Overview Lessons and outlook DMB in South Korea Factors shaping market evolution Platforms and solutions Value net of mobile TV

Value-chain of mobile voice services Few players (equipment manufacturers, network operators, service providers) Standardization sufficient to coordinate Value-net of mobile TV services Larger number of players Mobile operators Content providers Service providers Application providers Broadcast companies Network operators (mobile and broadcast) Equipment manufactures Challenges of coordination and service integration

Platforms and solutions Platform/SolutionFeatures In- band Digital Video Broadcasting Handheld (DVB-H) Unicast, existing handsets usable, opportunity costs of bandwidth Multimedia Broadcast Multicast Services (MBMS) Multicast, existing handsets usable, higher efficiency of bandwidth use Either Sling Media User-driven and user-configured solution, 2.5G, 3G, WiFi Out- of- band Terrestrial Digital Media Broadcasting (T-DMB) Additional broadcast frequency needed (T-DMB: MHz, MHz, GHz); new handsets; investment in broadcast infrastructure; increased coordination needs between players Satellite Digital Media Broadcasting (S-DMB) Media Forward Link Only (MediaFLO)

Status of deployment Platform/SolutionDeployment In- band DVB-HItaly (3 Italia, TIM, Mediaset, Vodafone, all 2006), Finland (Digita/Nokia, 2006), U.S. (Modeo, HiWire Mobile TV, planned for 2007), Germany (planned for 2008), Spain, France (planned) MBMSNot yet commercially deployed Either Sling Media10 countries, including U.S., Canada, Brazil Out- of- band T-BMBSouth Korea (six providers, 2005, limited coverage), Germany (Mobiles Fernsehen Deutschland, 2006) S-DMBSouth Korea (TU Media, 2005) MediaFLOU.S. (Verizon, 2007)

Factors shaping market evolution Technology Spectral efficiency Propagation Bandwidth Policy Spectrum policy Market design Industrial policy Economics Cost/risk/profit Supplier strategy Demand Socio- cultural framework Mobile sector Performance/ evolution

South Korean DMB infrastructure The satellite Han- Byul DMB Broadcasting Station S-band Gap filler S-band 2.630~2.655GHz Ku-band ~12.239GHz Ku-band ~13.883GHz Transmission tower VHF Ch7~Ch13 (174~216MHz) S-DMB T-DMB

Technology issues of mobile TV S-DMBT-DMB FrequencyKu band (12-13GHz), S-band ( ) - As power output is not limited by international regulations, the S-band is well-suited for broadcasting to small handset antennas VHF band III, L-band (1-2GHz) - Multiplexed T-DMB uses only MHz making it easier to accommodate than the 6-8MHz needed by DVB-H StandardizationSystem E - Uses CDM, similar to the CDMA technology ( Korea : competitive advantage) System A (Eureka 147 standard) -Backward compatible -Allowing use of the DAB (Stable and Mature technology) EquipmentGap filler - To cover areas not reached by the S-DMB or T-DMB signals, a gap filler system of repeaters is used. When making technology adoption, policy makers considered business as well as technology Influencing criteria such as the cost effectiveness of the infrastructure, equipment, and standards Closely linked to and co-evolved with technology and firm strategies

Policy toward mobile TV (1) Licensing Policy T-DMBS-DMB DateDescriptionDateDescription Jan 2005Call for service provider applicationMar 2004Launching of the satellite for S-DMB service Feb 2005End of application acceptance periodNov 2004Call service provider application Mar 2005Service provider selected (6 providers) Dec 2004Service provider selected (1 provider) Dec 2005Commercial serviceMay 2005Commercial service Korean Broadcasting Commission KBC adopted RFP (Request for Proposal) for provider selection For T-DMB in Korea, there are three T-DMB service providers (KBS, MBC, SBS) and three non- terrestrial service providers (CBS, YTN DMB, KMMB) TU Media took a license as the first S-DMB service provider (in Dec. 2004) Before licensing, TU Media had already invested substantial capital in launching a satellite ($97 million), the installation of gap fillers ($230 million) and the establishment if a DMB broadcasting center($ 60million) The circumstances of policy in which government should support to DMB service were created Korean DMB was developed by a leading mobile providers technology-push to market rather than by market-pull Source : MIC

Policy toward mobile TV (2) Retransmission of terrestrial TV programs via S-DMB S-DMB provider has insisted on retransmission (consumer needs, fair competition with T-DMB, …) KBC left the issue to contractual agreements between providers Terrestrial TV broadcasters have not signed retransmission contracts At least initially, advertising revenues would be too fragile and volatile to cover the costs of gap fillers and other start-up expenses Users wanted to maintain T-DMB as a free service, also VHF channels are regarded as a public asset Up until now, KBC has had difficulties in finding solutions to the T-DMB cost problem Pay service to T-DMB The profit structure of the industry could be changed according to how policies for competition are designed

Business aspects of mobile TV Business aspectsS-DMBT-DMB SupplyCost structure $ million$ million As T-DMB will mainly have to invest in a gap filler infrastructure, its costs are lower Demand (Consumer perspective) Rate$13/monthFree ChannelsA higher number of channelsA lower number of channels CoverageNationwideRegional coverage Nationwide ( 08, 2007) Business issues Public Policy regimeTechnology development Competition in business environment will change due to future technology development and public policy regime T-DMB: pricing policy (Free rate Monthly flat fee, per channel fees, or charges for specific contents) S-DMB: Public policy (Contents Allowing retransmission of terrestrial TV programs)

The Korean experience In addition to high initial cost, market demand has fallen short of expectations At the end of 2006, S-DMB reached an estimated one million subscribers. But due to initial investment cost and high fixed cost still loss-making Below 50% of short-term break-even goals of 2.2 million subscribers Optimistic predictions 6.6 million S-DMB subscribers by 2010 (TU Media) 10 million T-DMB subscribers by 2010 (ETRI) However, there are many issues awaiting solution Policy issues and conflicts waiting to be addressed by government Pay service for T-DMB Retransmission for S-DMB These issues will be repeated when Korea introduces other convergence services, already visible in IPTV and Wibro Solutions to these issues could lead to major changes to DMB business environment in the future

Lessons and outlook Important technical and economic differences between platforms/solutions Factors shaping market evolution Frequency allocations (in-band, out-of-band) Eligibility for a mobile TV license Rules governing competition among providers Revenue model (pay, ad-financed, hybrids) Ability of providers to bundle with other services Competition by substitute services (e.g. vodcasting) Policy and market rules should eliminate bottlenecks and facilitate experimentation