The Convergence of Telecommunications

and Broadcasting

Nov. 24, 2006

Fall 2006
Kijoo Lee
Contents

I Introduction

II The Regulatory approach to new services

III Shift from Industry based Regulatory Structure

IV Regulatory Institutions

Response to the Convergence of

V
Telecommunications and Broadcasting in Korea

1
 Ⅰ. Introduction

해당부서명 입력 2
Convergence

Convergence refers to the process by which communications networks

and services, which were previously considered separate, are being
transformed such that :
• Different network platforms carry a similar range of voice, audiovisual and data
transmission services
• Different consumer appliances receive a similar range of services; and
• New services are being created

Convergence is made possible by technological changes such as the

move from analogue to digital, improvements in network speeds,
improvements in compression techniques and storage capacity, and
a growing range of wireless applications
• Broadband Internet, 3G mobile networks, wireless LANs and digital televisions
are the new platforms which are expected to play a key role in convergence

3
Government objectives for policies in the communication sector

Economic objectives
• Promote and sustain competition and choice as a mean of minimizing price
and maximizing quality of communications services
• Encourage investment and innovation
• Maximize the contribution of the communication sector to economic growth
and performance
• Efficient allocation of spectrum

Social and cultural objectives

• Affordable access to a universal service specified in terms of telephony,
broadcasting and Internet access
• Plurality of voices in the media
• Cultural diversity and national identity reflected in content
• Consumer protection and privacy
4
Impacts of convergence on existing policies

Convergence can alter the effectiveness of policies in a number

of ways

• It may intensify competition across delivery networks and between

services
• It could also help to reduce access bottlenecks by allowing services
to be delivered on a number of different platforms
• It can create new services and stimulate innovation, both of which
might be associated with new entrants
• It is also associated with the vertical integration of global enterprise

5
Rapid development of the Internet

Rapid development of the Internet is resulting in significant

changes in the type of services available

• These services often do not fit easily into existing regulatory definitions
and frameworks

If audio-visual content (broadband audio visual services) is

offered through the Internet, should this be considered as
telecommunications or broadcasting?

• Should it be regulated as broadcasting?

• Uncertainty and unnecessarily restrictive policies could inhibit the
development of these services and the associated benefits to consumers
and the economy

6
The regulatory frameworks

While technology may be bringing telecommunications, broadcasting and the

Internet closer together, the regulatory frameworks within which the industries
operate remain not only quite separate but also focused on different objectives

Over the last decade, the drive to liberalize the telecommunications market has
seen the development of regulatory frameworks specifically to manage the
transition from monopoly to competition and to stimulate the roll-out of new
technologies and services

The major influences underlying the regulation of broadcasting have been the
social and cultural impact of the industry and the shortage of spectrum
• Broadcasting remains highly regulated
• Licenses are used to control entry and a wide range of technical and content
conditions are attached to licenses

In contrast to telecommunications, the Internet has faced little sector specific

regulation

7
 Ⅱ. The Regulatory approach to
new services

해당부서명 입력 8
The Regulatory approach to new services (1)
The emergence of new services which have some characteristics of
broadcasting challenges existing broadcasting policy and regulation

< Webcasting (Internet broadcasting) >

• Most countries have not specifically addressed the regulatory approach to
Webcasting, in part because, as yet, it is not seen as a significant problem

• Countries which have developed a position have come to quite different

conclusions
- Denmark, Japan, Korea : a telecommunication service
- Norway, Sweden : cable broadcasting
- Canada : Issued an order exempting such undertakings from regulation
under the Broadcasting Act
- The U.S. : The FCC does not regulate services delivered by the Internet

9
The Regulatory approach to new services (2)
< Video on demand >
• Canada, U.K., New Zealand: VOD would be regarded as broadcasting
• Finland, Japan, Portugal, Sweden, Korea: not broadcasting or a
telecommunication service

Content regulation becomes more difficult to implement

• A situation could develop where the same or similar content faces different
regulatory obligations depending on how it is divided

• Some have argued that different media should be regulated differently,

even if they deliver the same or similar content, because there may be
different social impacts depending on the delivery mechanism

10
Audio-visual services over the Internet(1)
Broadband audio-visual services are currently unregulated or subject to
very light regulations in most OECD countries since they are not
encompassed in existing service definitions
• These broadband services don’t fit into existing broadcasting definitions

Traditionally, broadcasting has been defined as the dissemination of

programme content to the public at large
• A large number of OECD countries incorporate this aspect into their domestic laws
• Underlying these definitions of broadcasting is the notion that access to broadcast
programmes requires no particular action by the consumer (apart form turning on
the television or radio)
• The notion of broadcasting differs from that of telecommunications where
information is transmitted and where the user plays a more direct role in obtaining
access to this information

