If someone asks me what kind of words can intrigue you a lot I won’t hesitate to say the word “Convergence”. It has long been a hot topic in various industries such as Media, IT, and Telecom and has always been around us.

A month ago I took a lecture on digital convergence in a college and I was surprised that most students had a quite good understanding of converged services saying IPTV, VoIP, and DMB(Mobile TV). What they knew is not about terms like media convergence, IT convergence, etc. What they understood is the changes driven by convergence. They know that they can watch territorial TV programs on their cell phones and TVs through broadband, which didn’t exist when they were in junior high. So what I did in the class is to show them how the changes have occurred and new changes will occur.

Below is a snapshot of the convergence history and trend in Korea that we are experiencing nowadays.

In Korea, convergence between different industries has become essential for companies to create new markets and to increase their profit margin as most markets have matured. So there are new types of businesses coming to market.

Source: Digital Convergence Research

Below is the ppt that I used in a class. If you want to know more about digital convergence business in Korea you can take a look at it.

Digital Convergence Business in Korea 2010

South Korea was ranked second in the 2008 broadband leadership, conducted by the Saïd Business School at Oxford and the University of Oviedo in Spain, and sponsored by Cisco Systems, the telecommunications equipment maker. This year, however, South Korea retakes the top spot in an annual ranking of broadband quality, achieving a broadband penetration rate of 97 percent and quality score of 66 points, followed by Japan with 64 percent and 64 points, respectively.

The study takes into account the download and upload speeds of Internet connections, rather than simply comparing market penetration rates since the quality of connections has grown more important as online services such as IPTV(Internet Protocol television) are expected to become popular in the near future.

The reason why South Korea was ranked second in the 2008 broadband leadership is that the broadband quality wasn’t good compared with its highest broadband penetration rate in the world. However, with the government’s continuous efforts such as the ultra broadband convergence network(UBcN) plan the broadband quality has been significantly improved as you can see below.

On 12th March, ‘&TV Communications’ launched ‘Enjoy and TV’ to serve Korean Americans in the US. This was the first attempt for Korean IPTV player to provide its service outside its territory. Considering the nature of internet service, where the national boundary doesn’t exist, Korean IPTV (also an internet based service) was supposed to go to overseas market much earlier.

As a matter of fact, Korea’s leading IPTV service providers, which were backed up by their cutting edge IP technologies, have been stuck in their domestic market for the last couple of years. On the other hand, it was &TV Communications (a joint venture between less known players such as Posdata, Celrun, JEI EDU and Acanet TV) who penetrated global IPTV market for the first time. What’s the story behind it?

In Korea, viewers lost their freedom of choice when it comes to IPTV service subscription. The choice of IPTV service depends on selection of their internet connection service. In other words, viewers can subscribe IPTV service that is provided by the same internet service provider. For example, KT and LG DACOM have provided their IPTV services exclusively to their internet service customers. However, SK Broadband behaved in the different manner. They expanded their target market to the subscribers of other internet service providers. KT and LG DACOM complained about this and finally closed their network with the reason of heavy network capacity. The Telecommunication Committee found this was against the benefits and welfare of citizens and thus asked KT and LG to open the network. They also requested SK to pay for interconnection fee to KT, LG and other MSOs. However, after the event, SK has been focussing on selling bundled products, i.e. they try to sell their IPTV and internet connection service together.

Outside the Korea, when SK Broadband launched its Broad & TV (IPTV) it was so popular among overseas Koreans and other Asian Korean drama lovers. They bought set top box from Korea and brought it back to their home countries. They could watch Korean drama and TV shows without the time delay. However, the Korean broadcasting companies began to complain this time. They disagreed with this because it might harm their profit from selling TV contents to overseas markets. Ultimately, SK closed IP network for the access from outside the Korea. Korea’s IPTV service, with huge potential in the global market, never went beyond its national boundary. It is a shame for Korean IPTV sector because they could have penetrated global market if they could cooperate together. Of course cooperation isn’t easy but not impossible.

Microsoft and its Xbox-360(a sophisticated game machine with internet access function) probably provide some lessons to Korean IPTV players about the cooperation. They lately signed partnership agreements with NBC Universal, Walt Disney, MGM Studio and Showtime Network etc for the contents provision. Microsoft currently limits their market within the US due to the copyright issues. However, their well functioning partnership not only makes us feel jealous but make us hope Korean IPTV sectors to learn something from them.

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Original article written in Korean: