Broadband-enabled services like IPTV, VoIP, and mobile data will help drive revenue growth in the South Korean telecom market during the next five years, according to a new report from Pyramid Research .

Like many others, the Korean market is taking a hit from the global recession, with the value of the services market (excluding traditional pay TV) roughly flat in local currency (won) from 2007 to 2009. But in its new report, "Communications Markets in South Korea," due out this week, Pyramid forecasts renewed market growth beginning in 2010, with increased revenues from mobile voice and data, fixed VoIP, and IPTV services more than accounting for the ongoing decline in traditional voice revenues.

The research house expects the value of Korea's telecom services market to grow from US$23.2 billion in 2009 to $29.5 billion in 2014, with mobile data revenues growing at a compound annual growth rate (CAGR) of nearly 16 percent (following the relatively recent introduction of more attractive unlimited data plans), fixed VOIP revenues growing at nearly 29 percent, and IPTV revenues recording a CAGR of 23.5 percent (albeit from a relatively low base).

The country's three main fixed-line operators -- KT Corp. , LGDacom Corp. , and SK Telecom (Nasdaq: SKM) -- have only recently launched their IPTV services, following the lifting of regulatory restrictions, and have already amassed hundreds of thousands of customers. (See Koreans Tune In to IPTV.)

The pay TV market is highly competitive, though, with the country's cable operators currently accounting for about 77 percent of pay TV subscriptions. As a result, content owners are "hesitant to switch their allegiances from cable TV to IPTV operators" due to cable's dominance, a situation that will make it harder for the telecom operators to grab the lion's share of the country's near 19 million pay TV subscriptions. And the cable operators are beefing up their technology capabilities, too. (See SK Broadband Goes for IPTV .)

However, by competing on price and by bundling in IPTV with other services, the Pyramid team believes IPTV will account for 27 percent of South Korea's pay TV subscriptions by the end of 2014.

And the prospect of such growth will be aided by the country's state-of-the-art fixed network infrastructure. Korea's saturated fixed broadband market (75 percent household penetration at the end of 2008) already includes a high proportion of fiber access lines: More than 8.5 million of the country's current 37.3 million fixed access lines (23 percent of the total) are FTTx-based. "Services offering 100Mbps broadband speeds are the norm rather than the exception in South Korea," notes the report. (See APAC Streaks Ahead in FTTH.)

And by 2014, the Pyramid team predicts, fiber will account for more than half of South Korea's access lines, a staggeringly high level driven by the government's policy to provide all of the country's 18 million-plus households with at least 50-Mbit/s broadband access by 2012.

That policy is backed with government funds that should provide some lucrative opportunities for broadband access vendors, notes the Pyramid team. "The South Korean government is looking to invest in telecom infrastructure to jumpstart economic recovery and has planned to spend $26.4 billion to make improvements in the access network," notes the report.

— Ray Le Maistre, International News Editor, Light Reading