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Countdown Begins for KT's Mega Moment(Korea Times Via Thomson Dialog NewsEdge) By Cho Jin-seo Staff Reporter For cable TV companies, the Christmas holiday season won't be as cheerful as in previous years. They may be biting their fingernails waiting for the National Assembly's decision on whether to approve the unleashing of Internet Protocol TV (IPTV) in South Korea. Bad for cable operators but good for South Koreans, the IPTV bill is likely to get approval sooner or later. Major political parties have agreed on a fast approval of the bill, which is to be presented during December's extraordinary session. If it goes according to plan, KT and Hanarotelecom will begin airing real-time TV programs through their Internet networks around May, they say. IPTV is an innovation of TV broadcasting, which best suits South Korea where more than 70 percent of households are connected to the broadband Internet. KT, the largest telephone and Internet operator, is already geared up to take advantage of this opportunity with its Mega TV service. ``It is highly possible that IPTV will lead the next-generation growth for KT,'' Choi Young-seok, an analyst of Mirae Asset Securities, the largest stock investor in Korea, said in a report. ``I have faith that IPTV will make KT metamorphose into a media company,'' he added, giving a ``buy'' opinion on the firm's stocks. IPTV is a system where TV contents are delivered by using broadband Internet lines and a set-top box, instead of using traditional TV antennas, cable boxes or satellite dishes. Users can watch real-time broadcasting such as KBS, MBC and SBS, or enjoy thousands of video-on-demand (VOD) programs such as movies, documentaries and educational programs. Research conducted during KT's Mega TV pilot phase revealed that 84 percent of target customers want to acquire the service when it becomes available. Affordable price is a big attraction of IPTV, as it is available for only 10,000 won per month, with discounts for signing multi-year contracts. Both KT and Hanarotelecom have been operating VOD services this year with more than one million subscribers in total. So far, Hanaro has been holding the pole position but KT is fast catching up by using its massive sales network and large subscriber base. It is real-time broadcasting that really matters for the IPTV's prospect, experts say. Han Ik-hee, an analyst at Hyundai Investment & Securities, says that cable TV companies will lose many of their customers once broadcasting starts. To soothe the fierce protests from cable operators, lawmakers are initially going to put a 33 percent market-share limit on IPTVs in each region. ``The launching of IPTV services will cause major changes in the media environment, and will benefit companies that produce and supply broadcasting content,'' Han said. According to the Ministry of Information and Technology, the adoption of real-time IPTV services will form a 12.9 trillion-won industry, and will create 77,000 new jobs by 2012. KT first tested the Internet TV platform in 2004. It launched a marketing campaign in 2006 under the name of Megapass TV. The name was trimmed to Mega TV this July. It is now available all over the country. Even Hanaro, KT's rival in the field, says it welcomes KT's expansion because they have different business focuses and it believes healthy competition will enlarge the market pie. ``KT is different,'' said Mark Pitchford, chief marketing officer of Hanaro in October. ``They are focusing on value-added services while we are more about content. KT actually helps lift the whole IPTV market.'' KT's strength lies in its advanced two-way communication technology and a wide variety of contents. Unlike Hanaro's system, KT's Mega TV enables users to give input into the system for specific transactions. For example, they can use the search engine of the Naver portal, or check out their portfolio on stock trading sites. Mega TV's other killer applications are education and games. The firm is offering educational programs in a partnership with Mega Study, the largest online education firm in South Korea, which is extremely popular among middle school and high school students. Last week, the company also started selling special packages of Sony PlayStation 3 to use the game console as the set-top box for Mega TV. It was hailed by many local and international media as the world's first attempt to use the game machine in broadcasting. As for the movie and entertainment contents, KT is determined to beat cable companies and Hanaro. Earlier this month, the firm's executive board approved a 40 billion won investment to set up a fund that will buy contents for Mega TV. Copyright 2007 The Korea Times Company Ltd, Source: The Financial Times Limited |