Network neutrality• mobile advertising controversy to be heat up again due to heavy increase of OTT
Jung Yoon Hee | yuni@ | 2017-04-05 10:12:40
Over-The-Top content (OTT) market, which allows users to view desired content anytime, anywhere on the smartphone, is growing rapidly. However, there is a strong possibility that it will spark controversy over network neutrality and mobile advertising as the OTT market expands. There is going to be a lot of controversy over the broadcasting communication market as the controversy over network neutrality and the government’s move to regulate mobile advertising has become visible this year.
According to the competition in the broadcasting market report by Korea Broadcasting Commission``s on April 3 in 2016, revenue of the OTT market reached KRW 488.4 billion last year. This is 53.7 % more than the KRW 317 billion in 2015. The double-ad revenue amounted up to KRW 265.7 billion, accounting for 54.4% of the total. On the other hand, monthly revenue amounted up to KRW 77.6 billion, up 15.9%, and purchase of paid contents such as video on demand (VOD) was KRW 40.9 billion won, 10.2%.
According to Korea Information Society Development Institute (KISDI), Korea``s OTT advertising revenue (KRW 135.2 billion) is 1.4 times larger than the VOD ad sales (KRW 96.5 billion) of paid TV operators such as cable TV and IPTV in the same year. Currently, OTT services available in Korea are YouTube, Naver TV cast, Oksusu, Olleh TV mobile, U + video portal, Puk, TVing and so on.
The broadcasting communication market around OTT is staying in so called right before a storm as there is still no legal definition for OTT, and it is expected that there will be various controversies because it is possible to provide services only by reporting as an additional communication service provider. A representative issue is network neutrality. Network neutrality means that a network operator cannot discriminate against content transmitted over the Internet. The controversy has risen in Korean m-VoIP (Mobile Internet Telephony) market in 2012. However, now the controversy has not been bothering industry much, but it is now heating up again due to expansion of OTT services.
In fact, in the case of OTT devices, smartphones (61.4%) leads overwhelmingly and data traffic is also the most used for video viewing. According to the Ministry of Science, ICT and Future planning, the proportion of video traffic as of December last year accounted for 56.1% of total data traffic. The rest are social network service (SNS) 16.5% and web portal 16.0%. At the Mobile World Congress (MWC) conference held at the end of February, the board of the World Telecommunication Operators Association (GSMA) continued to be filled with OTT operators. CEO of SK Telecom Park Jeong-ho, who attended the board of directors, stated, ‘The mobile carriers’ facility investment has increased. However OTT has taken the trouble. The content providers as well as the mobile carriers complain that OTT takes much profitability’.
Mobile video advertising regulation is also a problem. Currently, OTT is classified as an additional communication service and not broadcasting service, so there is no regulation on advertisement. The Korea Broadcast Advertising Agency (KOBACO) predicted that the mobile advertising market, which recorded KRW 1.804 trillion last year, will grow up to KRW 2.46 trillion this year. The total advertising market share is expected to increase from 16.0 % last year to 17.8 % this year.
In last year``s audit conducted by the government, OTT has been criticized that OTT users spend an average of 1GB of traffic a month or KRW 90,000 a year to see unwanted advertisements. Wo Sae-jung, a member of the National Assembly, insisted that domestic smartphone users use an average of 4 videos per day and 122 videos per month. The Korea Communications Commission announced its intention to review regulations on internet and mobile advertising earlier this year and is now researching methods to improve the advertising system. KOBACO also pointed out in the report that strict regulation is applied to broadcasting (advertising), while online and mobile are classified as non-regulated, which is a factor of the gap between media.
An industry expert said, ‘Potential controversy will appear above the surface as the OTT market grows. The OTT problem is not easy to solve as the various interests of carriers, platforms and content companies are mutually mixed.’
By Jung Yoon Hee yuni@
[ copyright ⓒ The Digitaltimes ]
According to the competition in the broadcasting market report by Korea Broadcasting Commission``s on April 3 in 2016, revenue of the OTT market reached KRW 488.4 billion last year. This is 53.7 % more than the KRW 317 billion in 2015. The double-ad revenue amounted up to KRW 265.7 billion, accounting for 54.4% of the total. On the other hand, monthly revenue amounted up to KRW 77.6 billion, up 15.9%, and purchase of paid contents such as video on demand (VOD) was KRW 40.9 billion won, 10.2%.
According to Korea Information Society Development Institute (KISDI), Korea``s OTT advertising revenue (KRW 135.2 billion) is 1.4 times larger than the VOD ad sales (KRW 96.5 billion) of paid TV operators such as cable TV and IPTV in the same year. Currently, OTT services available in Korea are YouTube, Naver TV cast, Oksusu, Olleh TV mobile, U + video portal, Puk, TVing and so on.
The broadcasting communication market around OTT is staying in so called right before a storm as there is still no legal definition for OTT, and it is expected that there will be various controversies because it is possible to provide services only by reporting as an additional communication service provider. A representative issue is network neutrality. Network neutrality means that a network operator cannot discriminate against content transmitted over the Internet. The controversy has risen in Korean m-VoIP (Mobile Internet Telephony) market in 2012. However, now the controversy has not been bothering industry much, but it is now heating up again due to expansion of OTT services.
In fact, in the case of OTT devices, smartphones (61.4%) leads overwhelmingly and data traffic is also the most used for video viewing. According to the Ministry of Science, ICT and Future planning, the proportion of video traffic as of December last year accounted for 56.1% of total data traffic. The rest are social network service (SNS) 16.5% and web portal 16.0%. At the Mobile World Congress (MWC) conference held at the end of February, the board of the World Telecommunication Operators Association (GSMA) continued to be filled with OTT operators. CEO of SK Telecom Park Jeong-ho, who attended the board of directors, stated, ‘The mobile carriers’ facility investment has increased. However OTT has taken the trouble. The content providers as well as the mobile carriers complain that OTT takes much profitability’.
Mobile video advertising regulation is also a problem. Currently, OTT is classified as an additional communication service and not broadcasting service, so there is no regulation on advertisement. The Korea Broadcast Advertising Agency (KOBACO) predicted that the mobile advertising market, which recorded KRW 1.804 trillion last year, will grow up to KRW 2.46 trillion this year. The total advertising market share is expected to increase from 16.0 % last year to 17.8 % this year.
In last year``s audit conducted by the government, OTT has been criticized that OTT users spend an average of 1GB of traffic a month or KRW 90,000 a year to see unwanted advertisements. Wo Sae-jung, a member of the National Assembly, insisted that domestic smartphone users use an average of 4 videos per day and 122 videos per month. The Korea Communications Commission announced its intention to review regulations on internet and mobile advertising earlier this year and is now researching methods to improve the advertising system. KOBACO also pointed out in the report that strict regulation is applied to broadcasting (advertising), while online and mobile are classified as non-regulated, which is a factor of the gap between media.
An industry expert said, ‘Potential controversy will appear above the surface as the OTT market grows. The OTT problem is not easy to solve as the various interests of carriers, platforms and content companies are mutually mixed.’
By Jung Yoon Hee yuni@