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. 

Korean Insight posted that they will launch a news letter service to deliver news and innovative service regarding korean digital world. I believe that it would be a good opportunity for people to want to know about Korean mobile, internet and media industries. Please refer to the below link for detail.

Coming Soon - Weekly Newsletter on Korean Digital Landscape

   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.