Proliferation of Smartphones and Tablets in Korea

Two items in the news today provide a sure indication of continued media convergence and the maturation of the market for smartphones and mobile devices.  The first item notes the change in distribution and sales of smart phones.  In the past, manufacturers of mobile devices sold them only through a single mobile operator.  Apple changed that pattern by making the iPhone available through both KT and SKT, and the other major handset and tablet manufacturers have followed suite, as reported by the Chosun Ilbo.  Another article, in the Joongang Daily, reports that this week will see the introduction of a "deluge of new smartphone and tablet PC models." (click on the illustration to see a larger version)

Content Providers vs. Platform Providers in Korea's "Media Big Bang"

As noted in an earlier post and widely covered in the press, many in South Korea are expecting a "Media Big Bang" after the recent awarding of broadcasting rights to new business entities.  Much of the focus in discussions of the "Big Bang" prospect has been on the nation's large newspaper groups and terrestrial broadcasters.  However, as noted by an interesting article in The Korea Times, the recent legal changes and new licenses may herald a new era in which content providers, such as the CJ Group (click on the graphic to see full-size version), may be the big winners, rather than the platform providers (newspaper and television groups) that have dominated in the past.  The article notes the increasing number of outlets or channels for content, with the rise of the smartphone, tablets and the continued convergence of digital media.  The increasing number of channels or "platforms," the argument goes, will only increase the demand for content.  Along with these developments, there has been a notable increase in the viewership of pay television in Korea.  Currently, more than 80 percent of Korean households subscribe to some form of pay-television service. And pay-television’s overall share in viewership rose from 21.5 percent in 2000 to 41.1 percent last year.

According to industry observers, for the four new comprehensive television channels to survive, each must secure advertising revenue of about 500 billion won per year.   As the article notes, this is the real question, especially in an export-dependent economy.

A Media "Big Bang" in South Korea?

As noted by an article in the Joongang Daily, it is the dawn of a new year, and with it hopes for a new era in Korea's media industry, what some are referring to as a "Media Big Bang."  On the last day of 2010, the government announced the selection of local media companies that would be allowed to operate both newspaper and broadcasting businesses for the first time in 30 years.  The so-called "Media Big Bang" is expected to involve not only traditional media, but also online and mobile businesses.

The biggest impact may be on the five companies that won the new broadcasting rights, as shown in the accompanying graphic (click to see a larger version).  There are concerns that the broadcasting sector will become overcrowded with the entry of the new competitors because the amount of advertising revenue is not seen as large enough to support all of them. However, analysts say the move is necessary to promote increased competition in a sector that has been dominated by the three terrestrial broadcasters KBS, MBC and SBS. The Korea Information Society Development Institute (KISDI) said in a recent report that restricting the number of television broadcasters damaged political pluralism, referring to the fact that newspapers were banned from owning television stations in 1980 as the then-military government sought to impose greater control over the media and public opinion. “An excessive restriction on media ownership may weaken the quality of media content,” it added.

Converged Network Operators Will Lead the Mobile Broadband Era

Interesting coverage in The Korea Herald yesterday of a speech by KT Executive Choi, Doo-hwan.  He makes some obvious, but important points about the network infrastructure needed for the emerging era of mobile broadband and eventually ubiquitous networking. "The key to success in the competition of wireless Internet, triggered by the rising popularity of smartphones, is gaining competitiveness in wired broadband networks,” said Choi. “The firm with both the wireless and fixed-line networks will ultimately pioneer the wireless Internet market.”

The reason for this is rather straightforward.  It will be necessary to spread the increasing wireless internet traffic to different networks, including Wi-Fi, WiBro and 3G in order to handle the amount of data used by smartphone users.

Convergence: KT's Focus on Mobile Broadband

Korea Telecom seems to understand the profound change that is underway with the arrival of more powerful "smart" phones and is concentrating its efforts to enhance mobile broadband services.  As reported in today's Joongang Daily, the company will put its focus on "mobile broadband" in the coming months.  As the graphic here illustrates (click to see full-size graphic), KT is trying to usher in an era where people can easily access wireless broadband internet services from all kinds of devices.  KT will introduce a "tethering" service that allows Korean smartphone users to connect their handsets to other devices like laptops, e-book readers, connecting them to the internet like a modem.  Such a system would free smartphone users from the need to find a WiFi hotspot to connect their computers to the web.

