Mobile in Korea

I made a post regarding 'Voice Service on WiBro (Mobile WiMAX)' in last August. SK Telecom has maintained a negative stance about voice service on WiBro because voice service on WiBro might cause the cannibalization effect toward SKT's existing voice service on CDMA and WCDMA. However, KT had asked that the government should grant the voice service of WiBro. KT has ever demonstrated the VoIP service using WiBro in OECD Ministerial Meeting of last June. KT seems to solve all technical problems for providing VoIP service using WiBro.

However, KT changed their stance regarding voice service on WiBro. Through 3rd quarter conference call, KT announced that they would not provide voice service using WiBro for quite some time. Why does they change their stance? I think there are two reasons.

First, KT might be concerned about the cannibalization effect as SK Telecom. KT has a plan to become incorporated with KTF, one of their subsidiaries. KTF is a mobile operator and provides CDMA and WCDMA service. If KT provides voice service on WiBro, the service would come into collision with KTF's existing business models.

Also, the coverage and quality of service for voice service might be burdens to KT. The coverage of KT's WiBro service covers only 40% of Korean population. Moreover, KT's WiBro service does not support sufficient quality for voice service in INDOOR SPACE. KT has often communicated with customers by informing that WiBro service could make the best performance in outdoor space. Thus, KT should enlarge the service coverage and improve the quality of service in indoor space as well as outdoor space in order to pursue the voice service on WiBro. It might be not a easy decision.

On the other hand, the Korean government seems to be disappointed that SKT and KT are passive for WiBro business in domestic market. A few days ago, the Government announced that another new WiBro service provider will be selected next year. The Government has additional 27MHz available whithin 2.3 GHz bandwidth. It will be given to a new service provider and both data service and voice service are expected to be permitted on WiBro network. The Korean Government wants to invigorate the WiBro business in domestic market by raising new competition among KT, SKT and a new service provider.

The Korean mobile market is wondering which one will be a new WiBro service provider.

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LG Electronics launched the LG Mobile World Cup, giving participants a chance to show off the speed and accuracy of their text messaging skills. This event began in Seoul, Korea on October 27 and will be in Brazil in late this year. In addition, this event will be expanded to 15 more countries and a winner of the world will be picked out next year.

According to market research company Gartner, text messaging is expanding at an explosive rate. This year, people will send an estimated 2.5 trillion text messages and this number is expected to surpass 5.6 trillion by 2012. For perspective, every people will send about 6.7 billion text messages per day this year.

As the popularity of text messaging has risen, phone manufacturers are trying to make mobile handsets which are friendly for sending text messages. (Recently, another Korean handset provider, Pantech made a contract with AT&T in order to provide "World's Thinnest Qwerty Keyboard" Handsets.) As I mentioned on the post, "SMS Usage Patterns of Korean People", over 40% text messages are sent using usual computer with QWERTY keyboard. It means usual people are familiar with QWERTY keypad and, if handsets provide a similar keypad, text messaging would be expanded more. (Also, refer to the below post, "An Innovative Mobile Keypad!!!")

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Korean Insight posted that they will launch a news letter service to deliver news and innovative service regarding korean digital world. I believe that it would be a good opportunity for people to want to know about Korean mobile, internet and media industries. Please refer to the below link for detail.

Coming Soon - Weekly Newsletter on Korean Digital Landscape

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The biggest mobile operator in Korea, SK Telecom announced 57% decline in its third-quarter profit. The higher marketing costs seems to be a root cause of the decline.

SK Telecom has competed with KTF in order to attract customers with WCDMA(3G) service. SK Telecom has maintained its doninant position with market share of over 50%. However, SK Telecom has poured extraordinary marketing cost for attracting 3G service users. Although SK Telecom succeeded to defend its market position against KTF and LG Telecom, the total number of mobile services has not increased. Because most of 3G service users are not new users of mobile service but existing users who only change their mobile service from 2G to 3G.

The penetration rate of Korea's mobile market is already over 90%. Additional growth in the domestic market might be not expected any more except for mobile data service area.

Please refer to the below table regarding SK Telecom's profit.

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   SK Telecom announced to develop and commercialize the first WiBro Femtocell. Femtocell is a small sized base station. SK Telecom has already provided WiBro (mobile WiMAX) service in Korea. However, the service has been able to be used at outdoor areas because of limitation of coverage range. SK Telecom announced that the WiBro coverage could be expanded into indoor areas with the Femtocell.

   I think that the price of Femtocell is still expensive (around $300). If the price of Femtocell could go down to around $50, Femtocell would contribute to the expansion of WiBro service. Because the function of Femtocell is very similar to Wi-Fi Access Point's. (Even the external formfactor) Customers are able to buy a Wi-Fi AP with only $50. In sum, I think the Femtocell could be provided with around $50 in order to have a competitiveness.

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   SK Telecom opened T.um in early October. It is located in 1st and 2nd floors of SKT's headquarter building. SK Telecom put something innovative regarding Korean IT products and services in T.um. People such as foreigners are able to experience the advanced Korean IT services here.

   Also, a Starbucks equipped with advanced technologies was opened in T.um. In this Starbuccks, people are able to order their coffees using a touch screen of each table and pay with their mobile handsets.

   The below is a video clip to show T.um. The background music of the below video clip is "SKT's corporate song."

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