중앙데일리

IPTV operators baiting subscribers with cash

But experts warn the practice could hurt consumers

Nov 13,2008
With local high-speed Internet service providers using cash gifts as a marketing ploy again, experts warn that the industry faces cutthroat competition which is likely to harm subscribers.

“Cash marketing is a widespread practice among broadband providers. Internet service providers are keen to build their TV subscriber numbers. This means that they have to snatch more users from other rivals to make their IPTV services successful,” said Kim Jin-kyung, a manager with the Korea Cable TV Association’s public relations team.

Since IPTV and Internet telephony are provided on broadband networks, Internet subscriber numbers are crucial to success.

Currently, nationwide sales agencies of the country’s three major high-speed Internet service providers - KT, SK Broadband and LG Powercomm - all provide up to 200,000 won ($147) in cash or other high-value gifts such as the Nintendo Wii game console depending on the number of services people take and their subscription length.

For example, SK Broadband offers 190,000 won in cash to subscribers who sign up for its triple-play service - Internet, IPTV and Internet telephony - for three years.

In contrast, subscribers who opt for the dual-play service, which bundles Internet and telephony services, for one year receive 70,000 won.

All three Internet providers say it is not company policy to offer cash marketing, pointing instead to the selling agencies. But the agencies and other Internet Web sites specializing in selling high-speed Internet services tell a different story.

“When we attract new subscribers, we get commissions from Internet companies. We return some of the commissions to new subscribers. This is how it works,” said an official of one Internet Web site, who asked to remain anonymous.

Competition in the Internet services arena is stiff. Full IPTV services are scheduled to be launched later this month. Earlier this year, each of the providers was slapped with business bans that prevented them from signing up new subscribers.

The Korea Communications Commission, the national broadcasting and telecommunication regulator, imposed on each provider a ban on attracting new broadband subscribers for up to 40 days for irresponsible management of subscriber information.

“We’re currently looking at the cash marketing issue to get a good grip on it. If we think the competition is getting out of control, we will step in,” said Choi Sung-ho, head of the division for protecting telecom subscribers at the KCC.

“What we’re worried about is that cash marketing could harm consumers who do not switch Internet service providers because they indirectly have to shoulder a certain amount of marketing costs,” added Choi.

Meanwhile, KT, the leading IPTV operator, said yesterday in a release that it finally reached an agreement with MBC, a local broadcasting station, to provide MBC’s TV programs on a real-time basis. KT signed up with KBS and SBS last month. Full IPTV service will be launched on Nov. 17, KT said.

Industry watchers believe that other IPTV providers will also sign up with MBC in the near future.

There has been a dispute between IPTV operators and the local major broadcasting stations because the broadcasting stations see IPTV as a threat.



By Sung So-young Staff Reporter [so@joongang.co.kr]



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