South Korea Adds Satellite Broadcasts To Mobile Services

TAIPEI, Taiwan — Already among the most savvy cell phone users in the world, South Koreans will add satellite digital multimedia broadcasting to their roster of mobile services on Monday (Jan. 10).

TU Media Corp, a joint venture between SK Telecom and Toshiba Corp., will start trials in Seoul that deliver up to 39 channels, 11 of which will go to video, 25 to audio and the remaining three to data.

SK Telecom will charge US$12 a month for TU Media's service, plus a general one-time subscription fee of US$17. It expects to attract 1.5 million subscribers by 2006, break even in 2008 and have 8 million customers by 2010, with US$1 billion in revenue.

With wireless and wired penetration among the highest in Asia, SK Telecom is being forced to come up with new services to keep its growth alive at home. In 2003, the telecom operator launched a video-on-demand service over its CDMA EV-DO network. The response was literally overwhelming. A monthly flat rate of US$17, plus 85 cents a movie, attracted so many Koreans that the network buckled under the load, forcing SK Telecom to make the unpopular move of sharply increasing fees to curb demand.

SK Telecom's latest foray into mobile video is the result of a partnership with Japan's Mobile Broadcasting Corp. (MBCo), which was formed in 1998 by primary shareholders Toshiba Corp., Toyota Motors, Fujitsu Ltd. and Nippon Television Network Corp. More than 80 companies have joined since then, including SK Telecom.MBCo and SK spent about US$230 million to launch a satellite last year for the inauguration of digital multimedia broadcasting (DMB) services in Japan and Korea. Japan launched a limited service package in October, focusing mostly on transmission to vehicles. In Korea, the services were supposed to come online last year, too, but red tape has slowed the approval of licenses, which were just issued in the last week of December.

The next hurdle TU Media and SK Telecom face is hashing out agreements with Korean broadcasters regarding retransmission of their content — something the company is counting on to break even. The core issue is when the Korea Broadcasting Commission will allow TU Media to relay terrestrial TV programming. SK Telecom says the sooner the better. But the commission may not give the go-ahead until the broadcasters put their own mobile TV services in place, probably via a new mobile TV transport system known as Terrestrial-Digital Multimedia Broadcast that was showcased last year by Korean broadcasters at the International Broadcast Convention in Amsterdam.

Cell phone cost and availability will also be a concern in Korea. At the moment, only a phone from Samsung Electronics that sells for about US$600 can receive signals. SK Telecom is hoping to subsidize the cost, but Korea has strict regulations against this. However, currently 3G phones qualify for up to a 40 percent subsidy, and the Korean government has indicated it might make another exception for the DMB-enabled handsets.