These developments are all part of the continuing convergence toward a ubiquitous networked society.  In that future society, mobile handsets will play a key role as a convergence point.  That seems natural, since they are small, lightweight and always with a person.  Another important feature of mobile broadband in the future is that all devices, including the handset, notebook, desktop and television, will be synchronized or access the same data from the cloud.   I for one am looking forward to this.

Multiple Screens: Digital Convergence Gathers Strength in Korea

Several articles in the newspapers this morning offer concrete evidence that the convergence of digital media in South Korea is strengthening and accelerating.   According to The Korea Times, both KT and SK Broadband are doubling their investment in IPTV this year from last year.  They also aim to double the number of IPTV subscribers this year, over the number in 2009.

Not surprisingly, The Korea Times report notes that IPTV is driving broadband usage and demand, particularly when it is bundled together with fixed line and mobile services.   In fact, SK Broadband in partnership with SK Telecom will promote a "three screen (TV, PC and Mobile) package to smartphone and IPTV users.  This reinforces a point made in my last post.  With convergence people will sometimes use a handset, sometimes a tablet, and sometimes a desktop PC, but increasingly they want the same content available at the touch of a finger on all the devices.

Three screens by no means represents the limit, since another new consumer trend is that people are putting the new flat screen television sets in more rooms of the house than just the family room or entertainment room, at least in Western countries.  

KT to Seek Management Control of BC Card

In another symptom of the coming era of mobile broadband and ubiquitous networking, Korea Telecom has announced that it plans to buy a large stake in BC Card and eventually gain management control of the company.  According to the Joongang Daily, KT has already signed a memorandum of understanding to acquire Shinhan Card Co.'s 14.9 percent stake in BC Card (see graphic).  A spokesman for KT said that "We see a great possibility in creating synergy between telecommunication and finance."

An earlier post noted that e-business in Korea is mired in the past because of an overly-heavy reliance on Microsoft software, and legal requirements that led banks and other businesses to require the use of Microsoft's Internet Explorer and active-X controls for internet transactions.   Obviously, Korea Telecom is looking beyond the present situation to a future in which most Korean consumers will use mobile broadband via iPhone, Android or other handsets.  There are currently over 24 million mobile phones equipped with USIM (universal subscriber identity module) chips which can identify subscribers and store various content, including credit card information.  In addition, KT is reportedly mulling over new services in which a customer might search for a restaurant using their smart phone, pinpoint its location, and pay the bill using a credit card and coupons downloaded to the smart phone from web sites.

The mobile broadband era is coming to Korea, and it is going to arrive very fast, for the simple reason that consumers want mobility and they want these services, just as in other advanced countries around the world.

Fixed-mobile convergence and the Role of Wi-Fi in Korea

Now that the iPhone is available in the South Korean market, the media are beginning to discuss a number of issues.  One of the interesting ones is the role of Wi-Fi in the continuing convergence of digital media.   As noted in The Korea Times this morning, mobile carriers in Korea had considered Wi-Fi more as a threat than an opportunity, even blocking handset vendors from including the wireless broadband functions on their devices over worries about losing data traffic or voice minutes.  SK Telecom, in particular, has been criticized by users for years for forcing Korean handset vendors Samsung Electronics and LG Electronics to exclude Wi-Fi from phones offered to its subscribers.

Now, things seem to have changed and SK Telecom is considering new ways to incorporate Wi-Fi access into its service offerings.  I'll say things have changed!  They began changing nearly three years ago with introduction of the iPhone.  The significance of the iPhone is not as a "smart phone" but rather that it begins to utilize various applications made possible by mobile broadband.   Until the full build-out of WiBro and perhaps LTE networks in Korea, (and even after that) Wi-Fi plays a very important role in the mobile broadband picture and in so-called "fixed-mobile convergence."  KT seems to recognize that with the iPhone and the manner in which it is leveraging its NESPOT network to sell the iPhone in Korea.  Let's hope that SK Telecom and LG Telecom follow that lead.  

Korea Ranks 7th Worldwide in Wi-Fi Hotspots

As reported in the Chosun Ilbo, new statistics from JiWire show that South Korea has 12,814 Wi-Fi hotspots, placing it 7th in the World. The U.S. leads with 68,059, followed by China, the UK, France, Russia and Germany. The majority of Korea's hotspots are part of KT's Nespot service.