11
Audio-visual services over the Internet(2)

Broadband audio-visual information differs from both notions in that

the information is not private i.e. it is available to all users, but there is
interactivity and it requires the active participation of the users to access
the information as well as allowing selectivity by the users of the type of
information they want to receive

• The number of video programmes available over the Internet is in practice

unlimited, whereas over-the-air broadcasting has a pre-defined and relatively
limited number of simultaneous programmes available

• Broadband audio-visual services would tend to fall within a ‘grey zone’ in terms
of the applicability of regulations but with a closer affinity to video-on-demand
where strict broadcast content regulations do not normally apply

12
 Ⅲ. Shift from Industry based
Regulatory Structure

해당부서명 입력 13
A vertical approach to regulation

The current regulation of telecommunications and broadcasting

is structured along vertical or industry lines

• Telecommunications is regulated separately from broadcasting

and broadcasting regulation covers both carriage and content
issues

• The regulatory framework is based around delivery platforms

• This characteristic developed in an analogue environment where

delivery platforms are service specific

14
The development of digital technologies (1)

Digital technology allows a transmission network (terrestrial, cable

or satellite) to deliver a larger number of broadcasting channels or
services within the same bandwidth and / or to deliver a wider range
of communication services
• Digital network operators are already offering packages of broadcasting,
telephony, high speed Internet access and new digital services
• Digital cable operators offer
① a large increase in the number of channels
② high speed Internet access
③ their own ISP
④ a telephony service
※ Some companies are also moving into the compilation of content packages
so that they no longer see their role primarily as carriers of other
companies’ services

15
The development of digital technologies (2)

The development of digital technologies raises a number of

challenges for policy and regulation

• The owner of a network could face different regulations for the delivery
of telephony, broadcasting and the Internet, despite the fact that all are
being delivered by the same network
• The same service delivered over different networks could face different
regulations
• These developments undermine the principle of consistency
→ Without consistency, regulation can bias outcomes in favour of one
type of technology or service or service provider
• The operator of the carriage network may be delivering the services of
a number of broadcasters

16
A horizontal approach to regulation (1)

Many experts have argued that convergence requires a shift from a

vertical to a horizontal regulatory structure

• The new regulatory framework by the European Commission adopts this

approach
• Instead of regulating the telecommunications industry or the broadcasting
industry, a horizontal approach would be structured around the regulation
of similar activities
• It is usually argued that separate regulatory frameworks could be developed
for carriage and content

Telecommunications Broadcasting
content
content content
carriage carriage carriage

17
A horizontal approach to regulation (2)

A horizontal approach to regulation has some advantages

• It is more likely to ensure that regulations are technologically neutral

and that they impact on similar services in a consistent manner
- In the environment of rapid innovation and change, it is important
that the regulatory arrangements do not favour one set of outcomes
over another
• A horizontal regulatory structure also allows changes to the regulation
of carriage and content to occur at a different pace
- The uncertainty surrounding convergence appears to be greater on
the content side
- Given the sensitivity attached to content regulation, governments may
want a clearer idea of the direction and extent of change before
introducing significant reform
18
 Ⅳ. Regulatory Institutions

해당부서명 입력 19
The number and roles of regulatory authorities(1)

There has been much debate about the implications of convergence for
the number and roles of regulatory authorities in the communications sector
• The discussion has focused on whether there should be a move to two regulators
(one for carriage matters and another for content) or whether both roles would be
best performed by one regulator
• An equally important point is the relationship between the competition authority
and the communications regulator(s)

It will be necessary to design the appropriate institutional structures to take

into account:
① The roles which regulators will be expected to perform

② The need for clarity (from the point of view of both industry and regulators) as to
which regulator has authority on a particular issue

20
The number and roles of regulatory authorities(2)
③ The value in minimizing the number of regulators that an enterprise needs to
deal with
④ Efficient public administration

⑤ Public and industry confidence in the independence and competence of

the regulators

Key functions of the regulator(s) in the communications sector

• Implementation of competition policy and access regimes

• Other carriage matters
- Spectrum planning and allocation
- Universal service obligation
- Consumer protection
• Content regulation (including allocation of broadcasting licenses)

21
Competition policy and access regimes(1)
It will not be possible to treat carriage and content issues as independent
and mutually exclusive issues
• As the impact of convergence becomes more pervasive, competition policy and
access regimes will be increasingly important tools for achieving both objectives
of competition and plurality

Convergence will also require regulators to take a broader view of industry

boundaries when assessing mergers
• These are arguments for reducing the number of regulators, otherwise the areas of
overlap and the potential for uncertainty and inconsistency will increase

At the moment, in some countries, three different bodies are involved in

administering these regulations
• The general competition authority
• The telecommunications regulator
• The broadcasting or media regulator
22
Competition policy and access regimes(2)

