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SK Telecom-Walt Disney Joint Hands

Friday, May 14th, 2010

Second left is Choi See-Jong, CEO of KCC (Korea Communication Commission)
and to his right is Andy Bird, Chairman of Walt Disney

Why did Andy Bird, Walt Disney’s chairman visit Seoul?
On May 11th, SKTelecom and Walt Disney completed signing of their joint venture company PP(Program Provider). The joint venture PP was made to establish Disney’s content broadcasting for Korea’s cable TV, IPTV, and satellite DMB, and also for subscriber based mobile phone VOD service. They are planning to launch two Walt Disney channels next year, and targeting the 3S (3screens) mobile phones, TV, and PCs. This will also mean the world’s first movie contents program provider for mobile phones.

Before, Disney had to retransmit their contents through local cable companies, but now they will be able to broadcast their contents directly. And with the broadcasting service experience and expertise of SKT, Disney’s contents are expected to be aired in a more Korean viewer-friendly method.

It has been revealed that SKT has the leading shares of 51% and Walt Disney has 49% of their joint venture company, and also planning to appoint the CEO form SKT.

They are certainly expecting to generate more shared profits as Disney fosters a more Korean suited content delivery, but there are also individual interests at hand.
Andy Bird has expressed their desire to strengthen Disney’s international competitiveness and business capacity through this joint venture.

Whereas, Choi See-Jong, CEO of KCC (Korea Communication Commission) indicated hopes that Walt Disney will support further overseas expansion of Korean broadcasting content.

SKT and Walt Disney have also stated that they are planning to further their cooperation in content development into games and other diverse fields. How will all this turn out? We will just have to wait and see. Nonetheless, the joining of hands between a world major studio and Korea’s largest telecommunication operator is surely going to make waves for the domestic media market.

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Korean Teleco’s New Strategy: Penetrating B2B Market

Wednesday, April 21st, 2010

Until now, the Korean telecommunication industry sole client base had been individual customers.  They were naturally the target customers, since people were the ones who needed telecom services for their mobile phones, home phones, and office phones. However, the telecommunication service  industry had been facing market saturation with its 47.9 million users, which accounted for almost the entire Korean population. Hence, it had been difficult to go beyond the fierce zero-sum battle over the fixed pie amongst the three major telecom players: SKT, KT and LGT.

Nevertheless, the three telecom service moguls overcame recent stagnant growth and have made a breakthrough with the B2B market. They had found a convergence model where they can create value and services by providing software solutions to a carefully selected range of core businesses of such as logistics, finance, education, healthcare, manufacture, transportation and SME (small medium enterprises).

This opened new windows for the telecommunication sector, and also created synergy value between businesses and optimized services for end consumers. Hence, the three telecom services launched their innovative projects; SKT introduced its IPE (Industry Productivity Enhancement), KT with its S.M.ART (Save cost Maximize profit Art), and lastly LGT began its ‘Taltongshin’(beyond telecom) project.

On this issue, I am going to first introduce SK Telecom’s IPE, with KT and LGT on the upcoming issues.

SK Telecom

IPE, Industry Productivity Enhancement was built as SKTelecom’s goal of becoming a ‘Global ICT(Information & Communication technologies) leader’, and also to evade stagnation in the industry. SKT’s qualified TF(task force) has selected upon eight core businesses in  logistics, finance, retail, education, healthcare, manufacturing(automobiles), housing construction, and SME(small medium enterprises). I will introduce POSCO and the automobile industry’s MIV as two of SKT’s IPE systems.

To establish a firm IPE in manufacture, SKT has collaborated with POSCO (world’s top producing Korean steelmaker) to construct a “Smart Factory,” which is based on the concept of the smartphone ‘Mobile Office’(operational management service which includes name card, electronic payment, schedule, bulletin, staff check etc) SKT had provided the previous year.  Hence within the next 4 years, POSCO is planning to replace all in-house cable phones to wireless phones, and establish a ‘(fixed wireless) broadband convergence network’ using the WCDMA(3G mobile) network. These ‘smart’ fixes are expected to bring positive effects on logistics, equipment, safety, and energy savings to POSCO.

SKT is also establishing an IPE for the automobile industry called MIV (Mobile In Vehicle). MIV is a diagnostic remote control system that provides services such as anti-theft, emergency rescue, AV integration system, meter check, etc , which is also anticipated to enhance productivity.

President of SK Manwon Jeong has stated the four mission statements of accomplishing SKTelcom’s vision of becoming a global leader in ICT, which are procuring a patriotic leadership in technology, developing of new markets, propelling globalization with its synergy effects, and increasing consumer welfare.
And, they are expecting to do so, however, not solely in their captive marekt, but by creating new market space many diverse industries.

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My interview with CNN.com regarding Mobile TV in Korea

Monday, March 15th, 2010

Changing channels: Who will switch on to mobile TV?

By Nicolai Hartvig, for CNN                                                                                   February 25, 2010 12:07 a.m. EST

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(CNN) — It was a record-breaking performance that slowed taxi traffic across Seoul on Wednesday when figure-skating darling Kim Yu-na took to the ice in Vancouver at the Winter Olympic Games.

The South Korean capital’s cab drivers have for days been glued to their dashboard mobile TV screens, following the nation’s athletes at the Winter Olympics.

