KoreaToday Telcos Struggling Over Mobile Tech
By Kim Yoo-chul
Staff Reporter
Despite increased calls for an early transition for next-generation wireless technology, South Korean telecommunication companies are still struggling to catch up with the telecom industry's ongoing problems of long-term evolution or LTE.
Citing vigorous pitches taken by the world's leading telecoms for better LTE mobile networks, industry officials and telecom experts are urging the nation's telecom regulator Korea Communications Commission (KCC) to follow a "market rule'' rather than pushing telecom players to invest in stalled third-generation (3G) based WiBro services.
``We have been having difficulties to maximize our energy to sharpen LTE technology," a high-ranking telecommunication industry source told The Korea Times. "WiBro still has marketability, but the business couldn't bring big money. Some countries in Africa, Central Asia, Middle East and South America might use WiBro services considering their weaker telecom infrastructure. But that will be a niche market.''
LTE technology allows fourth-generation (4G) mobile telephones to offer mobile Internet speeds up to a hundred times faster than current 3G networks.
LTE technology now constitutes "the industry's first choice for next generation mobile networks.'' A number of manufacturers such as Ericsson, Nokia and Siemens, and mobile telephone operators including T-Mobile, Telefonica O2, Orange, TeliaSonera, Verizon, AT&T and China Mobile have already committed to use this standard.
Against this trend, KCC is pushing Korean operators steadily into WiBro services. The body is receiving little for their investments toward the 3G-based mobile networks. Although government officials say KCC is preparing additional measures to expand WiBro coverage, it seems highly unlikely telecoms will actively respond with the government's such moves.
KCC recently asked Samsung Electronics to expand its WiBro-related equipment portfolios
"LTE will emerge as the main standard of next-generation wireless technology. Major carriers favor the technology over mobile WiMax because it can be built on existing systems. Time is very crucial to focus on LTE-related research to ride on the industry's transition,'' said an official at SK Telecom, asking not to be identified.
WiBro Disappearing
WiBro, short for "wireless broadband,'' is the local variant of mobile WiMax. WiBro virtually failed to appeal to customers due to 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 years ago, the government forecast that the WiBro services 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 just 220,000 WiBro subscribers, according to company officials.
WiBro never lived up to its enormous pre-launch hype as the next big thing in wireless communications.
Mobile carriers invested a combined 1.5 trillion won for the services as of July this year. But they are grappling with mounting losses from their WiBro businesses, making them lean toward a reliable fallback option in LTE.
Now, WiBro is currently used only in Internet connections on laptop computers and other mobile devices.
"Shares in Posdata, which recently folded its WiBro business, are showing a sign of stabilization as the market interprets the decision as a reasonable one, considering WiBro's losing momentum,'' said Kim Dong-june, an analyst at Goodmorning Shinhan Securities.
``KCC plans to expand WiBro coverage, WiBro-enable mobile phones and other services to revive the service,'' a KCC spokesman said.
Some say mobile WiMax will outpace LTE over the next few years, citing its head start on deployments. Researchers at In-Stat said LTE will not be commercially available until late 2009 while mobile WiMax is already deployed commercially.
The world's second-largest handset maker Samsung expects higher network-equipment sales as more operators begin deploying mobile WiMax service. Samsung has a 35 percent share in the mobile WiMax equipment market.
``Just two or three years remain to open a new chapter in the global wireless industry. South Korean government and operators need to clarify their top priority,'' said Kim.
US, Japan, Europe Investing
Major carriers in the United States, Japan and Europe are heavily jumping onto LTE services. Last week, the European Commission decided to grant $25.7 million from 2010 to the creation of the LTE technology.
Verizon Wireless, the biggest US mobile phone operator, aims to begin offering the high-speed network nationwide by 2015, using LTE technology. The technology is expected to reach 30 markets by next year.
NTT DoCoMo, Japan's largest telecom group, also plans to launch its next-generation 4G mobile phone network in 2010 even if rivals around the world wait.
To follow the moves, LG Electronics, the world's third-largest mobile phone maker, has developed a faster wireless chip for mobile phones based on LTE technology, forecasting that LTE technology will be bigger than that for rival WiMax.
Enhancements to LTE technologies will have a profound impact on mobile broadband users and revenues, said Coda Research. Half of all mobile broadband via netbook and laptop users worldwide will be using LTE by 2017, according to the report.
Although there are tremendous opportunities for operators and device and component manufacturers, the risks are significant, some say.
``With enormous growth in traffic and considerable decline in average revenue per user, operators will need to be ruthlessly efficient,'' another SK Telecom official said.
``LTE is going to be an important cushion for operators, but some say that they will need to take into account the very different factors impacting 3G and 3G+ growth across regions, and decide carefully how, when and where to market LTE.''