Mobile in Korea

Today, LG Electronics announced that they will launch the first Android phone in late February through KT. Even though LG has the second position in the Korean mobile handset market, they had no Android phone in order to counterattack the other handset providers such as Apple, Samsung and Motorola. Their new Android handset is based on the European version 'LG GW620.' They customized this modem for Korean market.

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   Although KT is officially saying that the plan to release iPhone in Korea is not decided, several news agencies have reported that KT would release iPhone in August. Especially, iNews24 (a Korean IT specialized news agency) reported a detail plan of KT regarding releasing iPhone.

   According to iNews24, KT will release iPhone 3G in August and iPhone 3GS in September or October. In addition, it mentioned that SK Telecom does not make a decision about releasing iPhone.

  In Korea, many people say that they are waiting for iPhone. Will iPhone make a big success in Korea? I am also wondering it. In my personal perspective, mobile operators should not modify anything including hardware and software, when they launch it. However, I am not sure whether KT could decide it without any modification. Because, many independent business models of iPhone collide with Korean mobile operators. For example, if KT launch iPhone without any modification, they should give up several their independant business such as Dosirak (a similar service to iTunes.). Korean mobile operators usually hope to become multi players which provide network, various services and content. However, when they launch 'PURE' iPhone and iPhone become the major trends in Korea, the mobile operators might become "DUMP PIPE"s.

  We can see the result soon. When mobile operators launch iPhone in Korea, I will make a post regarding this again.

 

my2pac

   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. 

my2pac

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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   SK Telecom announced to develop and commercialize the first WiBro Femtocell. Femtocell is a small sized base station. SK Telecom has already provided WiBro (mobile WiMAX) service in Korea. However, the service has been able to be used at outdoor areas because of limitation of coverage range. SK Telecom announced that the WiBro coverage could be expanded into indoor areas with the Femtocell.

   I think that the price of Femtocell is still expensive (around $300). If the price of Femtocell could go down to around $50, Femtocell would contribute to the expansion of WiBro service. Because the function of Femtocell is very similar to Wi-Fi Access Point's. (Even the external formfactor) Customers are able to buy a Wi-Fi AP with only $50. In sum, I think the Femtocell could be provided with around $50 in order to have a competitiveness.

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   SK Telecom opened T.um in early October. It is located in 1st and 2nd floors of SKT's headquarter building. SK Telecom put something innovative regarding Korean IT products and services in T.um. People such as foreigners are able to experience the advanced Korean IT services here.

   Also, a Starbucks equipped with advanced technologies was opened in T.um. In this Starbuccks, people are able to order their coffees using a touch screen of each table and pay with their mobile handsets.

   The below is a video clip to show T.um. The background music of the below video clip is "SKT's corporate song."

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