The broader significance of Wi-Fi hotspots was noted in a new draft report by Harvard's Berkman Center for Internet and Society. The report is entitled Next Generation Connectivity: A review of broadband internet transitions and policy from around the world. The report is available for download from the Berkman Center site.

The Berkman Center refers to Wi-Fi as providing "nomadic access" to broadband, as opposed to mobile or fixed access. The current trend toward ubiquitous, seamless access therefore involves the integration of fixed, mobile and nomadic access.

Finally, I recommend the Berkman Center's new report to readers of this blog for many reasons. It contains the best comparative analysis I've seen to date of the major international measures of broadband --the ITU and OECD measures, the World Economic Forum, and Leonard Waverman.

Mergers in Korea's Telecoms Sector

An article in the Korea Times, accompanied by a nice graphic, depicts the major shifts taking place in South Korea's telecommunications sector. In order to effectively compete in a market characterized by rapid convergence and in which the ability to sell bundled digital services will determine success, several major companies have merged or will soon merge. As shown in the accompanying graphic, the mergers began with KT absorbing its mobile affiliate, KTF. More recently, it was announced that three units of the LG Group will merge. As the Korea Times article spells out, it appears to be only a matter of time before SK Telecom merges with SK Broadband.

As broadband internet, fixed line telephony and mobile internet service all converge, it seems apparent that the mobile communications market will be reshaped into one in which content, applications and software make up the main arena for competition. This is in line with global trends.

Samsung Launches Solar Cell Testing Facility

Today the Chosun Ilbo published a very interesting article on Samsung launching a solar cell R&D and testing facility.  Its eventual goal is the mass production of solar cells.   The sentence from the article that caught my attention was the following. "The company said it has raised its technological independence in solar cells to 85 percent by utilizing its expertise in LCDs and semiconductors." This is only one example of the diverse effects of having a strong ICT sector like that here in Korea.

Mergers and Convergence in Korea: KT-KTF, Android, VOIP

The merger of KT with KTF has been approved by the Korea Communications Commission. This merger is considered to be the largest ever in South Korea, outside the financial industry. From a global perspective, it is one of several steps being taken here that will push rapid convergence toward a single, fast digital network for the future. The move has several very interesting implications as follows:

• As noted in a Joongang Daily article, it will mark a shift to packaged services in South Korea's telecommunications industry. After the two firms, which split in 1996, are joined together they will sell landlines, mobile service, high speed internet and internet television as part of a bundled package.


• This merger is expected to encourage other mergers in the sector. Under this scenario, SK Telecom will merge with SK Broadband and LG Telecom will merge with LG Powercom.


• KT is reported to be working with Samsung on a handset that will be capable of operating on both 3G and WiBro networks. This has powerful implications since it means that VOIP services like Skype or the forthcoming Google Voice will be available via this phone.

The last bullet point above is very significant and seems to indicate that the Korea Communications Commission and overall Korean government policy is going to push rapidly and forcefully for full convergence into a single, interconnected digital network that merges voice, data and television, along with fixed and mobile networks.

Ohmynews, in the article cited above, suggested that the merger of KT and KTF might "open up VOIP Heaven." We'll all see about that in the coming months. However, there appears to be one major element lacking in the emerging scenario here in South Korea. It is called Google, and more specifically Android and the Open Handset Alliance. According to reports, Samsung's forthcoming WiBro phone operates on Windows Mobile. This does not bode well for its success in the marketplace, if the example of the Apple iPhone is to be taken seriously. There is a coming battle among mobile platforms and at this point it will probably eliminate Windows mobile in favor of more open platforms ---Apple iPhone, Android and Symbian. So, I suggest we all wait to see whether Samsung and LG take the bold step of introducing Wi-Bro enabled phones for the Android platform.

