By Kim Yoo-chul
Staff Reporter
The nation's top telecommunications regulator has been cornered over whether to completely drop its "nationalism-backed" pro-wireless broadband policy, as investment in WiBro services by leading mobile carriers stalls.
Telecom experts and officials from mobile carriers say it is time for the Korea Communications Commission (KCC) led by chairman Choi See-joong to faithfully follow market rules rather than push telecom players to invest in money-losing and unprofitable third-generation (3G)-based services.
From 2006 to 2008, the nation's top carrier, SK Telecom, invested 621.3 billion won or $530 million in WiBro-related infrastructure, down from its earlier pledge of 664.4 billion won, according to a statement filed Tuesday with the National Assembly Cultural and Telecommunications Committee during the annual inspection of government offices.
Similarly, KT spent a combined of 730 billion won or $625 million during the same period, lower than its earlier investment projection of 796 billion won.
Despite the previous guarantee for the expansion of WiBro networks to 84 cities by the end of last year, KT has so far only completed work in 28, according to the paper.
"As we clarified, the KCC is considering the possibility of imposing a penalty on telecom carriers over the failure of the investment pledge in WiBro-related businesses. But some technical matters still remain," a KCC spokesman said.
WiBro, short for "wireless broadband," is the local variant of mobile WiMax. The technology has virtually failed to appeal to customers due to the limited coverage. The service, launched in June 2006, is only available in and around Seoul and a few other cities on a limited basis.
When the services started a couple of years ago, the government forecast that the WiBro market would reach 8.1 trillion won in 2010, with the domestic equipment market estimated at 5.8 trillion won.
The forecast proved to be way off the mark, with KT and SK Telecom having a combined user base of less than 300,000 WiBro subscribers, according to company officials.
In terms of marketability, it is highly unlikely that WiBro will revive its sagging momentum in South Korea where roughly 90 percent of the population has broadband access.
A separate statement showed that SK Telecom and KT had invested a combined of 1.4 trillion won in the services since 2005. But the profit ratios were 0.2 and 3.4 percent for SKT and KT, respectively.
"Over 40 telecom carriers have already adopted the next-generation wireless technology dubbed as long-term evolution (LTE). In terms of economies of a scale, WiBro is not attractive," an official at SK Telecom said, adding mounting losses from its WiBro involvement make it lean toward a reliable fallback option in LTE.
The situation is grimmer for Internet TV or IPTV-related investment.
The combined actual investment by the nation's top three IPTV players ― KT, SK Broadband and LG Dacom ― in the first half of the year was just 283 billion won or $242 million.
The three players originally promised to invest a total of 853 billion won for IPTV content and related equipment, according to the regulator and company officials.
KT spent just 24 percent of that sum, while SK Broadband and LG Dacom invested 37 percent and 42 percent, respectively, another paper said.
The number of IPTV subscribers here is nearing 1 million, KCC said.
But the regulator is unlikely to attain its aim of 2 million with less than three months of the year left due to chronic worries over content.
The KCC decided to allow foreign companies to provide content for IPTV services, rescinding a provision which had stopped companies majority-owned by non-Koreans from offering channels on some of the country's platforms.