In deciding which and how many bodies should be involved in

implementing competition policy, the important principles are:
• Legislation (relating to mergers, anti-competitive behavior and access
regimes) is framed so as to achieve both the economic and the social
objectives, as part of the one process and with clear indications of
the weighting to be given to both objectives
• The regulators should have the expertise to assess and make sound
judgments on both:
- The technical and industry-specific aspects of the arguments
- The social and cultural aspects of any national interest test (or similar policy)
relating to plurality

• The regulators are independent from the actors in the sector and are
perceived by the community to be independent

23
Competition policy and access regimes(3)

Three different approaches to achieving consistency and clarity in

the administration of competition policy in the communications sector

< U.K. >

• The new single regulator, OFCOM, has concurrent powers with OFT in applying
competition Act powers within communications sector
• OFCOM has oversight of all regulations affecting the communications sector
and can choose the most appropriate policies to tackle a particular problem

< U.S., Japan, Korea >

• Both the competition authority and the communications regulator (or Ministry)
are involved in approval of mergers in the industry

24
Competition policy and access regimes(4)
• U.S.
- DOJ or FTC examines proposed mergers and acquisitions to determine whether they
would violate the antitrust laws (competition policy)
- Simultaneously, FCC reviews any license transfer applications needed to effectuate
the acquisition or merger for consistency with the Communications Act and any of
the FCC’s policies regarding competition, diversity and the public interest

< Australia >

• The general competition authority (ACCC) has been given a range of regulatory
powers specific to the telecommunications industry
- Not only is the ACCC responsible for mergers and anti-competitive behavior in the
industry, but also ex ante, proactive polices such as access regimes, price controls,
interconnection arrangements and oversight of some license conditions
- The industry regulator (the ACA) is responsible for spectrum planning and allocation,
numbering planning and allocation, issuing licenses, USOs, and service quality

25
 Ⅴ. Response to the Convergence of
Telecommunications and Broadcasting
in Korea

해당부서명 입력 26
 Contents

Status of convergence of telecommunications and

1 Status of convergence of telecommunications and
broadcasting
broadcasting in Korea

Policy direction
for reformfor
of convergence of
2 Direction policy and regulatory
telecommunications and broadcasting
institution of
telecommunications and broadcasting

3 Policy direction for IPTV

Direction for reform of policy and regulatory

4 institution of telecommunications and broadcasting

해당부서명 입력 27
 1. Status of convergence of
telecommunications and broadcasting

해당부서명 입력 28
Convergence of Telecommunications and Broadcasting
Convergence
Convergence of
of telecommunications
telecommunications and
and broadcasting
broadcasting

The
The accelerating
accelerating development
development of
of BcN
BcN and
and convergence
convergence in
in content,
content, network
network and
and terminals
terminals
are
are eroding
eroding the
the boundaries
boundaries of
of telecommunications
telecommunications and
and broadcasting.
broadcasting.

Development
Development phases
phases of
of convergence
convergence
At present: separation Initial stage of convergence In the future: integration
Telecom Broadcasting Telecom Broadcasting Telecom Broadcasting
Service Service Service Service Convergence
Broadcast Voice/data Broadcast
Broadcast
Voice/data
Voice/data Broadcast Voice/data programs contents Voice
Voice ++ Data
Data ++ Image
programs
programs programs contents Image

Telecom
Telecom Broadcasting
Broadcasting Voice Network + Data Network
Telecom
Telecom Broadcasting
Broadcasting Network
Network Network
Network Network
Network + Broadcasting Network
Network
Network Network
Network

Telecom
Telecom
Telecom Terminals TV
TV
Telecom TV Terminals Terminals
Terminals Telephone
Telephone ++ PC
PC ++ TV
TV
Terminals
Terminals TV

29
Factors for accelerating convergence

Saturation of the
Advances in IT : BcN telecom and broadcasting
and digitalization market and the need for
new business model

Telecommuni-
convergence Broad-
cations casting

Changing market
Growing demand for environment:
segmented and deregulation and
customized services Rapid advances in technology are blurring the facilitation of
traditional boundaries of telecommunication and competition
broadcasting.

30
Future prospect for convergence
Anytime, Anywhere, Any-content :
Ubiquitous Content Access
Intelligent
handset
Home gateway
HDTV Intelligent
Integrated network of Networked home
Anywhere telecommunications home
appliance
and broadcasting appliance
Game
Content console

Satel
lite AV program
Package
Customized program Portable 3D TV
digital Multimedia Computer Anytime
appliance
Cable
Terrestrial
broadcast
Fixed/wireless
telecom network HDTV T-commerce
PC
Real-like sound and
image DMB terminal

31
 Current regulatory framework for convergence
PSTN
Telecom
Telecom network
network
TV
TV
Mobile
Web-
Telecom
network

communications Web-
phone/
phone/ iCOD
iCOD casting
casting One way/content-focused
Broadband VoIP
VoIP Internet
Internet
Internet

