Korean internet TV battle turns ugly

Upstart Korean internet TV provider Hanaro Telecom has reported a quarterly loss after rival ISPs blocked their own customers from watching its popular HanaTV service. 

Hanaro suffered a net loss of $18.9m in the third quarter of the year, citing higher marketing costs for the new online TV business among its outgoings.

Revenues climbed slightly compared to the previous quarter and were up 19.1 per cent year-on-year to $441m.

The fixed-line ISP's attempt to revitalise its finances by breaking into the TV business has earned the wrath of traditional cable TV companies and its rivals in the broadband business.

Competitors have claimed that, as a telecoms firm, Hanaro is acting illegally in offering 'TV broadcasting'.

Hanaro has countered this with the argument that on-demand programming is not the same as broadcasting.

Several large cable internet operators in Korea's most populous areas are either completely blocking access to HanaTV or throttling download speed enough to make the service slower and less attractive to customers, the Korea Times reported. 

Users of major rival ISP LG Powercomm are now also blocked from HanaTV. The two companies discussed a profit sharing arrangement, but were unable to reach agreement.

Hanaro is Korea's second largest broadband ISP, with about a quarter of the market. The market is dominated by Korea Telecom, with more than 50 per cent.

However, under telecoms regulations, KT's large market share has restricted it from subsidising some services, often putting it at a price disadvantage compared to smaller rivals.