On last September 1, Terrestrial DMB finally made its debut to first national broadcast. Even though it was for testing purposes only under MIC’s permission, major cities all over the countries can now receive DMB broadcasts with the DMB receiver.

DMB broadcast that made the first airwaves in December 1, 2005 is now expanding to 8 major metropolitan city regions. Within the capital city and its vicinities are served by six companies but other regions like Busan, Kwangju, Chunchon, Suhgipo had limited service and used as KBS’ (Korean Broadcasting Company) testing grounds. Now coverage areas are being expanded to cities Daejun, Daegu, Junju and Jeju.

Unlike the initial announcement of full national broadcasts by year’s end, with delays in preparations it has driven the high expectations of phone retailers into slump. However, with green light to go ahead this time around, the phone manufactures are once again anticipating high demands from retailers and network equipment businesses and broadcasting stations.

Head of MIC’s satellite broadcasting regulation team Sang-Hoon Song said, “With this expansion of service areas, the number of Terrestrial DMB phone sales should reach over 2 million (currently 1.43 mil) by the end of year. What’s more, Broadcasting stations and related network equipment demands should start to give the Terrestrial DMB industry a plenty of business.”

Unhappy voices over picking next contractor
There is no doubt the nationwide terrestrial DMB service will help ignite sparks in related industry. However, the industry with disputes in selecting contractors and lack of profitable models is causing a discord.

First, selecting KBS to lead the project could have put other competitors to feel left out or edged out. KBS with its new program-testing program already in place was favored by MIC and industry to be in charge of World Cup event related issues and initial proliferation of terrestrial DMB in the market.

At that stage, MBC, SBS and other terrestrial broadcasting stations, Korea DMB, U1, YTN and other DMB companies were keeping a close eye on the national terrestrial DMB broadcast project. The reason was simple. Because it’s probable that who ever gets the initial trial project will end up receiving the rights to the project. Eventually it was fallen into KBS’ hands to avoid delay in national DMB broadcasting, as they are the only public broadcasting company.

But there still are many who are unhappy over the rights to the project. An affiliate from related industry said, “They were not award with official contract for the project but appointed to be the testing station by MIC is same as receiving the actual contract. Soon a formal contract will be awarded for local districts rights to others but consider KBS has already been awarded. In the end, it won’t be selecting three contractors and in reality contractors will be competing over just two.”

On the issues, KBS is saying, receiving the actual contract and being selected to run testing are two different things. What’s more important is that focus should be on enabled nationwide broadcast. KBS’ team leader Min-Hyung Um explained, “The latest approval is meaningful in a sense it made the nationwide broadcast possible that was being delayed thus far. Approval for the operation comes from broadcasting committee but approvals for the test run came from MIC. Having said that, the importance should be stressed on not around who gets the contract but an opportunity that is being made for the terrestrial DMB market.”

The sole profit driving ad market on the ‘slide’
Even though latest approval has opened the gate for terrestrial DMB, a given condition is not all that good to broadcast. With just three months of remainder of the year, besides knowing KBS as a testing station and running one video channel, it’s unclear who will run the other video channel.

Even after confirmation, with only two channels being offered, viewers have very limited exposure to contents and therefore whether or not it will make a big influence is just unclear. On top of that, not enough lucrative ideas could hurt the T-DMB market to grow.

Unlike the satellite DMB, T-DMB is offered free to the viewers. It’s only earnings derive from the ads it runs. But according to T-DMB association, latest ad earnings figure from six T-DMB companies in last August have dropped drastically to more than half ($1.2Million) compared to World Cup driven June figures ($2.6 million).

MCT, will only accept new content related ads
From industry’s aspect, drastic drop in ad earnings are blamed on end of World Cup event or lack of prime time spots or due to free T-DMB services. But beyond that there is a even bigger issue at hand. It’s the advertisement regulation set by the MCT (Ministry of Culture and Tourism).

Advertising Ministry is directly under the MCT, which prohibits the ad not related to the new contents. And that precisely is hurting the infant market to grow. The industry is saying T-DMB operation is under the regulation of MIC, MCT, and Broadcasting Committee and where the operation and testing runs are approved separately by MIC and Broadcasting Committee makes sense but MCT just regulating ad policies really does not help the project.

KBS’ team leader Min-Hyung Um said, “recent viewer pattern analysis shows that more viewers prefer to watch reruns rather than watching new contents that are just not interesting.” In other words, advertisers do not want their ads run on reruns and that is why the earnings have dropped.

Broadcasting companies should focus on producing popular programs
What’s more, there is problem with the rating regulations. The T-DMB is using the air frequency and therefore it’s not free from airing any contents. Korea DMB contents strategy team director Hee-Dae Lee said, “T-DMB is a new media. But under broadcasting regulations its not practical with reality. As a new media it needs to carry breakthrough contents but that’s just not possible.”

The earnings are mainly form the ads and there are just few other routes they can try to replace that hole, like traffic-info, stock market update info, or running cell phone ads but even these are prohibited by the broadcasting regulations.

In the end, before the expansion of the nationwide broadcasting it ought to come up with fair contracting company selection process and policies that can back up for creation of new business opportunities. And more importantly, efforts from business contractors are needed to demolish the wall of bureaucratic policies and inconsistencies. As new media broadcasters, they need to come up with breakthrough killer contents that will attract more advertisers.