Broadcasting
Satellite

network
Satellite Satellite
Satellite broadcast
broadcast
CP Satellite Cable
Satellite DMB
DMB
interactive/network-focused VOD Terrestrial
Terrestrial DMB
DMB
Data Groundwave
Cable
Cable CATV
CATV
broadcast Terrestrial
Internet
Internet Terrestrial broadcast
broadcast
VoIP
PP PP

Traditional telecommunications Converged New Media Traditional

service broadcastng

Entry
Entry regulation
regulation 49% of foreign ownership 49% of foreign ownership
(only for facility-based service Conglomerates and media companies are restricted.
Providers) notification
< competition promotion/universal > < public benefit/neutral >
operation
operation
Operation regulation is imposed Business area Programming
regulation
regulation
on players with SMP. Channel Re-transmission of terrestrial
broadcast
Content
Content regulation
regulation
Illegal or harmful information ? Illegal and harmful information
Fairness/morality/democracy

32
MIC and broadcasting
Ministry of Information and Communication

Development of Registration of Inspection of Legal/institutional

Market creation
high technology frequency Completion framework

Allocation and Lead in

standardization Relicensing Pilot project International
Assignment standardadization

Decision on transmission Development of core Elimination of

methods of broadcast
programs technology intervention

Entry in to the
Development Management Licensing and Introduction of
foreign
of broadcasting of broadcast management new broadcasting
broadcasting
technology frequency of broadcasters service
market

Consultation on Recommendation for

Korean
Deliberation on
policy direction broadcasting licensing broadcast programs
Broadcasting
Commission

33
Public interest theory vs. Industry determination theory

Public Interest Theory Industry Determination Theory

In case market failures take place, government Extent Government intervention is minimized, and
intervention is indispensable market economy principles are respected.

Protection of consumer rights, democratic Objective Creation of industrial/economic values,

formation of opinions, promotion of national culture strengthening of national competitiveness

Perspective
Correction of market failures Consideration of interests of stakeholders

Diversity Pro-
Pro-competition
Plurality Key words Deregulation
Impartiality Efficiency
Localism Globalization

Protection of public interest of broadcasting Contribution to industry development and

enhancement in national competitiveness
Preference for the committee-level structure Preference for the government-level
that ensure various media and political structure that ensure swift decision making
independence process and efficiency

※ These two theories are mutually complementary, not exclusive

34
 2. Policy direction for convergence of
telecommunications and broadcasting

해당부서명 입력 35
Basic directions
Securing the global competitiveness of the IT industry and enhancing consumer benefits

Early facilitation of converged Development of high quality content

services and strengthening of distribution
channels

Promotion of market principle

Redefinition of public interests in the telecommunication and
broadcasting sector

Institutional changes for building

a new policy and regulatory framework

36
Early facilitation of convergence services
Foreign examples

▶ Most countries categorize IP-TV as telecommunications service, not broadcasting.

▶ Some countries put an additional(the third) legislation in place to regulate converged services.

Implications

▶ The application of the Broadcasting Act that focuses on public interests to IP-TV may
hamper early introduction of new services
IP-TV embraces features of both telecommunications and broadcasting.

▶ The key issue of IP-TV lies in discrimination in regulating IP-TV operators and CATV operators.
The solution would be to ensure fairness by lifting regulations on CATV operators.

▶ Apart from the ongoing discussion on the institutional changes, the early introduction of converged
services such as IP-TV needs to be addressed under the current policy coordination system.
In order to ensure policy consistency and avoid redundancy in investment, MIC and the Broadcasting
Committee need to cooperate in implementing pilot projects and enacting related acts.

37
Redefinition of public interests

Redefinition of public interests in broadcasting

▶ Redefinition of public interests in broadcasting in line with the ubiquitous digital era
▶ Continued exploration of ways to provide public programs and ensure universal access

Establishment of the institutional framework including a new regulatory body and enforcement

▶ Public broadcasting: maintaining regulations for public interests, establishing a sustainable

source of finance
▶ Commercial broadcasting: promotion of market principles, deregulation and introduction of
competition

38
Promotion of Market Principles in the
Telecommunications and Broadcasting Sector

Building of the competitive market environment in the broadcasting sector

▶ Deregulation on entry, ownership and management concerning commercial broadcasting,

converged service and new media
▶ Respect for economic principles and promotion of a variety of content transmission
regardless of networks
▶ Allow cross-entry between telecom operators and broadcasting service providers

Promotion of the virtual cycle of the industry

▶ Establishment of the regulatory framework that enables a smooth introduction of

new converged services
▶ Organic integrations and development of the broadcasting and IT industry through the
expansion of supports such as R&D, nurturing of human resources and financial loans

39
Development of high quality content and
strengthening of distribution channels

Support for investment in content production

Facilitation of independent production by reforming the distribution channels and

protecting the copyright

Improvement in the advertising system to promote content development

Support for informatization to protect content and development distribution technology

