Mobile in Korea

   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.

   Korea Communication Commision requested in-depth research about voice service on WiBro to Korea Information Society Development Institute. WiBro was commercialized by KT and SKT in 2006, but WiBro was permitted for only data service, not voice service. Because voice service can not be provided on WiBro, call number for each WiBro device is not necessary until now.

   However, because KISDI started to investigate the long-term effects to the telecom industry of Korea if voice service is allowed on WiBro, new competition might be started on mobile industry of Korea. Real mobile services, including voice and data services, are only provided by mobile operators such as SK Telecom, KTF and LG Telecom. If voice service on WiBro is possible, KT can participate in the competition. KT has steadily insisted that voice service on WiBro be provided.
 
   If Korean Government permits the voice service on WiBro, will KT and SK Telecom start the service? I think it is not sure. There are two reasons.

   First, COVERAGE of WiBro!! Even if KT and SK Telecom commercialized WiBro service in 2006, the services only cover Seoul and near areas of Seoul. In addition, WiBro is well operated outdoor only. Indoor, the signal of WiBro is very weak. KT and SK Telecom should invest much money to strengthen the network coverage. Because the penetration rate of mobile voice service in Korea is already over 90 percent, it is not sure whether the operators make the huge investment on WiBro.

   Second, the merge of KT and KTF is expected within near future. Even if KT promotes WiBro service aggressively and wants voice service on WiBro in order to strengthen WiBro service now, KT might lose the driving force for voice service on WiBro after merging KTF. KT can provide mobile voice service through KTF without voice service on WiBro.

   I am wondering how KISDI will make the final decision about the voice service on WiBro. I will make a posting after announcement of the decision.

   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.

   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.

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

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

  As I mentioned, full browsing service for mobile internet is attracting many korean users after LGT launched OZ service. Full browsing service enables many users to connect to usual web pages with mobile handsets. However, some guys point out that, because usual Korean portal put too many contents including picture and text on an independant web page, usual web pages are not proper for mobile service.

  Thus, popular web-portals started to transform their service for mobile service. Naver, the biggest korean portal, has already provided the simple edition of its initial page. The simple edition of Naver looks like the initial page of Google. The initial page of Naver SE excludes unnecessary pictures and text and includes just only a blank input box for search like Google. It is very effective and efficient for mobile web browsing service.

Naver Simple Edition

Original Naver

  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.