KT Stuck in 2G Mobile Service Conundrum?

The complex interplay between mobile service providers, Korea's telecommunications regulator and the handset and equipment manufacturers is the underlying theme of an interesting article in The Korea Times today.

KT, the country’s No. 2 mobile carrier, desperately needs to close its second-generation (2G) mobile service after dropping its bid for the 1.8 gigahertz (GHz) band in the government auction, otherwise it will lag behind competitors in adopting the ultra-fast 4G service. The regulator, however, isn’t approving KT’s move without proper guidelines.

As noted in an earlier post, KT dropped its bid for the 1.8 GHz band Monday, allowing competitor SK Telecom, the biggest player in the industry, to buy the band at 995 billion won, more than double the starting price.

“We sought approval from the Korea Communications Commission (KCC) for our plan to close the 2G service early August,” a KT representative said.

However, it remains to be seen whether the regulator will approve it. KT already sought approval a few months ago, but the KCC rejected it saying the carrier still has too many 2G users.

KT said it has greatly decreased the number of 2G users since then. It currently has 320,000 2G users, a steep decrease from 1.1 million in March when it first announced the plan to halt 2G service.

“The number is decreasing by thousands each day. We expect to get the green light this time,” the KT representative said. KT has been trying to lure 2G users to its 3G service, providing new handsets for free or offering subsidies and exempting subscription fees.

KT Chairman Lee Seok-chae held a press meeting, and announced that KT would halt the 2G service in September to launch LTE service in November. Lee’s remark is regarded as pressure on the KCC to allow it to halt 2G service.

How Smartphones Amplified the Crash

There is an interesting article in the Joongang Daily today on the role of smartphones in stock trading.  It argues that the increasing interconnectivity of the world, thanks in large part to smartphones and tablets, played a role in amplifying the stock market mayhem.

One big difference now compared to the 2008 sell-off is that mobile devices are in use by more people to trade stocks. And in Korea, which had been a smartphone laggard, smartphone use has exploded since the iPhone landed in Korea in late 2009.

Mirae Asset Securities and KB Investment and Securities were the first two brokerage firms in Korea to launch stock trading apps in February 2010. Other companies have followed.

“In recent trading through our company, trades made from smart devices accounted for 30 percent of all trades - and was as high as 35 percent at one point,” Cheon said. “Investment patterns have been changing with the wide distribution of smart devices. People are using their smartphone to trade shares, even on their vacations.”  Click on the accompanying graphic to see a full size version.

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!

"Haves" and "Have-Nots" in Korea's Smartphone Era

Right up until 1980, basic telephone service in South Korea was considered a luxury and the lack of adequate telephone networks had created a major social crisis in the country.  However, beginning in 1980, the country instituted changes designed to build modern networks.   From the very beginning, these networks were considered incomplete until they were equally available to all citizens nationwide, reaching the most remote farming and fishing villages in the nation.   This emphasis on universal service, from the start of construction on Korea's digital networks, is described in detail by Dr. OH, Myung and me in our new book, Digital Development in Korea:  Building an Information Society (Routledge, March 2011).

South Korea's experience with the utter lack of phone service during the 1970s may explain partly why it worked so hard for so long and invested so much to build the worlds most extensive and fastest digital networks.   This meant that, while the debate about "network neutrality" flourished in the U.S. and Europe, not much was heard here in South Korea.  Until the end of 2009, when the Apple iPhone finally arrived, there was an excess of network capacity and major industry players were concerned about how to increase use of data services!

This background explains why I read with great interest the Joongang Daily's article entitled "Haves and have-nots in the Smart Phone Era."  As shown in the accompanying graphic, (click to see full size version) ownership of smartphones in Korea currently has a great deal to do with level of education, financial status and residence location.  This information is based on a 2010 survey, but it is sure to cause concern among senior policymakers here in South Korea.  However, the problem may soon be ameliorated by the rapidly decreasing cost and increasing power of the so-called smart phones.  In the near future, it may be that "haves" and "have-nots" will be distinguished by the cost of the mobile broadband services they can afford, rather than simply smart phone ownership. 

