Bidding War Over Mobile Frequencies in Korea Continues

The Joongang Daily reports that the continued bidding war for use of mobile frequencies in Korea is beginning to worry some experts.

Market watchers are concerned that a bidding war between the nation’s two largest telecom firms over an important mobile frequency band could end up hurting the winner down the road.

On auction since Wednesday have been slots for three mobile frequency bands: 2.1-gigahertz (GHz) band, 1.8 GHz band and 800 MHz band. The Korea Communications Commission (KCC) - the country’s telecommunications regulator - is running the auctions.

The bands are like roads for voice calls, text messages and data applications. They are finite public property, managed by the government and rented to mobile service operators on 10- and 15-year contracts. Securing vital spectrum slots are crucial to meeting surging data demand from smartphone and tablet PC users.

Previously the government had allocated the bands, but this year it decided to auction them off to the highest bidder.

It is the space on the 1.8 GHz band that market watchers are keeping their eyes on. The bidding war has already gone through 21 rounds and the price has risen from 445.5 billion won to 543.7 billion won.

“We cannot let our enemies have ‘the best weapon’ without a fight,” an SK Telecom official said.

Market watchers say the final price could be up to three times the opening bid and that worries financial experts. They point to cases in Europe, which held spectrum auctions between 2000 and 2001 that ended up burdening telecom firms and making them less competitive.

Google's Acquisition of Motorola Mobility: Its Impact in Korea

Google's acquisition of Motorola Mobility is making big news around the world, but particularly here in Korea, home of two major handset manufacturers, Samsung and LG.  As noted by The Chosun Ilbo, Google's US$12.5 billion takeover of Motorola Mobility not only allows the search giant to obtain a portfolio of more than 17,000 patents but also gives it the capability to roll out cheap-and-cheerful smartphones within a year or two.

The same paper published an opinion piece entitled "Korean IT Industry Needs to Make Fundamental Changes." It reads in part,

"The world's largest Internet company Google has acquired Motorola Mobility, the mobile phone unit of the U.S. company. So far Google has supplied its Android operating system free of charge to smartphone and tablet PC manufacturers, but now it has gone beyond the software industry and entered the hardware market. Motorola ranks eighth in the global smartphone market, but it is still a formidable force. The company was the first to market a mobile phone in 1973 and has around 17,000 mobile communications patents.

The smartphone market is divided between Apple's iPhone, which has an 18 percent stake, and Android-based handsets, which control 48 percent. Microsoft, another software powerhouse, has already teamed up with Finland's Nokia and is competing fiercely for a larger slice of the pie. Amid rumors that Microsoft may buy Nokia, we cannot rule out the possibility that the global smartphone market could be dominated by Apple, Google and Microsoft, which all have both OS development know-how and handset manufacturing capability."

Mobile Internet as the "First Screen" in the Asia Pacific Region

As reported by eMarketer, Asia Pacific consumers view mobile as their first screen. Asia-Pacific is economically diverse, but universally high mobile usage unites the region. Mobile users in Asia-Pacific are increasingly looking at their phones as a first screen, whether to download media, access the internet or communicate with peers—and marketers.

eMarketer estimates over 2.1 billion people in Asia-Pacific will use a mobile phone at least monthly this year, representing over half the population of the region. By the end of 2011, Asia-Pacific will account for 56% of all mobile users in the world. Growth will be steady, with penetration reaching 72.6% by 2015 for a mobile population of nearly 2.9 billion.

eMarketer estimates just under 30% of Asia-Pacific mobile users, or 623.3 million, will log on to the web via mobile at least monthly in 2011. As shown in the accompanying illustration (click to see full size version) mobile internet penetration is expected to rise to 42.1% of mobile users in the region by 2015. And for many of these users, mobile is the first screen for internet access.