Since free terrestrial mobile TV, or t-DMB, was launched in South Korea in 2005, million of commuters on buses and subway trains have also watched game shows, sports, news and dramas on antenna-fitted cell phones with tilting screens or pocket-sized TV sets.

Broadcasters in the U.S. are hoping for a similar trend as they roll out the new mobile television standard ATSC-M/H. It will allow TV stations to put their live broadcasts on mobile devices with relatively little investment.

Yet in South Korea, terrestrial mobile TV has not lived up to its promise and while handset makers make money, broadcasters have yet to turn a profit.

Mobile TV is “not a failure but more of an ethnographic study” in a very mature mobile market, says Yunho Chung, the founder of the Seoul-based Veyond Partners media consultancy, who has been tracking the market for the past four-and-a-half years.

In penetration and geographic reach, mobile TV is more of a success, Chung told CNN. But it has been less successful economically, in part because the dominating terrestrial TV players didn’t invest enough.

“They were not expecting something great,” said Chung, adding it was seen as merely another platform for their usual channels in a country where broadcasting was traditionally regarded more as a public utility than a profit-making business.

South Korea’s government sees mobile TV as an investment. It put its research capability at the service of DMB and is now exporting the technology to countries interested in trying mobile TV — recently striking deals with Vietnam and Cambodia.

“Going abroad is the only solution,” said Chung.

The new American standard has a strong South Korean link, combining two systems developed by leading cell phone manufacturers Samsung and LG. The perennial rivals are now launching the first ATSC-M/H receivers in the U.S., getting a quick start in the hardware sales that are the cash cow of mobile TV.

South Koreans had bought 20 million handsets by the second quarter of 2009, double the number from the first quarter of 2008 and eleven times the number of handsets sold when mobile TV was first launched.

Without subscription fees, those numbers are the closest the country comes to counting its terrestrial users — and as the price of mobile TV technology has dropped in recent years, the feature has become more standard in cell phones, making it more difficult to gauge actual viewership.

The Korea Communications Commission (KCC) in 2008 estimated it at 1.6 percent.

Advertisers shrugged, buying mobile airtime worth just $6.2 million in 2008, with prime-time-commute advertising costing about 20 times less than its traditional television equivalent.

Tight control by the Korea Broadcast Advertising Association, which sells TV advertising time on behalf of broadcasters, has also kept prices low.

“Advertisers did not believe that mobile TV would be an effective medium,” Chung said, because mobile TV lacked a fixed environment to keep the viewers’ eyes trained on the sales pitch.

Contrast that with a study by BIA Financial for the National Association of Broadcasters, which predicts that mobile digital television advertising will provide an extra $2 billion annually for U.S. broadcasters by 2012.

The Open Mobile Video Coalition, which has worked to develop the ATSC-M/H standard and lobbied for mobile digital TV in the U.S., now counts more than 800 member stations.

Thirty stations will consumer-test the new standard in April after taking on the new technology for about $75,000 to $150,000 and a longer-term expense of “a few hundred thousand dollars,” says Dennis Wharton, the NAB’s Executive Vice President of Media Relations.

“It’s not like making the transition from analog to digital television which cost a minimum of about $2 million per station,” Wharton told CNN.

Unlike South Korea, where free mobile TV is mostly simulcasts from the country’s largest TV stations, the U.S. rollout is local programming. Wharton predicts this will draw in both viewers and advertisers, citing the “once-in-a-century” snowstorm that blanketed Washington D.C. earlier this month.

“People wanted to know whether their kids were going to school, whether their work was going to be closed,” Wharton said. “That’s the type of intensely local programming that only broadcasters can provide on these sorts of handheld devices. We’ve got a great franchise there.”

Local and premium seem to be the two business models to follow.

The 2006 Football World Cup and the 2008 Beijing Olympics were hits on South Korean mobile TV, hinting that must-see-live programming could be lucrative.

U.S. West Coast viewers are furious with NBC’s coverage of this year’s Winter Olympics because they must watch the contests with long delays — hours after news outlets have reported the results.

The premium content has so far been the core of Qualcomm’s subscription-based FLO, which delivers shows from major networks ABC, CBS, NBC and Fox, along with specialized channels like ESPN and Disney.

Mazen Chmaytelli, a Senior Director for Business Development for MediaFLO, sees the new ATSC-M/H service as a way to get mass viewership and introduce more people to mobile TV, noting that cable TV was first driven by local channels in set-top boxes.

“When they started offering that, customers started demanding premium content,” Mazen told CNN. Qualcomm is positioning FLO as a complementary hybrid specifically designed for a mobile TV experience.

“Every phone has a camera right now but a lot of people still own their own digital camera to complement it,” Mazen said.

Online viewing, video downloads and peer-to-peer file sharing remain mobile TV’s toughest competitors. In a 2009 survey by the Korea Communications Council, 70 percent of respondents said they watched re-runs of shows on the TV stations’ Web sites, a field in which Hulu and TV.com are U.S. leaders.

Only 6.9 percent said they used their cell phones to download or stream video.

South Korean broadcaster MBC announced in January it would make all its content available for free peer-to-peer sharing after a small download fee per show, expecting gains from better exposure to the mostly young peer-to-peer users.

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