Some Data on Mobile Data Use in Korea

The Joongang Daily, in an article entitled "Telecom Data Use Booming," provides some data to show the increase in mobile data usage with the arrival in Korea of smartphones. (click on the accompanying graphic to see a full-size version)  As the article notes, users of tablet devices use more data services than users of smart phones, probably about two times as much.

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)

Are Smart Phones Tracking Users in Korea?

The Joongang Daily this morning carried an article with the accompanying data (click on the graphic to view a full sized version) on the growth of location-based data and location-based service businesses in Korea.  Not surprisingly, the chart shows a rather dramatic increase in the business between 2009 and 2010.  This is exactly what we would expect, given that Apple's iPhone was delayed in coming to the South Korean market and did not arrive here until November of 2009.  While location-data businesses, which include Apple and Google, collect location data, location-based services businesses use that data for various services such as logistics, transportation, or emergency services.
LBS is considered a rising business, and not just in Korea. Research firm Gartner said the market for location-based services - currently worth $2.9 billion - will to rise to $8.3 billion in 2014.

How Widespread is Mobile Phone Use in North Korea?

The English online version of The Chosun Ilbo this morning has a short, but fascinating article, entitled "How Widespread is Mobile Phone Use in North Korea?"  As readers of this blog will know, I've been following not only the extent of mobile phone usage in North Korea, but also its implications, in posts over the past several years.  According to The Chosun Ilbo article, the mobile phone penetration rate in North Korea is only about 1.3 percent, far lower than South Korea's 103.9 percent, but the average usage time amounts to 300 minutes, more or less the level of South Korea's. Hwang Sung-jin of the Korea Information Society Development Institute, said this is because of brisk usage among high-ranking North Korean officials.  The article also quotes Suk Ho-ick of KT, the chairman of the IT Unification Forum, on North Korea's efforts to control the use of mobile phones.

The Mobile Broadband Revolution in Korea

Two articles in the Joongang Daily this morning provide further evidence of the mobile revolution that is sweeping the nation since the arrival of Apple's iPhone in late 2009.  The first article, entitled "Smartphone craze spurs location-based apps" explains a variety of location-based services that are taking off in Korea.  One will allow a woman to track the location of her boyfriend, another allows parents to follow the location of their children, and so forth.

The other article, describing how credit card companies and mobile carriers are vying for mobile payments business also presents some interesting data on the rapid diffusion of such services here.   (Click on the graphic to see a full-size version.)

Location-based services and mobile payments are but two examples of the types of services that become possible once broadband goes mobile.

Cheap Smartphones and the Mobile Broadband Revolution

The modular character of digital devices is becoming very apparent in the worldwide diffusion of smartphones.  Although the mainstream press often reports that the Apple iPhone is "manufactured" in China, this is really a misnomer.  Instead, it is assembled in China, rather like putting together lego blocks, while the highly sophisticated components are manufactured in Korea, Japan or elsewhere.

The Chosun Ilbo this morning carried an article headlined "Cheap Chinese Smartphones Poised for World Conquest."    It notes that ZTE, which ranked fourth in smartphone shipments in 2010, is selling its San Francisco smartphone through Tesco Mobile of the UK for 80 pounds per unit (about 145,000 won) based on prepaid calling plans.  By contrast, LG Electronics sells a phone which is almost identical, with better finish and trim, for 150 pounds.  Samsung, the article notes, has plans to release a lineup of cheaper smartphones later this year.

So the familiar pattern underlying the information revolution continues, the cost keeps decreasing while the computing and communications power increases!

