sean.jackson@informa.com
Seoul searching
Arguably the most advanced mobile market in the world,
South Korea is set for more groundbreaking changes in 2008.
�outh Korea is one of largest mobile
markets in the Asia Pacific
region, with 44 million mobile
subscribers at the end of 2007, up
from 40.6 million the previous year,
according to Informa Telecoms & Media.
Penetration was approaching 90
per cent at the close of last year. With
saturation not far off, the market has
a rate of subscription rising by just
under ten per cent; one of the slower
growing markets in the region.
South Korea is a three-player market.
With 22 million subscribers, SK
Telecom (SKT) is the market leader,
followed by Korea Telecom Freetel
(KTF) and LG Telecom (LGT) with 14.1
million and 7.8 million subscribers
respectively at the end of 2007.
While most Asia Pacific markets
have accepted prepaid to differing
degrees, neither operators nor subscribers
in South Korea have embraced
the up-front approach. With
only 725,900 prepaid subscribers at
the end of 2007. LG Telecom leads
the prepaid market with 401,000
subscriptions, while KTF had 302,00
and SKT just 22,000. Nevertheless,
even though South Korea’s market
is not pushing prepaid, the majority
of its net additions are coming from
the low-end segment.
South Korea is a market in which
CDMA technology has dominated.
However, WCDMA services are set to
significantly reduce its market share.
SKT and KTF have both embarked
on plans to migrate their combined
CDMA subscriber base to HSPA within
the next five years. Both firms say
they’re eager to take on the ambitious
task, because migrating their
subscribers will ultimately enable
them to offer cheaper wireless data
services and handsets. At end-2007
there were 40.1 million CDMA subscribers
compared to just 3.6 WCDMA
subscribers, representing a small but
increasing base.
Third-ranked operator LGT was
denied an HSDPA licence by the
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regulator, in response to the operator’s
decision to hand back its EV-DV 3G
licence. Instead, LGT has announced
plans to launch EV-DO Rev. A services,
for which it has been given the green
light by the regulator, but there is
concern that the firm has been left
without a WCDMA migration path, and
that EV-DO services and handsets will
be prohibitively expensive.
South Korea is, of course, famous
for pioneering another alternative
network technology; WiBro, which
was launched back in June 2006.
Operators’ subscriber figures are a
closely guarded secret but anecdotal
evidence suggests that the homegrown
wireless broadband technology
has struggled to make an impact. The
initial slow growth of WiBro can be
attributed to limited network coverage
and lack of dual-mode handsets, but,
even after resolving these issues, the
future of WiBro is likely to be affected
by WCDMA/HSDPA. However, while
the benefits of WCDMA/HSDPA loom
in the mind of operators, both KTF
and SKT have indicated they do not
intend to give up on WiBro.
Surprisingly—for such a saturated
and technologically advanced market—handset
availability has been a
serious issue in South Korea, thanks
largely to the regulator placing a ban
on handset subsidies back in 2002.
The full ban expired in March 2006,
and the Ministry of Information
MARKET ANALYSIS
and Communication (MIC) relaxed
regulations to allow subsidies for
subscribers who have been using one
operator for more than 18 months.
According to estimates, about 63
per cent of all South Korea’s mobile
subscribers will qualify for subsidies,
prompting speculation that
operators will shift from marketing
strategies based on subscriber
retention to strategies based on
subscriber acquisition.
According to the LG Economic
Institute, the partial lifting of the
ban should help with the next wave
of new technology, driving the market
with subsidy-triggered demand
for the replacement of HSDPA and
DMB phones.
As in other highly penetrated
markets, South Korean operators
have been looking at new ways of
generating revenues. The mobile data
market is well developed in South
Korea with about 50 per cent of the
total user base being described as
‘active’ mobile data users. It is still
dominated by basic products such
as ringtones, ringback tones, graphics
and gaming.
SK Telecom has emerged as the
clear leader in data traffic, with nearly
25 per cent of its revenue generated
from data usage. Walled gardens are
a thing of the past in South Korea.
This—in conjunction with SKT and
KTF pushing data usage further on »
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