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What is IPTV and how does it work?

It merges TV and high-speed Internet to provide entertainment, e-commerce and educational content.

Nov 14,2009

Since early this year, the word IPTV has been mentioned in numerous headlines and news stories. Yes, it is a fancier version of regular old TVs, but many people wonder - what exactly is IPTV, or Internet protocol TV, and how does it work?

What is IPTV?

Simply put, IPTV combines TV and high-speed Internet into one system through a set-top box. In other words, it delivers a digital television experience over computer networks at broadband speed. Thus, the content for IPTV is delivered through a high-speed broadband connection, instead of the traditional way - through broadcast networks directly through cable.

With this, a whole new viewing experience is possible. It promises a more interactive TV experience for viewers because they will be able to access a whole different kind of home entertainment. For example, viewers will be able to fast forward or rewind any part of a show on TV as well as watch TV shows they missed, all through IPTV’s VOD, or video-on-demand, service. Electronic bank transactions, text messaging, movie downloads and online chat sessions are also possible with this advanced form of television.

Another IPTV feature is e-commerce services. Viewers can choose to shop on home shopping channels and order the products they want to purchase by clicking their remote instead of picking up the phone. And it doesn’t stop there. On certain TV dramas or shows, viewers can click on items worn by TV personalities and purchase the items for themselves or get information on where they can buy the items.

In addition to entertainment, IPTV offers new ways for people to view educational content. Through IPTV, someone who lives in a remote part of Korea and doesn’t have access to educational facilities close to home will be able to take part in an interactive lecture with famous instructors. This particular function has served as a crucial point for the government to encourage the spread of IPTV service. The nation’s broadcasting regulator, the Korea Communications Commission, announced that the Korean government plans to spend 15 billion won by the end of this year on including educational content through IPTV at schools nationwide. In fact, by 2010, the government plans to provide IPTV in all classrooms in schools across the country. It will also convert the country to digital television broadcasts by 2012.

IPTV launches in Korea

Korean operators got on the IPTV bandwagon at the end of last year and at the beginning of this year. KT was the first. It launched its full IPTV service, Mega TV, in November 2008 with 40 channels in total. The company managed to work out a deal with Korea’s three major broadcasting stations, KBS, MBC and SBS. In the deal, the networks agreed to allow KT to show their TV programs through IPTV.

By last December, SK Broadband and LG Dacom also struck a deal with the three networks. After securing retransmission rights with broadcasters, SK Broadband launched its full IPTV service, Broad & TV, with 23 channels in January this year. Also in January, LG Dacom launched its IPTV service, myLGtv.

KT’s service was launched for a price of 16,000 won ($13.81) per month. SK Broadband and LG Dacom charge 14,000 won monthly.

Before this, the operators could only provide VOD services because they had a conflict with broadcasting stations, which prevented them from airing real-time broadcasts. There was a large controversy surrounding IPTV operators and broadcasters for quite some time before these deals were made possible. All three major broadcasters initially said no to providing their content to IPTV. The main problem was advertisements and who receives the profits from TV ads.

Because IPTV allows viewers to skip advertisements, the broadcasters were afraid that the revenue from advertisers would decrease. They were also worried that they might have to share advertisement revenue with IPTV providers.

Push for popularization of IPTV

The Korean government had long pushed for the development and popularization of IPTV here, and they touted it as an important new growth engine for the development of Korea’s IT industry. In fact, the government announced an investment plan worth 12.2 billion won over the next three years in support of IPTV development.

Despite this, IPTV service failed to secure many subscribers during the first half of this year. At the end of June, the three IPTV operators had managed to secure only a combined total of 400,000 customers.

Along with the government, the nation’s three IPTV operators have also been aggressive in marketing IPTV to the public, because the phone and data transmission sectors are becoming saturated in Korea. These efforts have come out through new payment plans and services.

KT launched their new IPTV pricing plan called “a la carte” this summer. With the plan, customers can select the channels they want to subscribe to at a lower price than the full set of channels offered.

LG Dacom, along with affiliate LG Electronics, featured LCD TVs that have internal set-top boxes for IPTV service.

SK Broadband launched their “Broad & IPTV 2.0.” The plan allows users to pre-select channels and genres that they watch most often to make a personalized program schedule.

The three operators also announced that they will increase the number of channels available on IPTV by more than twice their starting number. In theory, as channels are transmitted in much smaller files on IPTV compared to traditional TVs that rely on frequencies, IPTV can feature up to 1,000 channels.

The low subscription rate offered earlier in the year prompted the government to come up with other IPTV services. One service connects soldiers with family members in real time through IPTV. In another service, elderly citizens can get health examinations through IPTV.

These efforts seem to have been successful. The Korea Digital Media Industry Association announced last month that over 1 million people had subscribed to IPTV as of the end of September. The KDMIA said that the rapid growth in subscriptions was due to improved service quality and expanded infrastructure.


By Cho Jae-eun [jainnie@joongang.co.kr]

Employees work at KT’s New Media Center in Yeouido, Seoul, where the company operates its IPTV services.[JoongAng Ilbo]



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