Smartphones Boost Mobile Commerce

As reported in The Korea Times, the rapid diffusion of smartphones in the South Korean market is giving a measurable boost to mobile commerce. 11st, an online market operated by SK Telecom, announced that it recorded 1.85 billion won in monthly sales through mobile shopping last month, the most since it started the service. Its mobile shopping application had 625,000 downloads, and Auction and G-market have also launched similar applications. Mobile commerce currently marks 4 billion won in monthly sales, and is expected to grow to 50 billion won this year. This is still a small part of the online shopping industry, but the growth is remarkable. According to the Korea Online Shopping Association, the market is set to double, exceeding 120 billion won next year. Not only open markets but also TV home shopping channels are stretching to the mobile sector. CJ O Shopping, Hyundai Home Shopping, GS Home Shopping, and Lotte Home Shopping have launched applications to attract smartphone users. They find it appealing as they can reach out to customers regardless of time or place. On top of showing the shopping programs in real-time, the home shopping channels are linking the mobile service with their other online and offline shops.

Rapid Adoption of Smart Phones in South Korea

I'm in Seattle near the end of the AACRAO (American Association of Collegiate Registrars and Admissions Officials) conference, which explains the lack of posts over the past few days.  However, during a few free minutes before my departure for SeaTac I had a chance to catch up on some reading, including an interesting article in the Chosun Ilbo documenting the extremely rapid adoption of smart phones in South Korea.  According to the article, the number of smartphone users has skyrocketed from fewer than 1 million early last year to 9.7 million or some 20 percent of all 50 million mobile phone users.  At this rate, most users will have switched to smartphones by 2015.  Furthermore, as the article notes, it is likely to become difficult to purchase the less expensive feature phones by 2013.

Samsung (and LG's) Relationship With Apple

The introduction of the Apple iPhone, followed by Android devices was a boon for South Korean electronics manufacturers, led by Samsung and LG.  However, as noted by an article in the Joongang Daily, the relationship with Apple poses somewhat of a dilemma for the Korean firms.  As Samsung and Apple products go toe to toe in the global market, the two companies are now more dependent upon each other than ever before.

Samsung has never specified which parts it supplies to Apple. But when consumers disassemble the iPod, iPhone, and iPad, Samsung’s A4 central processing unit, NAND Flash, DRAM, and liquid crystal display panels are there in plain sight. Industry sources also say Samsung is in the running with LG to become the main display supplier for the second version of the iPad. Apple will place an order worth of $7.8 billion in parts for future productions.

As for the iPhone 4, Samsung parts account for 27.5 percent of the device, which amounts to $187.51 per iPhone, according to iSuppli, a research firm.

As shown in the accompanying graphic (click to see a full size version) Apple remains far ahead of Samsung in the global market.  With the growing strength of Android devices in the world market, it will be interesting indeed to watch the shifts taking place in market share.

Tablets: A New Start in Samsung's Galaxy Lineup?

There is news out of Barcelona about Samsung's new Galaxy smart phone and its new tablet computer, designed to compete with Apple's iPad.  The Joongang Daily covered it, along with much of the trade press.  As shown in the accompanying graphic (click to see full size version), the new Samsung tablet has a 10.1 inch screen, slightly larger than the iPad.  I have long thought that something approximately this size will turn out to be a popular form factor, if it is lightweight enough.   Think of it as a powerful electronic clipboard.  For reading newspapers and magazines, or watching television, the size of these new tablet computers seems almost ideal.  The day is close at hand when many people will carry a smart phone and a tablet computer, both for use at work and on the go, and will choose to use a large or wall-size screen at home.  The ability to synchronize, access and use the same content across all three screen sizes (aka cloud computing) is indeed going to be convenient and commonplace.

Android and Korea's Handset Makers

There is new evidence that Android will become the dominant mobile platform worldwide, if present trends continue, and this has a powerful effect on Korea's handset makers, led by Samsung and LG.  As reported in The Wall Street Journal and shown in the accompanying graphic (click to see full-size version) shipments of Android-based smartphones surged sevenfold year-on-year in the fourth quarter giving Android a 33% share of the global market.  This year HTC, Samsung and LG Electronics, all of which made late entries into the smartphone market, plan to further their push with the introduction of new Android models in order to meet lofty sales goals.  Samsung reached its goal of selling 20 million smartphones in 2010 and more than 50 percent of those models were Android-based.  LG showed improved sales results from its Android-based Optimus One handset, selling three million units since its launch in the second half of last year.

