Lack of Demand, Market Competition Mean Slow Growth for Wireless Broadband

By Kim Tong-hyung
Staff Reporter

WiBro, the Korean version of mobile WiMax, arrived on the scene with tremendous anticipation two years ago, with pundits calling it the ideal love-child from the country's advanced wireless and broadband infrastructures.

It has yet to be determined whether the technology, designed to deliver broadband speed to users on the move, is to sizzle or fizzle.

However, with operators looking to expand coverage and the government considering easing regulations to allow the wireless broadband services to support telephony, WiBro may still have a chance to deliver on its pre-launch hype.

The country's two biggest telecommunications heavyweights, fixed-line king KT and wireless leader SK Telecom, are currently gathering customers for WiBro, although the mobile-phone operator is less enthusiastic as it would rather have customers use the more expensive data services provided on its third-generation (3G) handsets.

KT, which controls more than 90 percent of the fixed-line telephony market and about 44 percent of the broadband sector, had gathered about 206,000 customers for WiBro by the end of June, while SK Telecom's presence is comparatively miniscule with around 2,000 subscribers.

Although the numbers are more than double the 100,000-plus WiBro subscribers at the end of last year, they still don't come close to the government ambitions to have 8 million subscribers by 2010.

WiBro provides broadband connectivity in vehicles moving at speeds of up to 120 kilometers per hour. However, in a country with one of the world's largest broadband penetration rates and ubiquitous computer terminals, finding customers willing to pay extra for a few minutes of high-speed Internet on buses and subways is proving to be difficult.

And with SK Telecom's WiBro commitment going less than half way, an ``Exhibit A" for doing things just because your rival does, the market has not seen the type of competition that brings growth.

``It's hard to call 200,000 subscribers a disappointment in a land where everybody has a broadband connection at the office and home,'' said a KT official.

``It's true that we need to get more creative in gathering customers, expanding applications and delivering services to more devices'' he said.

KT could have a larger customer pool by the end of the year when it will expand it's WiBro coverage. Currently, it is providing full coverage only in Seoul and Seongnam, although limited coverage is provided in the metropolitan cities of Busan, Daejeon, Daegu, Gwangju and Ulsan and 19 other towns in Gyeonggi Province.

The company is also expected to introduce an advanced WiBro service, dubbed ``WiBro Wave 2,'' in Seoul and the neighboring metropolitan area by the end of the year. The new version is designed to double the speed of the current WiBro services that provide an average download speed of 3 megabytes per second (mbps).

Can VoIP Become Killer Content?

The slower-than-expected acceptance of WiBro has businessmen and policymakers gasping for explanations and desperate for new ideas to foster growth.

One of the suggestions is to allow Internet telephony, or voice over Internet protocol (VoIP), on WiBro-enabled devices.

The KCC, the country's telecommunications and broadcasting regulator, has recently hired the Korea Information Society Development (KISDI) to produce a report on the long-term effects on the telecom market if voice is allowed on WiBro and subscribers are allocated their own call numbers.

This indicates a departure from the previous policy of the communication ministry, which disallowed VoIP on WiBro over fears of angering wireless operators like SK Telecom.

The KCC is also considering granting a license to a company to provide VoIP calls over WiBro as a mobile virtual network operator (MVNO), leasing the networks of KT and SK Telecom, by the end of the year.

Voice over WiBro already seems to be an attractive concept for organizations and businesses hoping to optimize their communication networks while cutting down on costs.

The Catholic Medical Center recently said it will rebuild its in-house communication system around WiBro and plans to provide VoIP through instant messaging systems.

However, the plan to allow telephony over WiBro is being met with strong resistance from mobile-phone operators, who shudder at the thought of customers downloading VoIP programs on their WiBro devices for cheaper wireless calls.

KT, on the other hand, would surely have mixed feelings over the delivery of VoIP on WiBro. Allowing voice calls would surely make WiBro more attractive with customers. But with KT looking to complete its merger with its wireless affiliate KTF, the country's No. 2 mobile-phone carrier that is barely holding a lead over SK Telecom in 3G customers, the calculations become complicated.

thkim@koreatimes.co.kr