Seoul to Boost its Urban Competitiveness with IT

Dr. Jong-Sung Hwang, the newly appointed Assistant Mayor of Seoul for IT (AKA the CIO for the City of Seoul) has publicly stated his plans to boost the South Korean capital’s urban competitiveness to the 5th highest level among world cities.
Plans to boost Seoul’s urban competitiveness will be created based on the following agenda:
1) A city making the most of smart technologies by extending the use of smart phones, CCTV, smart TV, and WiFi.
2) A city making outstanding use of smart technologies by applying real-time intelligent data and pre-emptive public services.
3) A city with a future-oriented smart urban living system which will address issues of safety, disaster, welfare, transportation, and other civil affairs.
4) A city with a smart economy and culture with focus on IT services, smart business, information security, and global contents.
For further details, consult Asia Pacific FutureGov.

For even more background, there is an interesting post by Tim Carmody on FastCompany.  The last half or so of his post gets into the problem cities around the world face in providing free mobile service outside, on the streets and in public places, versus in people's homes.   In that section of his post, I only wish Carmody had mentioned the obvious fact that South Koreans spend a much greater portion of their waking hours outside the home, than do Americans and perhaps people in other cultures.  I think this is quantifiable and helps to explain why the Seoul government is so confident in moving ahead with its ambitious plan.  Also, the density of Seoul's large apartment complexes raises the obvious question of how many of them will be within range of one of the free wireless signals.  Certainly it will be a measurable and significant percentage. Finally, most apartment dwellers in Seoul and other large cities already have fiber to the home (FTTH) to their apartments and many, like me, have spent about $20-25 to purchase a wireless router and install a wireless access point in their apartment.  So, they already have fast wireless internet at home, at no cost other than their basic broadband subscription monthly fee.

In conclusion, I wish Dr. Hwang and his team at City Hall the best of luck. It seems clear that we residents of Seoul have some interesting new services to look forward to!

Korea Tests Operational 4G Mobile System

Korea has become the first country in the world to demonstrate a high-capacity, super speed mobile telecommunications system outside of laboratory conditions.  As reported by Yonhap, the state-run Electronics and Telecommunications Research Institute (ETRI) tested a Long-Term Evolution Advanced (LTE-Advanced) system. The accompanying photo of the test was published in The Korea Herald. (click to see a larger version)The technology acquired meets 95 percent of the requirements needed for a functional 4G mobile communications system, he said, adding technologies not yet developed must wait for the creation of a worldwide standard on 4G telecommunications that is expected to be set by the International Telecommunication Union in April.  The research took over five years and cost ETRI an estimated 64 billion won (53 million dollars) to complete.  According to Yonhap, ETRI reported acquiring 24 patents related to LTE-Advanced and has applied for intellectual property protection on 500 processes learned during the research and development stage.
South Korean companies may hold least 23 percent of all patent rights on 4G communications technology, up from 19 percent for 3.9G and 10 percent for 3G wideband code division multiple access, it added.

Emerging Growth Patterns in the Global "Smartphone" Market

The Independent recently carried two articles that are of interest to those following the global growth of the smartphone market, which is more aptly thought of as the worldwide transition to mobile broadband.  The first of these reports on data from a recent Gartner study showing that Google's Android system surged past Apple's iPhone and Canada's Blackberry in the third quarter of this year to become the second biggest smartphone platform, after Nokia's Symbian.  Based on third quarter sales, Nokia held a 36.6 percent market share, compared with 25.5 percent for Android, 16.7 percent for Apple and 14.8 percent for Blackberry.   Among other trends, smartphone sales grew 96 percent in the third quarter and accounted for 19.3 percent of overall mobile phone sales.  Nokia continued to be the leading handset manufacturer in the world, followed by Samsung and LG.  Samsung, according to Gartner, was the top Android seller in the third quarter, with sales of 6.6 million Android phones.

The second article of interest appeared last month, and relates to an earlier post on this blog.  It deals with the interesting relationship between Apple and Samsung as competitors yet partners in the global roll out of mobile broadband via smartphones.