40
 3. Policy Direction for IPTV

해당부서명 입력 41
Concept (1)
Web Server
(Billing/User Mgnt)

Contents
DB
Modem

Internet
TV STB
Program Streaming Server
(Data Transmission Mgnt)
TV
Real-time Encoder
IP-TV H/E IP-TV

Providing multimedia contents to subscribers over the Internet network such as

xDSL and FTTx
- Users can receive the service via a set-top box in their home that is connected
to TV or PC

42
Concept (2)

IP-TV is a new converged service that distributes video, audio,

and other multimedia contents across a broadband Internet network
in an interactive way
- Delivering over IP multichannel broadcast programs, VOD, Internet service
and telecommunication service
Broadcasting Broadcasting personalized content over IP-TV in real time
service

ICOD Providing VOD, Internet search and e-commerce service

service
* ICOD : Internet Contents on Demand

▶ By converging TV and the Internet, IP-TV could provide a wider

variety of services as well as greater scalability than traditional TVs

43
Features
Technol
ogical ICOD service Broadcast
develop
ment wil
provide
IP-TV wi
l (VOD, GOD, e-commerce programs
greater s th Internet search and etc.) in real time
calability
.

‹ High value added service converging telecommunications

IP-TV
Basic and broadcasting
Characteristics ‹ Interactivity
‹ Unlimited scalability

‹ Packet-based IP address that allows all the information

Technological to be delivered in an interactive way
features ‹ Technological advantage that may extend the boundary
of traditional broadcasting service

‹ A variety of customized and interactive services over

Service the Internet network that distinguish IP-TV from CATV
features
‹ Multichannel broadcast programs like CATV

44
Market forecast
IP -TV is expected to have a great impact on the industry
IP-TV
< Global Market > < Korean Market >
15.6 329.8
2006
2003
2008
2.5
2007
10.2 227.7

128.5

3
24.3 0.41
0.4 0.73 0.73

Service
Service market Subscribers
Subscribers Equipment
Equiment market Service market
Se r v ic e SuSubscribers
b s c r ib e r s Equipment
Eq u im e nmarket
t
market ($) market ($) market (won) market (won)
(billion $) (million) (billion $) (million $) (million) (million $)
Source: MRG. CA, the U.S. (2004) Source: DongSeo Research (2004)

• The number of IP-TV subscribers and the IP-TV market are expected to grow by 79% annually
and 102%, respectively at the global level
- (’04) 1.9 million, 635 million US$ → (’08) 2.5 million, 7.2 billion US$
• The number of IP-TV subscribers in Korea is expected to rise to 4 million by 2012 at an annual
growth rate of 34% on the assumption that service is available from 2006.
- By 2012, industry revenues are expected to reach 1 trillion won while a total of 3.7 trillion won is
expected to be spent on facility investment and maintenance.

45
Legal issue (1)
Telecommunications and broadcasting described
described in
in the
the Constitutio
Constitutionn

◆ Under the Article 21 of the Constitution, telecommunications and broadcasting both are one
of the means of exercising the right of freedom of expression
- Article 21 of the Constitution
① All citizens shall enjoy freedom of speech and the press, and freedom of assembly and
association
② Licensing or censorship of speech and the press, and licensing of assembly and
association shall not be recognized
③ The standards of news service and broadcast facilities and matters necessary to ensure
the functions of newspapers shall be determined by Act
④ Neither speech nor the press shall violate the honor or rights of other persons nor
undermine public morals or social ethics. Should speech or the press violate the honor
or rights of other persons, claims may be made for the damage resulting there from

◆ The confidentiality of the telecommunications is protected under the Constitution

- The Article 18 of the Constitution stating ‘The privacy of correspondence of no citizens
shall be infringed’ is irrelevant to the definition of the telecommunications

46
Legal issue (2)
Whether IP -TV can be considered a ““broadcasting”
IP-TV broadcasting” service
in accordance with the Broadcasting Act

◆ IP-TV is an interactive service since content that customers want is delivered

◆
-- In
In that
that regard,
regard, IP-TV
IP-TV cannot
cannot be
be seen
seen as
as aa “broadcasting”
“broadcasting” service
service that
that is
is defined
defined as
as aa
one-way
one-way transmission
transmission under
under the
the Broadcasting
Broadcasting Act
Act
※ Cable
※ Cable TV
TV continuously
continuously broadcasts
broadcasts regardless
regardless of
of the
the reception
reception notice
notice of
of individual
individual subscribers
subscribers

◆ The confidentiality of the telecommunications is protected under the Constitution

◆
-- There
There is
is no
no program
program planning,
planning, production
production or
or scheduling
scheduling

◆ IP-TV uses packet-based IP address not ‘channels’ to deliver content

◆
-- Channel
Channel (Article
(Article 22 of
of the
the Broadcasting
Broadcasting Act)
Act) :: aa unit
unit of
of broadcasting
broadcasting provided
provided in
in form
form of
of
continuous
continuous flow
flow oror information
information system
system through
through thethe same
same frequency
frequency band
band

