Mobile in Korea

   There will be three big changes in Korean WiBro business this year.


   3 years have passed after WiBro service was launched officially in Korea. In June of 2006, SK Telecom and KT started to provide WiBro business using PCMCIA and USB dongle modems. However, only 0.2 mil users subscribed the service until the December of 2008. Even though SK Telecom and KT have made total investment of around 1,600 bil KRW for 3 years, the current performance of WiBro business is terrible. In the late last year, the Korean Government began to make various policies in order to accelerate WiBro business in Korea. In terms of the point of view, 2009 would become a very important year for Korean WiBro business.

  1. Voice service on WiBro network

   WiBro was originally data-centric service. In 2006, Korean Government permitted only data services such as mobile broadband on WiBro network. Thus, each WiBro device has no identification number which usual mobile handsets have. Instead of the identification number, each WiBro device has special ID which is similar to IDs of usual web services and is made of combination of alphabet characters and numbers. Because this ID is not important for users to use only simple internet connection with USB dongle modem, most of users don’t know their own WiBro ID.

   However, in the Christmas Eve of 2008, Korean Communication Commission (KCC) announced that Korean Government will give identification number to WiBro subscribers and permit Voice service on WiBro network in 2009. KT, a WiBro service provider, positively replied to the announcement of Korean Government through announcing that they will provide voice service on WiBro network in 2009. SK Telecom, another WiBro service provider does not yet announce whether they will provide the voice service or not. Because SK Telecom is already operating usual mobile service using CDMA and WCDMA network, it seems very hard that they easily makes the final decision about providing the Voice service on WiBro network.

   Anyway, new aspects of the situation regarding overall mobile market as well as merely WiBro market will be opened in 2009. If KT tries to penetrate mobile voice market beyond fixed communication market, including fixed broadband and fixed voice service, which KT has focused on, new competition situation in Korean telecommunication market will be built up in 2009.

  2. Appearance of new entrant WiBro service provider?

   As well as deciding to give the identification number to WiBro service and permit the voice service on WiBro network, KCC announced to choose new WiBro service provider in 2009. Originally, Hanaro Telecom (Current SK Broadband) was the third WiBro service provider. However, they gave up the business a few years ago and returned the wireless frequency for the business. KCC seems to ignite the competition among WiBro service providers and try to expand WiBro business in Korea through granting the remained frequency, which Hanaro Telecom returned, to a new service provider.

   Yet, the official schedule for deciding a new service provider was not announced. The association of MSOs (Multiple System Operators – Cable TV Companies) is considering whether they will together try to acquire the WiBro business authority. Because, recently, commercialization of IPTV was officially decided and real IPTV will be provided this year. Major IPTV service providers are KT and SK Broadband which are fixed telecommunication companies. IPTV services of telecommunication companies will penetrate the broadcasting market which was originally dominated by MSOs. In order to protect their own business domain, MSOs might try to attack telecommunication companies through jumping into telecommunication market. WiBro is able to become a good weapon of MSOs who want to survive under tough competition with telecommunication companies.

   Beside that, possibility that Samsung tries to become a new WiBro service provider might exist. Samsung Electronics is the biggest manufacturer which provides most of WiBro equipments and several WiBro devices. Even though Clearwire in US and UQ Communications in Japan are building the mobile WiMAX network and several companies in India will be chosen as mobile WiMAX service providers this year and start to build mobile WiMAX network soon, Samsung might want to drive WiBro business in Korea directly. SK Telecom and KT already made the maximum investment which they promised to make when they acquired WiBro business authorities. If SK Telecom and KT will not be able to attract more customers beyond current number of subscribers, they might not increase additional investment. Samsung might try to do the business directly and expand the WiBro business market through igniting the competition among WiBro service providers.

   When the official schedule is announced and a new WiBro service provider is chosen, I will make a new post about the news.

   3. Introduction of WiBro MVNO (Mobile Virtual Network Operator)

   There is no MVNO in Korea, in the area of usual mobile service. However, WiBro MVNO might appear this year. When Korean Government granted the WiBro business authorities, there was a contract condition. In 2009, if any company request to rent WiBro network from SK Telecom and KT, SK Telecom and KT should enable the company to start WiBro business as MVNO.

   If MSOs want to penetrate mobile communication market through providing WiBro service, they might do their WiBro business as MVNO instead of becoming a new WiBro service provider as MNO. If they decide to do MNO business, they have to make at least 800 bil KRW in order to cover only Seoul areas. (SK Telecom and KT could not make the nationwide coverage with 1,600 bil KRW.) Because this investment might become a burden to MSOs, I think that MVNO is better option for MSOs .

