7 million to 6.1 million, with sales forecast of US$9 billon.

Meanwhile, digital cable TV industry is keeping close watch on the IPTV commercialization and target to finish much of the digital conversions by 2010. Three cable companies Tbroad, CJ Cablenet, C&M Communication are working toward offering a standardized digital Media Center (DMC), acquiring HD set-top boxes, offering HD pay-per-view programs to raise the combined cable TV market revenues close to US$1.3 Billion dollars.

LG Dacom and KB bank also recently launched a TV banking service through subscribers of KDMC (Korea Digital-cable Media Center) to bring next generation of home networking electronic financial service or T-Commerce.

Mobile services as next-gen TV
Mobile broadcasting is one other form of next generation TV services. T-DMB and Satellite DMB services are available in domestic Korea currently. The satellite DMB (service provided by TU Media) is struggling to carve a niche of its own but T-DMB (free service) on the other hand is doing quite well. In the first nine months since its availability in the metropolitan service area, 1.75 million DMB devices have been sold.

Nation-wide pilot programs are presently being developed by KBS (Korean Broadcasting Service). In December, the broadcasting commission plans to select a single firm to control one region and twelve others to run six other regions, targeting for the first commercial service by next March. It is also in discussions to employ MediaFlo or DVB-H devices for IP-based DMB services.

"With the convergence of broadcasting and communications, we could see a one standard bandwidth, common network with unified platform to carry TV programs in future. The unified platform ultimately will offer mobile TV, mobile phone, and mobile Internet all as one unified service," said Minhyung Um, KBS DMB team manager.

Hyo-Jeoung Kim of ZDNet Korea reported from Seoul.