Mobile in Korea

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.

my2pac

   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.

my2pac

   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.

my2pac

   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.

my2pac

  VoIP is a hot potato in communication industry of Korea. Fixed VoIP services already atrracted a lot subscribers, however mobile VoIP is not yet permitted. Recently, JCI, a japanese mobile virtual network operator (MVNO), announced that mobile VoIP service will be provided using DoCoMo's 3G N/W in Japan.

  In Korea, WiBro is considered as an appropriate mobile network in terms of mobile VoIP. As I mentioned on the former post, there are two operators, KT and SK Telecom, providing WiBro service in Korea. SK Telecom might have no needs for voice service on WiBro, because SK Telecom already provides mobile voice service using CDMA and WCDMA.  However, because KT is a fixed communication operator, KT is trying to expand its business area to mobile communication service. KT has aggresively pushed WiBro service into Korean market. Although KT has attracted 150,000 subscribers for one year, is seems to be very hard to attract more subscribers without voice service on WiBro. However, Korean government allowed that operators can only provide data service through WiBro.

  By the way, Korean Communication Commision, a division of Korean government, announced to start the review about VoIP using WiBro network. In addition, KT announced that VoIP trial service using WiBro will be demonstrated at the OECD conference which will be held in Seoul next month. If VoIP service using WiBro is permitted, it means a direct crash between two biggest Korean operators, KT and SK Telecom. It seems like a night before a storm in Korean communication industry.

my2pac

  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.
 

my2pac

   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.

my2pac