Secrets of carriers’ free messenger services

KT launches ‘olleh talk,’ receives good response from users

By Yoon Ja-young

Korean mobile carriers make around 1.5 trillion won from text messenger services annually, at a cost of 20 won per message. Hence, Korea Communications Commission Chairman Choi See-joong faced a backlash from carriers when he told lawmakers earlier in April that the regulator is considering making text messenger services free.

Now, the mobile carriers are providing free messenger services, which will inevitably eat into their text message revenues. They made a tough decision here not to fall behind in the competition going on to set a social networking platform.

Free messenger war

KT, the country’s second largest mobile carrier, launched olleh talk, a data-based messenger service for smartphone users. LG Uplus, the smallest player, has already been offering Wagle, a social networking and mobile messenger service, from January. SK Telecom, the telecommunications kingpin, plans to launch smartphones that have messenger services within this year.

However, mobile carriers are latecomers to the market. Kakao Talk, an application offering free messenger service, has already drawn over 15 million users. Mobile carriers have been attacking Kakao Talk, saying it uses up too much data space on their networks, but they are launching similar services.

Fall of mobile carriers

Analysts point out mobile carriers had no other choice. “With the launch of the 4G long-term evolution (LTE) telecommunications service, which focuses on data transmission, Kakao Talk may start offering voice calls. If that happens, Kakao Talk will have to operate as a telecommunications company. There will be no quality difference between voice call services of Kakao Talk and those of other carriers,” said an industry analyst who asked not to be named.

“It means mobile carriers may downgrade to the status of network providers, which will make them similar to small regional cable network operators,” he added.

The wheels have already started turning toward such services. My People, a messenger service of local portal Daum offering free Internet phone calls as well, has 7 million users. Microsoft, which recently acquired Skype, plans to install Skype in its Windows Phone 7 and Google Talk offers video chatting.

Aside from application companies like Kakao Talk, manufacturers like Apple as well as mobile carriers and portals are all rushing into mobile messenger services, convinced that they will become social networking service platform.

The biggest priority for mobile carriers is to keep their subscribers by offering messenger services. They will later develop diverse business models such as running mobile ads or applying location-based services on the platform.

Differentiated services

Businesses are making efforts to launch differentiated messenger services to attract users. KT, which launched olleh talk only a few days after Apple’s presentation of its messenger service iMessage, strengthened social networking features by linking them with Twitter and Facebook. Olleh talk offers private phone homepages for users which work like a communication hub for individuals. It is also open to subscribers of other mobile carriers. They can download the application for free.

SK Telecom is developing a messenger service based on the rich communication suite (RCS), a global standard for communication, to launch it within this year. Users won’t have to download application as the service will be preloaded in smartphones.