Growth of Mobile Phone Service in North Korea

According to a report in Business Week, mobile phone subscriptions in North Korea have surged by 400 percent over the twelve month period ending in September of 2010, reaching a total of 301,199 subscribers.  Of course, this increase is due in part to the low level of subscribers a year earlier (reportedly just slightly over 69,000 as of September 2009).  Cairo-based Orascom Telecom said its advanced 3G telephone service network now covered 75 percent of the population.  It reaches a total of 12 main cities, 42 small cities, and 22 highways and railways.  Orascom plans to extend coverage to over 90 percent of the population by year's end.

Analysts had predicted that mobile service would be limited to North Korea's political elite and the capital city of Pyongyang.  However, Orascom reported a steady increase in voice and SMS usage over the past three quarters.  The company has 26 direct and indirect sales outlets in eight North Korean cities.

Mobile Phone Subscribers Outnumber People in Korea

It finally happened.  The number of mobile phone subscribers in Korea now outnumbers the population.  This is a trend that arrived several years ago in some other countries which allowed a single individual to have multiple mobile subscriptions by swapping SIM cards.  As reported in the Chosun Ilbo, the number of subscribers to wireless communications services totaled 50.05 million as of September 8th, while the nation's population was estimated at 48.88 million.

With the arrival of smart phones, tablets and notebook PCs, the trend toward more than one mobile service is likely to continue.

Mobile Communication Reportedly Grows in North Korea

The Korea Times reported the other day that cell phones are becoming more popular in North Korea, and the article included some recent data.  The number of North Koreans with a state-approved cell phone reached nearly 185,000 as of the end of June, operator Orascom Telecom said Thursday, as more citizens have mobile access after a recent government expansion of services. Egypt’s Orascom, which operates the mobile operator Koryolink in partnership with the North Korean regime, said in a first-half report that services have expanded to several cities other than Pyongyang and that 184,531 subscribers had signed up as of June 30.

Although 60 percent of North Korea's citizens now technically have access to mobile communication, the network reportedly excludes cities near the border with South Korea because authorities fear the proximity could allow cross-border communication.  According to Orascom, foreigners, middle class people and young people are all taking advantage of the service.  However, according to Radio Free Asia, North Koreans have to pay a steep price to go mobile.  Customers must pay the equivalent of $250 for a phone, in addition to high-priced pre-paid minutes.

Apple gets more than 600,000 Orders for iPhone 4 and closes Pre-ordering

As reported in The New York Times, Apple was overwhelmed with pre-orders for the iPhone 4 and had to close pre-ordering and apologize to customers, asking them to try again when the phone was in stock.  What does this say about the emerging market for smart phones in Korea?

Although KT has already sold 700,000 or so of the iPhone 3Gs, they are impossible to find and there is a waiting list for them in the South Korean market.  It seems apparent that there would be an equally strong demand here for the iPhone 4, as soon as it becomes available.

The demand for these phones is not because most of their most valuable components (screen, camera, batter, main processing chip, memory chip, etc.) are made in Korea.   Instead, it is because Korean consumers have perhaps the world's highest expectations of their telecommunications services of any consumer group in the world.   Three decades ago, an average Korean had to wait over a year to have regular telephone service installed and there were no digital networks.  Today all of that has changed.  Korean consumers expect the very latest and very best technology and are quick to adopt it.   I say bring on the iPhone 4 and the Androids!

LTE, WiBro to be Global 4G Standards

The news is out that LTE Evolution and WiBro Evolution (known as WiMax Evolution outside of Korea) have been selected as the two global standards for fourth generation mobile technology.  As reported in The Korea Herald, the decision was made at an ITU meeting in Vietnam June 9-16.  The ITU will complete developing the specific standardization framework for the two technologies by March 2011 and grant final approval in February 2012. “With Korea playing a key role in the international standardization effort, the nation will be able to lead the way in designing core technologies for the next generation,” said Kim Jeong-sam, director of the radio spectrum policy division at the Korea Communications Commission.  The research and development on WiBro Evolution has been led by Samsung Electronics and Korea's Electronics and Telecommunications Research Institute (ETRI).