   The above events will be hot potatoes in overall Korean mobile industry as well as WiBro area. Until last year, WiBro business was an isolate island in Korean mobile industry. However, it might make a great ramification in the overall mobile industry. I will make posts regarding the above events steadily. 

   There are public buses which provide internet cafe using WiBro (Mobile WiMAX). KT started to provide ;WiBro Internet Cafe in Bus' service in Seoul. Several seats in a bus have devices equipped with touch-screen panel. Currently, it is free service for trial. People who want to enjoy internet or use a streaming music/video service are able to do those activities in a bus. Please refer to the below pictures for your understanding.

   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'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.
 

   KT WiBro attracted 100,000 subscribers in the late November. Although KT launched the WiBro service at June last year, KT had only 5,000 subscribers until last March. However, since last April, KT attracted, on an average, 12,000 subscribers every month.
  
   In Korea, there are three kinds of mobile broadband service. KT WiBro is mobile WiMax service based on data service. Meanwhile, SKT's T LOGIN and KTF's iPlug are HSDPA services based on voice service. SKT and KTF can not push the mobile broadband services because the services share the HSDPA network with voice service. However, because WiBro is a network for only data service, KT might be able to push the service aggresively.

   Although someone says that 100,000 subscribers of KT WiBro are due to KT's aggressive promotion, the acheivement must be the steppingstone for the expansion of mobile WiMax service. In 2008, SKT has an investment plan for WiBro service. I expect the korean mobile broadband market will be exciting in 2008.

   Today, The ITU Radio Assembly approved WiBro (Mobile WiMax) as an official IMT-2000 Interface. WiBro became a sixth radio interface of IMT-2000 which has W-CDMA, CDMA2000, TD-SCDMA, EDGE and DECT.

   Korea is one of leading countries for WiBro (Mobile WiMax). KT already launched the WiBro service early this year and got about 60,000 users until last September. In addition, SK Telecom must invest a lot to WiBro under aggrement with MIC (Ministry of Information and Communication). In addition, there are many WiBro equipment manufacturers including Samsung Electronics, Posdata. Korean government and companies expect that WiBro would be extended to global markets.

   However, there are some barriers that disturb WiBro to be pomoted to usual people. One of barriers is the prohibition of voice calling function on WiBro devices. Korean government granted WiBro license to KT and SK Telecom whth conditions attached that WiBro should be used for only data service, not voice service.

   I am wondering whether Korean government will change the existing rule that WiBro should be used for only data service. WiBro as a standard of IMT-2000 can be used for data & voice service.

   This issue might cause great impact on korean communication market. What is the final conclusion??

   Korea is one of the most developed countries regarding mobile broadband. There are three services for mobile broadband, T LOGIN of SK Telecom, WiBro of KT and iPlug of KTF. The three operators just have a simple business model for mobile broadband. The services make users connect to internet with their laptops having USB modem or PCI modem card. However, users are not satisfied with the the simple services and feel that the price for mobile broadband services are too expensive.

  Most of Korean people use the fixed broadband service in their home. In addition, there are so many internet cafe in Korea. Most of people can connect to internet without mobile broadband service when they want. There are few people who have needs for mobile broadband service.

  In addition, people think the price is too expensive for them to use the mobile broadband service. If they want to use the mobile broadband service, they have to pay about $20~30 a month for limited data usage(about 1GB) - Currently, KT offers a promotion price plan for unlimited usage until next March.- Even if it is cheaper compared with the service of other countries including US and Japan, most of people think the price schem is not reasonable for broadband service. They consider the tariff compared with the tariff of fixed broadband service. They usually pay $20~30 a month for unlimited usage in order to use the fixed broadband service in their homes. Moreover, the most of fixed broadband services gaurantee high speed of 10Mbps. Korean users think the mobile broadband is slower and more expensive service than the fixed broadband.

  Operators are offering the unlimited options in order to promote the service in the initial stage. However, if the promotion period is ended, many users might stop using the services.

  Operators need another business model except for simple internet connection services. Operators are making efforts to develop new business models. They launched WiBro-embedded PDA or PMP and considered developing WiBro-embedded digital camera. However, there are not any cool business model yet. If someone find a gorgeous business model for mobile broadband, he or she might be a star or a millionaire.

  Anybody has a gorgeous business model for mobile broadband???