Mobile in Korea

Today, Korea Communications Commission which aims to manage broadcasting and communication in Korea as a government organization decided to abolish the policy about mandatory WIPI (Wireless Internet Platform for Interoperability) on all handsets in Korea. From next April, mobile handsets can be launched without WIPI in Korea.

The policy was applied on April. 1, 2005. The Korean government had two objectives with this policy.

First of all, they intended to make mobile applications to be developed efficiently. In early 2000, various wireless internet platforms such as BREW of Qualcomm and J2ME were used on handset in Korea. This situation prevented mobile application companies and mobile operators from developing applications efficiently. Mobile application companies had to develop each platform-based application in order to provide their applications through all handsets. Through the single wireless internet platform, WIPI, mobile players could provide their service with only one version of applications.

Second, Korean mobile industry intended to spread its own mobile technology to the world. Even though Korea had very innovative mobile services in early 2000, these services depended on foreign companies' technologies. (For example, even though Korea is the first country which commercialized CDMA technology, most of CDMA technologies belonged to Qualcomm.) Korean government initiated to develop an unique wireless internet platform and wanted to expand this platform to the global market. They wanted to make a Korean version of BREW and J2ME which are popular in many countries' markets.

However, the implication of this technology exists no more. The global trends about wireless platform have been changed fast. Especially, as open operating systems such as iPhone OS and Google's Android expand their territories, the closed platform, WIPI is losing its power and prevent Korean mobile industry from developing.

Concerned with the changed policy, I think the change has both positive and negative impacts on Korean mobile industry.

Positive Impacts

1. Various foreign manufacturers including Apple, Nokia and Sony Ericsson can break into Korean market and customers will become free to choose their handsets. Up to now, Korean mobile handset market has been dominated by three Korean companies, Samsung, LG and Pantec. Even though Nokia has number 1 position in the world market, they can not run their business in Korea. The changed policy will enrich Korean customers' mobile experiences.

2. Mobile operators can their competitiveness through applying various open OS for their services. The penetration rate of smart phone in Korea is very low. (Two percent or less) However, the changed policy will stimulate mobile operators to consider adopting various smart phones which have open OS.

Negative Impacts

1. Small Korean mobile companies might not thrive under tough competition environment. Up to now, they could focus on only WIPI and developed only one version of application. However, under the open environment, they should develop various versions for an application. For example, they should develop a version for iPhone and another version for Android. Several successful companies can make bigger success under this open competition environment. However, most of small companies would struggle to thrive.

Anyhow, the Korean mobile industry is trying to change steadily. I believe that the Korean mobile services and technologies will make great impacts on global mobile industries.

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.

[Statistics : Mobile Market Size of South Korea (June, 2008)]

• Population of South Korea : 47,925,000
• Penetration Rate of Mobile Service : 93%

  I've been to WiMAX Forum Congress Asia 08 from 8th April to 10th April. I am wondering whether mobile broadband based on WiMAX (and LTE) will succeed in developed markets (in terms of mobile service) including Korea, Hong Kong and Japan.

  In the Congress, many participants from emerging markets including India, Malaysia, Indonesia and Pakistan are expecting that WiMAX will perform an important role for roll-out of broadband service. The penetration rates of fixed broadband service in emerging markets are very low under 10%. The providers think the broadband service is a great opportunity for growth and are trying to expand the service through their countries. Because they did not have fixed broadband infrastructure like fiber optic and copper line, they must invest much money in order to provide the broadband service. In this case, mobile or nomadic broadband using WiMAX is more efficient than fixed broadband using fiber optic or copper line. Moreover, some countries including Malaysia and Indonesia consist of many islands. It is very difficult for them to build fixed infrastructures over the whole countries.

  However, developed countries including Korea and Japan have different environments. For example, the penetration rate of broadband service in Korea is over 80%. In addition, there are so many PC cafe providing computer and fast speed internet connection. Usual Korean people might have no needs for mobile broadband. Because the environment of internet connection is well developed, they do not like taking a laptop when they are out of home and do not want to subscribe the mobile broadband service like KT WiBro and SKT T LOGIN. Even if WiBro service was launched in 2006, the number of subscribers is only 150,000 up to now. A pay Wi-Fi service, Netspot, which is a simmilar to mobile broadband service, is not also evaluated as a successful service in Korea. (It has attracted about 400,000 subscribers since 2002.)

  KT is focusing on another business opportunities using WiBro. KT also thinks that it is difficult for WiBro to expand with only mobile broadband service which provides an internet connection with usb modem or PCMCIA card. KT is trying to develop various mobile service using WiBro. For example, mobile education service was launched for undergraduate students of SKKU. KT announced today, that a full browsing service on a smart phone will be provided. However, I am not sure that the efforts and strategies for expansion of WiBro service would give a great result to KT.

  I am agree that many innovative mobile services like full browsing, mobile education and mobile health service must attract users for WiBro in order to succeed in developed markets. However, why do we have to consider WiBro as the network for the services? There are alternatives like HSDPA and CDMA. LGT succeeded to provide full-browsing service using CDMA EV-DO Rev.A and already attracted 50,000 users for 15 days after launch.

  I am wondering how WiBro or WiMAX service can survive in developed markets.