Worldwide Trends in Sales of Mobile Devices

CNET has an interesting report on the trends in sales of smart phones over the past year.  Overall sales of mobile phones increased 17 percent year on year.  However, smart phones showed a 48.7 percent increase as 54.3 million units flew off the shelves.

The most interesting data in the report were in Table 2 (click on the graphic here to see a full size version).  Note that ONLY the iPhone and Android phones increased their market share year on year.  The report notes that the first quarter of this year was Apple's strongest yet, helped in part by overseas sales from mature regions, such as the U.K. but also in new markets such as China and South Korea.

Gartner's forecast for the near term suggests that the most successful companies will be the ones that control an integrated product in terms of operating system, hardware and services.  To stay competitive, manufacturers must integrate hardware, the user interface, the cloud and social networks to continue to attract customers.  Enough said. The challenge for Korean handset makers and mobile service providers should be apparent.

A Space-Themed Android Onslaught in Korea?

The forthcoming entry of large numbers of Android phones into South Korea's market is taking on a number of themes related to space.  An article in the Chosun Ilbo today speculates on why this is the case.  Samsung has chosen the name Galaxy for a smartphone to be released later this month.  Earlier this week, Pantech unveiled a smartphone called Sirius.  LG Electronics new smartphone slated for release next month is being developed under the name Eclipse.

The space theme is in line with the open nature of Google's Android project.  The name Android itself refers to robots that appear in science fiction stories and movies such as Star Wars.  Although the Chosun Ilbo story did not mention it, we might add the obvious fact that these new smart "phones" with their ability for mobile broadband access, locational services and more, are a key point of convergence and contact for entering cyberspace!

Question for Readers of This Blog

I would like to pose a question for readers of this blog, and would encourage you to post your answers as "comments."  If you do not want those comments to be publicized, please make note and I will respect your wishes.



The question is as follows.  How could South Korea, while possessing arguably the most advanced and dense digital networks of any nation in the world, be a laggard (80 or so other nations preceded it) in the adoption of the Apple iPhone and even Android-based "smart phones"?   In your answer to this question, I would appreciate it if you could specify the major reasons why this happened.  For example, was it a failure of government policy?  Was it that the private sector (LG, Samsung, SKT, KT) feared loss of profits?  Were there cultural or linguistic factors?



I would welcome comments from scholars, government officials, industry executives and any interested members of the public.

More on Naver versus Google in the Mobile Market

The Korea Herald carried an article that provides some interesting detail on the changes taking place in internet search with the introduction of the iPhone and Android phones here.  Although Naver is still far ahead of Google in both the PC and mobile web market, the gap is smaller in the mobile arena.

Google, which held a single digit share in the PC web market, grabbed a 23.1 percent share in the mobile web market in January, according to the local market research firm Matrix. Naver controlled 82.6 percent of mobile web usage that month.  However, I suspect these figures lump iPhone and Android users with users of the older feature phones that still predominate.  Also, as Hugo Barra, Product Management Director at Google noted, with Android devices coming to Korea a whole new ecosystem of cloud computing based applications will be born.

Mobile Phone Communication with North Korea: Current Status

An article in today's Korea Times provides some very interesting specifics about how North Korean refugees in South Korea communicate with people in North Korea by mobile phone.  Seo, Jae-pyong, the Secretary-General of a group called North Korea Intellectuals Solidarity (NKIS) said that NKIS has run a news outlet service based on mobile phone conversations with secret correspondents in North Korea since 2008.  The purpose of this effort is to provide more information about the reclusive nation.  The NKIS provided the stringers with cell phones that have an international roaming service. International phone rates between South Korea and China are applied when North Koreans call NKIS people.  Although he declined to give information about how much the stringers are paid, the NKIS representative said that their allowances are high enough to feed their families.  He also said that "When we have conversations with people, especially from the border area between North Korea and China, we hear them as clearly as our phone conversations with our colleagues in South Korea."  Mr. Seo, an engineer, escaped from North Korea in 2001.  Out of approximately 20,000 North Korean refugees that have settled in South Korea from the 1990s, about 600 are college graduates.  About 300 of these educated people have joined NKIS to let people outside North Korea know more about it.