47
Legal issue (3)
IP -TV belongs to telecommunications service in accordance
IP-TV
with the Framework Act on Telecommunications
◆ Under
◆ Under the
the current
current legal
legal framework,
framework, “telecommunications”
“telecommunications” set
set forth
forth in
in the
the Framework
Framework
Act
Act on
on Telecommunications
Telecommunications include
include “broadcasting”
“broadcasting” of
of the
the Broadcasting
Broadcasting Act
Act
-- Since
Since broadcasting
broadcasting is
is one
one of
of the
the various
various types
types of
of telecommunications,
telecommunications, itit is
is hard
hard to
to exclusively
exclusively
separate
separate broadcasting
broadcasting from
from telecommunications
telecommunications

※ Telecommunications: Transmission or reception of code, words, sound or image through

wired, wireless, optic, and other electro-magnetic processes
Broadcasting: Planning, programming or producing broadcast programs, and transmitting
them to the general public through telecommunication facilities

-- Since
Since IP-TV
IP-TV is
is not
not included
included in
in types
types of
of broadcasting
broadcasting services
services enumerated
enumerated in
in the
the Broadcasting
Broadcasting
Act,
Act, the
the Framework
Framework Act Act on
on Telecommunications
Telecommunications thatthat is
is more
more comprehensive,
comprehensive, isis applied
applied to
to IP-TV
IP-TV

◆ IP-TV
◆ IP-TV belongs
belongs to
to “telecommunications
“telecommunications services”
services” stated
stated in
in the
the Framework
Framework Act
Act on
on
Telecommunications
Telecommunications since
since information
information transmitted
transmitted and
and received
received is
is classified
classified as
as
telecommunications
telecommunications and
and interactivity
interactivity constitutes
constitutes an
an intermediary
intermediary service
service

48
Basic Policy Direction
Introduce IP-TV first and then focus on establishing the regulatory framework
‹ The converged services of telecommunications and broadcasting such as IP-TV are now
at the initial stage
‹ It is desirable to impose a minimum of regulation at the initial stage and to give active
supports to facilitate new services
- Advanced countries are trying to reduce regulation on new services to the minimum (ex: FCC’s
hands-off approach to new services in the U.S. and OFCOM’s light touch regulation in U.K.)

Give priority to BcN pilot projects

‹ The results of BcN pilot projects will be the basis for determining the level of regulations
‹ The Ministry of Information and Communication and the Broadcasting Committee are
jointly implementing pilot projects
- Considering all the aspects of IP-TV including social, cultural, technological, industrial and legal
aspects, market demand forecast, technology development, content and etc
- Holding the 5th Multimedia Policy Consultation (June 3, 2005) where a decision to implement
IP-TV pilot projects before the enactment was made and MIC and the Broadcasting Committee
agreed to jointly implement pilot projects

49
Regulatory framework
Need to enact the Converged Service Act in order to introduce IP-TV
as early as possible and facilitate related services
‹ Telecom companies provide IP-TV via IP-based networks
- Leading to greater scalability of ICOD
‹ Considering that broadcast programs in real time provided by IP-TV belong to
broadcasting, a special act that classifies IP-TV as another independent area is needed

Need to establish a new regulatory framework reflecting features of

converged services

‹ Advanced technology and service development should be embraced by alleviating

the current regulations on telecommunications and broadcasting
- Allowing cross-entry between telecom companies and broadcasters
- Streamlining the market entry process and alleviating regulations on programming and content

‹ MIC and the Broadcasting Committee should continue to discuss specific matters
concerning converged services

50
Content development
Content is the key to discussions on convergence
- A wealth of content contributes to enhancing users’ benefits by expanding
their choices

IP-TV will serve as a catalyst for facilitating the content industry

- IP-TV can help develop the content industry including entertainment, education,
healthcare, culture and etc. by facilitating investments in CP &PP. – IP-TV can
also help increase the negotiating power of content developers by promoting
content production and distribution.

The development of network and content will be pursued in parallel

- In the network industry, content, network, service and terminal form a chain
- Over the mid- and long-term, content will continue to evolve according to
unique features of each medium.
51
Fair competition (1)
• In the era of convergence, less regulation or deregulation needs to
Regulation be made if unreasonable regulations are imposed on CATV that is
fairness between competing with IP-TV in the market
SO and IP-TV - Alleviating regulations on entry, ownership, broadcast area and total revenues
needs to be considered