Fair Trade Commission Approves KT Merger with Freetel

There is an important bit of news today in the telecoms press.   The Fair Trade Commission (FTC) has approved KT's proposed merger with its mobile subsidiary, Freetel.  The antitrust regulator said in a statement that it doesn't expect the merged entity to create a monopoly.  However, it warned that KT would face tougher regulation if it finds that the company is abusing its market dominance.  The deal still needs the approval of the Korea Communications Commission, a government agency that oversees telecommunications and broadcasting regulation, as well as shareholder's approval.  The merger of KT, which holds 90 percent of the country's fixed-line market, with Freetel which has 32 percent of the wireless market, behind SK Telecom with 51 percent, would create the country's largest telecommunications company.  SK Telecom objects to the merger and anticipates that it will lead to unfair competition.

New York Times: What Convergence? TVs Hesitant March to the Net

An article in today's New York Times just illustrates that the United States is on another planet than Korea when it comes to media convergence and offering of television services via the internet.  Three major providers here are now agressively marketing IPTV services, bundled with attractive voice and data services in so-called "triple-play" packages.  The government, through the newly-established Korea Communications Commission, is trying to remove obstacles to "convergence," as if to say "bring it on!"  Meanwhile, in the United States, many are suggesting that it will be a slow transition to the inevitable.  The debate discussed in the New York Times never took place here, nor will it, and we are moving on to other things.  I'm not suggesting that it will be a completely easy road ahead, but as a consumer, I'm happy to live in the Korean media market versus that of the U.S., thank you.

KT Launches IPTV Test Service

One of the most interesting aspects of the broadband digital convergence taking place in South Korea these days is the introduction of Internet Protocol Television (IPTV) service.   On Thursday, as reported in the Digital Chosunilbo, Korea Telecom started a test service of the IPTV, including realtime broadcasting of KBS1 and EBS.  Although the test is beginning with service for only 200 members, KT aims to secure at least 300,000 members by the end of this year, 1.1 million by next year and 3 million by 2011. 

Will Convergence Lead to Free Voice Telephony?

In South Korea, internet telephony is poised for explosive growth over the next five years. As anyone who has experienced the convenience and economy of a service like Skype will already know, consumers are likely to go for internet telephony in droves. An article in today's Korea Times points out that the Korean government is expected to adopt number portability as early as next month. That policy will allow telephone subscribers to switch to cheaper VoIP services without changing their numbers and offer new possibilities for companies like Hanarotelecom, which has been struggling to strengthen its share in the saturated fixed-line market. Although Internet protocol television (IPTV), has been getting more attention in the Korean media, some analysts believe that VoIP offerings could make more of a difference in the competition between bundled services. The Korea Times article notes that "The local VoIP market was valued at about 255.2 billion won (about $251 million) last year, according to an estimate by IDC Korea, but forecasted to show an annual growth of about 53 percent for the next five years."

With the introduction of VoIP and IPTV services in Korea, the major providers are planning to bundle services and offer steep discounts. Some are expected to offer free calls between subscribers to their VoIP service. However, the article reports that KT is not planning to do so, "... fearing a massive drop in average revenue per user (ARPU)." In fact, market pressures may force KT to offer free calling sooner rather than later. South Korea seems certain to be one of the first markets in the world to test the viability of something many analysts have predicted: free voice telephony.

Korea's Beef Infodemic and Cyber Defamation Law

The international news agency Reuters took note today of a subject treated in several of my earlier posts on the Korean "Beef Infodemic." The Reuters headline cast the subject as "Bruised South Korean government takes on infodemics." The lead sentence in the Reuters report says that "South Korea's unpopular young government is having second thoughts about the benefits of running the world's most wired society."   Not a bad lead, except for the fact that much of Korea's networking these days is wireless, and is aiming to become "ubiquitous."  South Korean government efforts to deal with media convergence are one factor that has led to a full fledged debate here about the role of the traditional print media powerhouses here and the nation's leading internet portals.  The Justice Ministry is working on what it calls a Cyber Defamation Law. "The reality is that we lack the means to effectively deal with harmful Internet messages," a ministry official said.  The Korean Communications Commission, which regulates the industry, has come up with its own rules to oblige portals to suspend sites stepping outside the limits and force Websites to use real names of anyone posting comments. The commission says the measures are designed to improve security and reduce the spread of false information.  Predictably, voices are rising that the government moves are attempts to erode freedom in a country that has had only two decades of democratic elections.

"The regulations violate the autonomy of the Internet and are an effective tool for tighter media control by the government," said Lee Han-ki, senior editor at the popular citizen news Website OhMyNews.  For a better overall picture, read the complete Reuters report.