Digital TV a turnoff in tech-savvy Korea

Standards disagreements slow rollout

SEOUL — South Korea prides itself on adopting new technologies fast.

However, digital TV is an exception. Plans to switch to digital broadcasting in 2010 are in doubt due to regulatory, technological and commercial hurdles.

Pols had hoped 95% of South Korean households would own digital-ready TVs by 2010.

But only 17.8% of homes have made the switch, compared with 56.9% in the U.S. and 36.6% in Japan, and the government now estimates only 59% of homes will have digital in 2010.

Much of the blame lies in disagreements over standards. The government adopted the U.S.-developed ATSC standard in 1997. However, local broadcasters wanted the European DVB standard, said to better support mobile broadcasting. A protracted battle was finally resolved in ATSC’s favor in 2004.

Although terrestrial channels KBS, MBC and SBS now broadcast HD digital programs for free for more than 25% of airtime, cable TV is dominated by analog.

Cable operators have offered digital subscriptions since 2003, but uptake has been tiny: a mere 51,000 households, compared with 13.2 million on analog subscriptions.

The higher costs of subscription and the need to buy digital set-top boxes (which can run as high as $200) have been a major drag on the young industry, marketed on its low cost.

Program providers have struggled to introduce exclusive content for digital TV, meaning the channels on the inexpensive analog subs and the higher-priced digital subs are virtually the same.

“We introduced digital broadcasting in 2003, but our subscriber base remains at 13,000,” says Deok-Sun Lee, managing director at cable provider Qrix. “Subscribers don’t see the difference between digital and analog, and we have not been able to offer major incentives for subscribers to switch.”

Satellite delivery of digital TV has been more successful, with lone operator SkyLife boasting almost 1.9 million subs.

However, the need to change content to encourage the uptake of digital TV is limited by Korean Broadcasting Commission regulations. Foreign media can own only 49% of content providers, while licenses to retransmit foreign channels are restricted.

Broadcast quotas on terrestrial and cable channels also limit foreign content, a constant source of frustration for companies like Sparrowhawk Media and Turner Broadcasting System, which operate in the Korean market. “The regulatory framework actively discourages companies like mine from investing in local content,” says Ian Carroll, senior veep at Turner.

The government insists it’s rethinking the policy, given the introduction of new technologies. Internet protocol TV, already making headway in Hong Kong, will be introduced by telcos KT and Hanaro Telecom once the government establishes a regulatory framework.

Other new technologies gaining ground include satellite and terrestrial DMB, which enables broadcasting via phones and other mobile devices. South Korea became the first country in the world to introduce both services in 2005, and DMB-ready phones are hot sellers.

Meanwhile, the government is pushing for the construction of a $2 billion broadband convergence network by 2010 that will combine telecom, Internet and broadcasting pipelines into one converged network.

With so much change on the horizon, Korea’s digital TV sector will have to adapt quickly before it is left behind.