Mobile in Korea

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 made a posting about LGT's full browsing service, OZ. Yesterday, LGT launched new price packages which enable customers to use OZ service freely. The below article about the news was provided by Digital Daily.

   LG Telecom, LGT, from August 1st, launches 3 ‘OZ free airtime rate’ packages to promote 3G OZ service, enabling subscribers to surf the internet via their handsets. The new rate packages allow subscribers to connect to the internet without additional charges and provide discount from 140,000 up to 240,000 based on each tariff regime.
  
   The basic rate of ‘6 hour Free OZ service‘ is 510,000 won per month, but subscribers only pay 37,000 won with 14,000 won price cut. Subscribers to 8 hour OZ free and the 13 hour tariff regimes get 19,000 won and 24,000 won discount from 61,000 won and 81,000 won respectively.

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  iPhone 3G was veiled out on June 10th in WWDC. Because Apple sold 6 mil units of iPhone after launching it last year, iPhone 3G is expected to make new wave of innovative handset in 3G market. iPhone is already proved to be very helpful that mobile operators attract new customers with the innovative handset and get more revenue from data service. According to Rubicon Consulting, AT&T, which has povided iPhone exclusively in US market, sold 3 mil units of iPhone and the yearly increased revenue from iPhone is expected to get to $2 bil, even if AT&T gave $199 per unit to Apple.

  Apple is expected to go into many countries beyond US with iPhone 3G and also go to Asian markets, including Japan and Korea. In Korea, KTF is expected to be a sole provider of iPhone 3G in Korea. SK Telecom, the biggest mobile operator in Korea, might not provide iPhone 3G, because Shin-bae Kim, CEO of SK Telecom, mentioned yesterday that Apple is destabilizing the mobile market through requesting overburdened subsidy and revunue sharing to mobile operators.

  However, it is not sure whether KTF will provide iPhone 3G in Korea. KTF has a strategic alliance with NTT DoCoMo, the biggest mobile operator in Japan. (NTT DoCoMo has 10 percent stake in KTF. In addition, KTF and NTT DoCoMo acquired a Malaysian mobile operator together last year.) Thus, iPhone 3G will be provided by Softbank Mobile in Japan. Until early this year, NTT DoCoMo was expected to provide iPhone 3G in Japan, but the negotiations between the two sides have broken down, the collapse of negotiation that might make KTF not provide iPhone 3G in Korea.

   Apple announced that it will change the strategy for iPhone from providing iPhone through a sole operator in a country under an exclusive contract to providing iPhone through various operators in a country. Many experts are expecting that NTT DoCoMo will provide iPhone 3G in Japan through negotiating again with Apple. If NTT DoCoMo provides iPhone 3G, it is expected that KTF will also provide iPhone 3G in Korea.

  If iPhone 3G is launched in Korea, I will report the news again.

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  In Korea, SK Telecom and KTF provide 3G services using HSDPA; LGT provides it using EV-DO Rev.A. In late April, SK Telecom and KTF attracted 9.97 mil subscribers (KTF 5.2 mil SK Telecom 4.7mil) who use 3G handsets on HSDPA network. In addition, LGT launched OZ service in early April and attracted 0.08 mil subscribers.

  Total subscribers of 3G service in Korea is 10.05 mil up to now. The rate of 3G subscribers is 22.5%;the number of mobile subscribers including 2G and 3G is 44.5mil.

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  Samsung launched a new 3G handset (HAPTIC) in late March. Although one month has passed, the handset is expected to become a best selling handset in Korea. About 70,000 handsets have sold for 20 days. Although it is a high-tier model (retail price : $700), more people want to buy the HAPTIC.

  The KSFs of HAPTIC are 'innovative UI design', 'convenient widget' and 'full-browsing function'. In Korea, the handset manufactures have focused on handset design and additional function like game in order to attract users. I assume that this trend is changing. Korean users are interested in innovative UI more than hadset design and fuctions. I think that, if iphone is launched in Korea, it can surely attract many korean users.

my2pac

   Nowaday, Korean operators are focusing on Video call which is one of 3G service. Aditionally, SK Telecom and KTF are pouring much money into TV commecials for video call. Let me introduce the TV commecials of SK Telecom and KTF. Even if they are made for Korean, it is easy for you to understand the meaning of commecials.

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