South Korea's Ministry of Information and Communication (MIC) will spend US$6 million on an IPTV trial.
The decision came after the MIC and the Korean Broadcasting Commission reached an accord after extended discussions for the IPTV trial to be carried out. Broadcasters in the country were earlier opposed to IPTV services.
To be eligible for the market trial, which will be conducted between November and December this year, service providers need to be fully equipped with their own IP communications hardware. "It's open to broadcasters, communication companies, and anybody who has the network capability to run the trial service project," an MIC spokeperson said.
Industry experts are expecting most Korean service providers to participate in the trial. In particular, local telcos running TV portal services--essentially customised video-on-demand offerings--are already gearing up for the IPTV market.
Korea Telecom (KT), for instance, has said it will commit 80 percent of its US$50 million IPTV budget toward the trial.
A KT representative said: "With experience in TV portal services as a prelude to actual IPTV service, we are well qualified, just that legal issues are still in the way [and] we should wait and see to decide."
Hanaro Telecom, which currently has its 'Hana TV' service, is already planning to enter the IPTV market. Its own market research has indicated that by 2010, it will be able to generate a profit margin of 88.3 percent from IPTV. The company is aiming to attract 250,000 subscribers by year-end to gain an early lead in the IPTV market.
According to a Hanaro spokeperson, the company's existing Hana TV system was built with IPTV in mind. "We just need to upgrade real-time encoders and set top box software."
With the debut of IPTV services in Korea, there is a looming concern over the future of existing TV portal services, which were introduced at a time when the commercialization of IPTV services was uncertain.
"With the commercialization of IPTV in the near future, the focus should be on getting quality content and preparing for live broadcasts, rather than hovering over the existing TV portal service," according to an unnamed source.
In fact, LG Powercom and Dacom, which provide TV portal services in the Ulsan areas, are not optimistic about the future of their services. Dacom is already planning to get involved in the IPTV trial to keep up with rivals who are eyeing the same market.
Meanwhile, mobile communications service provider SK Telecom (SKT), which does not have land-based network, is also interested in the IPTV market following rumors of a potential merger with Hanaro Telecom.
"We are reviewing all the avenues with the latest trial project to prepare for converging market. However specifics are not in liberty for discussion," according to a SKT spokesperson said.
Hyo-Jeoung Kim of ZDNet Korea reported from Seoul.