<Comparison of regulations on IP-TV and CATV>

IP-TV (under the Framework Act on
Regulation CATV provided by SO (under the Broadcasting Law)
Telecommunications)
Registration (facility-based service Recommendation from the Broadcasting Committee,
Entry
operators being exempted) approval from MIC
Foreign ownership: less than49%
No limit Ownership of satellite broadcasting operators: less
Ownership (Foreign ownership of facility-based than 33%
service operators: less than 49%) (KT/ SKT being regulated more heavily than foreign
operators)
Broadcast
No limit Less than 1/5 of a total of CATV broadcast area
area
Revenue No limit Less than 33% of a total of CATV revenues
▶ Considering that the converged services is now at the initial stage, imposing the same regulations
as those of the Broadcasting Act on SO risks undermining the development of related services and
eventually the virtual circle of the IT industry could collapse
52
 Fair competition (2)
Market dominance • Making a comprehensive judgment based on market analysis
shifting to the - Given the modest level of market share at the initial stage of
content market convergence, shifting of market dominance is not so problematic

• Advantage: Transaction cost saving, enhanced economic value of

Approval for technology, removal of double margins
vertical
integration • Disadvantage: Shifting of market dominance between upstream and
downstream markets

• Offering more preferences to CATV operators using telecommunications

Allowing CATV facilities for the purpose of broadcasting services than
to use telecommunications
telecommunications
facilities • Establishing a fair trade environment in case where telecommunications
facilities are used for the purpose of broadband communications

• Designing a reasonable regulatory framework for significant market

Essential facilities, players’ abuse of essential facilities and unbundling by means of setting
bundling a predatory price based on analysis of platform operators’ market
dominance

53
Basic principles

¡ IP-TV is a new converged service with unlimited scalability that goes

beyond the traditional multi-channel broadcasting services

¡ Taking the “dichotomy” approach to regulating telecommunications and

broadcasting is not desirable. It is necessary to build a new regulatory
framework reflecting unique features of convergence.

¡ At the initial stage of convergence, seamless provision of services and

its soft-landing in the market through deregulation and strong support is
needed.
- Fostering a fair competition between competing media
- Producing and distributing a wealth of content with good quality

54
Time to change
Every service evolves!
‹ Both telecommunications and broadcasting are undergoing digitalization
- Advanced converged services including IP-TV, digital broadcasting, Wibro, HSDPA, WCDMA go
on increasing
‹ Instead of the current ‘dichotomy’ approach to telecommunications and broadcasting,
a new regulatory framework that reflects the converged services is needed
- Regulations should not be an obstacle to new services
- The Internet is a new technology that is hardly regulated

The objective of regulations should be made clear

‹ If new services contribute to increasing consumer’s benefits and welfare, it is desirable
to allow new service providers to enter the market
- Offering a variety of choices to consumers
- Creating a new business opportunity for service providers
‹ The regulatory body needs to focus on building a business environment for a fair
competition and protecting consumers

55
Current Status of IPTV Pilot Project
Outline of IPTV Pilot Project
Host : Joint Promotion Committee for IPTV Pilot Project (MIC, KBC)
Purpose
- Verify Technology Potential and Business Model with regard to Interoperability between Communications and Broadcasting Technology,
Two-Way, Contents Security and Personal Information Protection
- Prove Usefulness of Utilizing Various Multimedia Contents
- Examine User Response such as Usage Behavior and Request for Improvement
Service : Real-time Broadcasting Program, Two-Way Communications Service(VOD, T-Commerce, Game, SMS etc.)
Service Period : 2006. Nov. ~ Dec.

Investment Cost Participating Companies Number of Households

Govt. 1.2 billion Won

Terrestrial Consortium Region(No. of Households)
CP Broadcasters

Seoul, Kyeonggi
C-Cube
Handset& Yangpyung
Private Sector 26.2 billion Won Joint Project Promotion Equipment Company (350)
PP (C-Cube, Daum)
Seoul, Kyeonggi Anyang
Daum
(100)
Govt. : Private Sector
Solution Telecom
[ 1 : 21.9 ] Total 27.4 billion Won Company Operator Total 450
C-Cube: Govt.670 million Won/Private Sector 23.4 billion Won
Daum: Govt.530 million Won/Private Sector 2.8 billion Won

56
Positions of Related Organizations on IPTV
Ministry of Information and Korea Broadcasting Commission
Communication
For the smooth introduction of IPTV, a third Regulate IPTV under the Broadcasting Act
Legislation other than the Telecommunications because it is similar as the SO in terms of
Act and Broadcasting Act is needed transmitting broadcasting programs
▶Enactment of Broadband Convergence Service
Business Act(tentatively)

IPTV
Telecom Operators CATV Operators

Approve the Provision of Convergence Service Introduce IPTV after the complete
To cope with CATVs’ advancement to digitalization of CATV(2010)
TPS market
▶Operators hope for improvement of related legal
framework to ease regulation

57
Coordination and Future Plan between MIC and KBC

Current Progress

As a Result of Numerous Discussions between MIC and KBC on Various Issues

▶ MIC and KBC came to have similar views on the establishment of legal framework within ’07,
approval of simultaneous retransmission of terrestrial broadcasting, entrance of all-around channels and
news channels, reservation of foreign market opening, publishing a dictionary on technology standard,
introducing restriction on market share and easing regulation on Cable SOs

▶ But there are still other issues to be solved such as the characteristics of service and laws to be applied,
approval method, restriction on market entrance of facilities-based operators and business areas etc.

