Mobile in Korea

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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   I posted 'Catalyst for Growth of SMS Usage' in last April. I found an interesting article regarding the post.

   Recently, K Research, a research firm specialized in IT & mobile, conducted a survey about SMS usage patterns of Korean people. There was a question about how to use SMS and very interesting result was identified. The question is "How do you send SMS?" You guys might think that most of people send SMS using mobile handsets. HOWEVER, 40 percent of Korean people use instant messenger for sending SMS.

   Most of young people under 29 years old prefer mobile handset to instant messenger to send SMS. Because they usually stay in school or enjoy wlaking on street. However, many people over 30 years old use instant messenger such as NateOn for sending SMS. Those people usually stay in office and work in front of computer. When they get a message or want to send a message, it is very convenient to use the instant messenger on computer.

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   SK Telecom announced that a new price discount program for middle and high school students as well as college students. Students will pay 50 percent of regular price when they make a call to other students who are attend same school. Students should call to the customer center of SK Telecom and register the name of their school. After registering the name of school, they can save money whenever calling to friends in same school.

   Moreover, this discount program is applied simultaneously and together with other discount programs. For instance, most of college students are getting a discount benefit for using mobile phone in a specific region. If a student thinks that he usually use mobile voice services near his college, he can register the region and get discount benefits when using mobile services in the region.

   From August 4th, students can get discount benefits from both price discount among friends in same school and price discount in a specific region. If a student call to his friend in the campus, he only pays abount 0.5 cents per 10 seconds. The regular price is 2 cents per 10 seconds.

   Although SK Telecom is a market leader and expect to attract many new students to its customers, KTF and LG Telecom announced that they did not prepared simmilar program in order to react SK Telecom's strategy.

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   SK Communications annouced that 25 mil users are using NateOn service. NateOn is the number one instant messenger in Korea. As well as providing simple messaging service like MSN and Google Talk, NateOn provides various value-added service, including 'SMS service on NateON', keyword chatting, remote control, internet radio and keyword channel. I expect that NateOn will be evolved consistently.

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   Last week, the Board of Audit and Inspection of Korea insisted that Korean mobile operators, SKT, KTF and LGT got unjustified profits of $870 mil from customers in 2007. However, mobile operators criticized that the Board of Audit and Inspection of Korea ignored the environment of Korean mobile industy, so that the profits of $870 mil were assumed as unjustified profits.

  The main point is that the mobile rates in Korea are calculated based on the usage per 10 seconds. (Usually, the mobile rates per 10 seconds are about 2 cents.)  The Board of Audit and Inspection of Korea pointed out that, even if a customer hang up at the time point of 11 seconds after starting the call, the customer should pay about 4 cents - the rates for 20 seconds. The Board of Audit and Inspection of Korea requested that mobile operators modify the scheme of mobile rates based on the usage per 1 second.

  However, mobile operators mentioned that the scheme of mobile rates is resonable compared with the scheme of other countries' mobile operators. For example, the mobile rates of US are calculated based on the usage per 1 minute and those of some European countries are calculated based on the usage per 30 seconds. In addition, mobile operators insited that they have lowered the rates for mobile data service and video call.

  Since last year, Korean government has continued to put pressure on mobile operators to lower rates. As a result, mobile operators started to offer "intra-network" discount package. The intra-network discount system gives 1 50-percent discount for inner-network calls. For example, if a customer pay additional $2 for the discount service, the customer get a 50-percent discount benefit when calling to other SKT's subscribers.

  Moreover, SKT started to offer "family price discount plan" without additional charge. If members of a family subscribe SKT's mobile service, the members can get discount benefit when calling to each other. The discount rates have variation based on the subscription period of members.

  Even if Korean mobile operators offer various discount options, government put pressure on mobile operators consistently. Some experts are pointing out that the pressure for price discount might make mobile operators decrease the investment because of the expense pressure and the investment reduction might hamper the growth of IT industry in Korea.

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