Seo also said that North Koreans can access the latest South Korean television dramas at home without much difficulty, despite the government's strict ban on the circulation of South Korean cultural products.   Two or three weeks after airing in the South, these dramas are copied onto CDs in China, and then these CDs are sold to distributors who deal with the North Koreans.

Number of iPhone Users in Korea Reaches 400,000

According to a KT Executive, as reported in today's Joongang Daily, there are now over 400,000 iPhone users in South Korea.  That amounts to an average of about 4,000 people a day who have purchased the device since it was introduced last November 28.  For those of you keeping track, that also amounts to an annual sales rate of nearly 1.5 million phones.   I feel vindicated about the prediction I made in an earlier post when all of the industry experts here were making lower estimates.

According to a demographics survey conducted by KT, half of the new iPhone users are in their 20s, 70 percent were men, and 30 percent came from the wealthier districts of Seoul.  This is only the beginning of the mobile transformation in Korea!

Korean Mobile Operators Prodded to Create Unified App Store

As reported by The Korea Times today, the Korea Communications Commission (KCC) is prodding the nation's three mobile telephony carriers to create a unified application store, to meet competition from Apple's iPhone.  Handset vendors Samsung Electronics and LG Electronics, which each run their own online applications store, will also be allowed a chance to join in the planned alliance between mobile carriers, the KCC said.

I encourage readers to take a close look at this article in The Korea Times.  In reading it, note that two subjects are not mentioned:

• One is the inherently global scope of the internet.  Does the KCC suggest that Korea's mobile carriers and handset manufacturers team up for success in the global market or only here in the domestic South Korean market?


• The second subject is the role of language in creation of internet applications and content.  Although progress is being made toward "machine translation," applications (apps) for the mobile internet still need to surmount language barriers.  Language is central to culture, and applications that may appeal to people within the bounds of Korean culture and language may still fail in Western or other markets around the globe.  Witness the failure to export Cyworld to the United States market, despite the fact that this social networking innovation arrived in Korea years before Facebook showed up in the U.S.

Part of Google's success is that it attempts to provide its applications in all of the world's languages.  I think Korean companies can mimic Google in this respect, to their great benefit.

Global Media Trends---Korean Media Trends

From April 19-22, Fulbright Korea will be hosting a U.S. State Department-sponsored Social, Mobile and Visual Media Workshop on "Advising in the Digital Age."  The workshop will be attended by fifteen Education USA advisors from around the Asian region with possibly some international involvement.  I've been asked to give a presentation on the opening day on the topic "Global Trends in New Media."  Today, while preparing for that presentation, I ran across the following video on YouTube of Google CEO Eric Schmidt's presentation at last month's Mobile World Congress in Barcelona.  Each of the major trends discussed by Eric Schmidt and his colleagues has direct and profound implications for Korea and its ICT sector.  Enjoy!

Forecast for Touch-Screen Mobile Phone Growth

Here in Korea, Samsung Electronics, LG Electronics and other companies are racing to develop advanced touch-screen technologies in the wake of the Apple iPhone's debut.  And they should be racing.

Back in December of last year, shortly after I had purchased my Apple iPhone 3GS, I wrote a post talking about capacitive versus resistive touch screens.  The capacitive touch screens, led by the iPhone are the ones most prized by consumers because of their speed and responsiveness.

Not surprisingly, the market for touch-screen mobile phones is projected to expand rapidly over the next several years.  A recent study by Displaybank (click to see a full size version of the accompanying graphic) suggests that one in four mobile phones will be touch-screen models by 2013.  I expect that most of these will be capacitive.  As the processor speed of these phones increases, along with improvements in the touch technology, they will give users a sense of wielding the power to instantly retrieve and manipulate vast amounts of information with simple taps, swipes and other gestures of the thumb and fingers.  These are indeed handheld computers, empowered by GPS, digital compass, other sensors and most importantly, high speed internet access.