Friday, January 05, 2007

Extelecommunicating Heretics

For a country with as much broadband Internet as Korea and that watches as much television as Koreans do, you would think that Internet TV would be a natural match. IPTV has been the next big thing in many territories about the world, with 1,300 IPTV channels being broadcast around the world (or so Wikipedia tells me).

South Korea's IPTV, however, has been stymied for years, thanks to the never-ending turf wars of various government ministries -- mostly the Ministry of Information and Communications and the Korean Broadcasting Commission, although the Ministry of Commerce, Industry and Energy has also been involved and the Ministry of Culture and Tourism stepped in recently, further muddying the waters. Since IPTV represents the convergence of several fields (Internet technology plus TV broadcasting, plus telephony, plus who-knows-what-next), each field's individual regulator and policy body now wants the power over all IPTV.

Also complicating things was the Cable TV industry, which worries that IPTV could put them out of business. Korea's generally dodgy Cable business has been trying to upgrade its service, moving to HD digital, but last I checked, they were having serious technical problems (standard definition is okay, but HD is not working yet). So rather than get their own house in order and complete with the telecoms for customers, the cable industry has been furiously lobbying the government to prevent IPTV from taking off.

Now why, you might ask, should I care about IPTV? After all, Korean TV networks have streamed content over the Internet for years. But streaming is not the same thing as broadcasting.

IPTV also brings us closer to Triple Play, that converging of TV, Internet and telephone into one single package (even Quadruple Play, if you can combine mobile phones). Instead of having to pay for three separate services, you will just have one company providing all three. Theoretically for a lot less money than the three services cost separately.

Korea's mighty telecoms have been straining at the bit for years for the chance to move to IPTV. Everyone in Korea already has a mobile phone, and most people have Internet and cable TV, so it has been increasingly hard to find room for growth.

Hanaro Telecom finally got tired of waiting for the government to get its act together and last summer launched HanaTV. Which of course pissed off regulators to no end. But so far HanaTV is just Video on Demand, not full IPTV, and the government can see what is coming, so HanaTV has been left alone. KT has also started IPTV trials.

Finally last month, the government put forward legislation to create a new regulatory body that would combine telecommunications and broadcasting and sort out the whole mess.

Well, be careful of what you wish for. Especially when you have leadership like the Roh Moo-hyun administration. Because the law that Roh is pushing would create a new regulatory body MORE controlled by the president's office. Under the new bill, the president would appoint all five members of the new regulatory body's standing committee. This committee would be responsible for, among other things, appointing the presidents of the three public TV stations (KBS, MBC and EBS). Considering how overpoliticized the media already is in Korea, adding more politics to the mix is not a good idea.

In the IPTV age, why is the state involved in controlling broadcasting at all? In the past, the argument was that the airwaves belong to the public, so content should reflect the public good. But IPTV is not constrained by the limits of the open airwaves. You can have hundreds, thousands of Internet-broadcast channels. Year by year, the cable channels are getting better ratings and are posing better competition.

This is not just some abstract, technocratic debate. Koreans have proven, over and over again, that they far prefer receiving their entertainment content over the Internet, rather than buying packaged goods. CD sales have dropped nearly 75% since 2000 (down to barely $100 million), but Internet and mobile phone music sales might have topped $400 million last year (2006 figures are not available yet, but those are the early estimates I have heard). Video game boxes (like Playstation and Xbox) are barely an afterthought compared to Internet gaming. DVD sales never took off in the first place, and have since declined a lot.

The Korean movie industry has been overreliant on theatrical revenue for some time. Over 80% of most movies' revenue comes from the theaters (in the United States, DVD sales are often bigger than theatrical revenue). And more diverse revenues for TV producers would not hurt either. So IPTV has the potential to be a major boost for movies and TV.

In many ways, the future of the entertainment industry could be linked to this new law. But Roh, once again, has shown himself more concerned with asserting his power and the power of his office rather than taking the steps needed to empower the Korean people and their cultural industries. I do not mean to sound all high-and-mighty or rant too much, but it is so annoying small-minded politicians so intent on mucking things up once again.

(Btw, sorry for not writing much these days. But the book is taking up more and more time these days.)

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