Future Plan

Promote Working-level and High-level Meetings based on the results of Meetings

58
 4. Direction for reform of policy and
regulatory institution of
telecommunications and broadcasting

해당부서명 입력 59
Korean authorities with respect to
telecommunications and broadcasting

Telecommunication Broadcasting

Policy
MIC MCT
Promotion

Technology/ KCC
economy Broadcasting
Regulation Committee
Information and Communication
Content
Ethics Committee

Policy: acts amendment/enactment, planning, membership appointment of public broadcasting

(KBS, EBS, Foundation for Broadcast Culture and supervision of KBS

Promotion: financial assistance, technology development and nurturing of human resources

Regulation: licensing, investigation into and correction of unfair practice and content deliberation

60
Organization of MIC

61
Examples of foreign response: Overview

Countries around the world have in place their own organization

according to their national policy objectives and background.

Policy Regulation Policy Regulation Policy Regulation Policy Regulation Policy Regulation

Telecomm-
Telecomm-
unications

Broad-
casting

U.K., Canada France, Germany, Italy, Australia, Singapore

USA, Japan
Korea Malaysia

Recently, Britain (2003) and Australia (Jul. 2005) have established a single regulatory framework
for telecommunications and broadcasting.

62
Examples of foreign response: U.S.A.

Since the Telecommunications Act (1934) was enacted, FCC has retained a committee-level
structure as a single regulatory body before the emergence of convergence takes place.

In addition to FCC, a single regulatory body, each state has its own regulatory system in place.
▶ FCC provides the comprehensive recommendations as a supervisory body.

The telecommunications history of the U.S. stated from Bell and its policy focus was on privatization.
▶ In order for easy entry into foreign countries, the U.S. tends to encourage other countries to adopt the
privatization-based policy system.

FCC reform discussion

Political independence/expertise ▶ political discrimination and lack of accountability

Industry regulator congress committee

Market principle government one-person-led government body

63
Examples of foreign response: Britain

In 1980s and 1990s, the policy focus of Britain was on deregulation and competition.

The broadcasting sector that traditionally highly valued public interests began to introduce
deregulation and a fair and effective competitive environment.
▶The ultimate objectives of deregulation and competition are the industry promotion and consumer protection

There has been a growing need for new policy and regulatory framework in response to digitalization
and convergence.
▶ Based on the Communications Act of 2003, OFCOM, an integrated regulatory body was created.
▶ According to the ‘Light Touch Regulation’ principle of the Communications Act, OFCOM is applying minimum
regulations to the telecommunications and broadcasting sector.

64
Examples of foreign response: Australia, Singapore, Malaysia

65
Discussion results of telecom-broadcasting convergence
promotion committee (1)

2006. Feb.~July : Operation of the Telecom-Broadcasting Convergence Task Force Team

under the Office for Government Policy Coordination
- Organization of Promotion Committee and Identify Agenda for Discussion

2006. 7. 28 : Launch of Telecom-Broadcasting Convergence Promotion Committee

- 47 Personnel including Commissioner Ahn Moon-seok (Vice President of Korea Univ.)
(20 General Commissioners and 27 Expert Commissioners)

2006. Aug.~Oct. : 31 Meetings within three months

- Discussion on 22 agenda such as organization reshuffling, introduction of IPTV, Promotion of digital broadcasting etc.

2006. 10. 27 : Consultation and Voting on Organization Reshuffling

- Majority : Integrated Committee

- Minority : Pure Regulatory Committee and Regulatory Policy Committee

66
Discussion results of telecom-broadcasting convergence
promotion committee (2)

Majority opinion was to establish a 「Administrative board under the President 」

by integrating telecom and broadcasting related bodies, but that characteristics of
single-judge system must be included

Broadcasting and telecommunication committee

Integrate overall functions regarding broadcasting and telecommunication

Function
In the form of a committee established as an Administrative board under the President,
add elements of single-judge system

By integrating overall functions of broadcasting and telecommunication,

Characteristics enable comprehensive and systematic policy enforcement
Advantageous in securing independence and fairness of broadcasting

67
Discussion results of telecom-broadcasting convergence
promotion committee (3)

Promote cooperation at the National Assembly level such as through

Government-Ruling party consultation (within November)

Promote legislative draft bill, consultation between related ministries, notification of

legislation and others (within November)

- Reach social consensus by hosting public hearings and discussions for relevant businesses,
organizations and the civil society

Submit related bills during the regular session of the National Assembly (December)

Aim to pass bills during the extra session of the National Assembly in February 2007

68