Seoul's Subways and Smartphones

The Chosun Ilbo reports that Seoul's Subway Line Number 2 has become one of the city's major WiFi hotspots.  The reason?  It passes by major universities including Ewha Womans, Hongik, Seoul National and Yonsei Universities and is now notable for passengers' lively use of smartphones.  According to statistics released by KT,  Line 2 recorded 2.56 times more WiFi data consumption than the average of 14 subway lines running through Seoul and adjacent areas.  KT also noted that 94 percent of WiFi data usage was accounted for by smart phones.

"The soaring WiFi traffic on the Line No. 2 stations including Dongdaemun, Gangnam, Hongik University and Samseong shows that most smartphone users are young people in their 20s or 30s," KT said.  Click on the accompanying graphic to see a full-size version.

iPhone 4 Arrives in Korea

As reported in the Joongang Daily and other papers, the arrival of the iPhone 4 in South Korea was greeted by long lines of customers.  (click on the photograph to see a larger version).  Although Samsung's Galaxy S and other smartphones are present in the Korean market, they still do not have the sheer number of applications that Apple's platform supports.  It seems likely that the iPhone will continue to drive the mobile revolution here, and worldwide, until Android phones catch up on the application side of things.

In an encouraging note, KT is taking the iPhone 4 introduction as an opportunity to promote its expanded services for expatriates in Korea. With the growing number of foreigners in the country, KT said it will provide special services for expats in Korea. The mobile carrier opened a twitter account (http://twitter.com/ollehkt_expats) that offers advice in English on the use of the iPhone 4 and KT’s other services.
In addition to the permanent expat community in Korea, KT and the other mobile service providers should be explicitly targeting more of the marketing toward tourists and business visitors, who may want to use state-of-the-art mobile services during short stays here!

Police Raid the Office of Google Korea

As reported in most of the local media and in The New York Times, Korean police raided the offices of Google Korea on Tuesday as part of an investigation into whether the company had illegally collected and stored personal wireless data.  The search company is already facing lawsuits and investigations in several countries in connection with private wireless data collected for its Street View service.From late last year until May, Google Korea dispatched cars topped with cameras to cruise around the country to photograph neighborhoods before the planned introduction of Street View. The police suspect that those cars might have illegally captured and stored personal data from wireless networks while they were mapping streets, a statement by the Cyber Terror Response Center of the Korean National Police Agency said. Google said it would cooperate with the investigation. This is a story that bears following, especially since Google is already facing investigations and questions in several other countries on this same issue.

Korean Government Announces "Smart Work" Initiative

The Korean government on Tuesday announced a "Smart Work" initiative that aims to have 30 percent of public employees work from home or nearby "smart-work" centers by 2015 with smartphones, laptops and other mobile devices.  The move is hoped to boost productivity and minimize carbon emissions.

As reported by The Korea Times, the country is on the cusp of a mobile broadband explosion. According to plans jointly announced by the Korea Communications Commission (KCC), the Ministry of Public Administration and Security and the Presidential Council on Information Society, government organizations will spearhead the efforts to plug the workplace into the Web.

The plan calls for thirty percent of private sector employees to work at home or in the smart work centers, the same percentage as for government workers.   This will be an interesting initiative to watch, to say the least!

Status Report on Korea's "Smart Phone Revolution"

An article in the Joongang Daily today reports that the "Smart Phone Revolution" in Korea is finally starting.  It was accompanied by the graphic shown to the left (click on graphic to see a full-size version).   Last year only about two percent of consumers used smart phones, defined as those capable of accessing e-mail or the internet and performing functions much like a small hand-held computer.  This year the percentage of smart phone users has risen to 22 percent.

Expert predictions when the Apple iPhone was introduced have been shown to be way off target.  For example, experts predicted that 1.8 million smart phones would be sold in 2010.  Now the predicted figure is up to 5 million.

Not surprisingly, the introduction of smart phones has been accompanied by a boom in wireless data transmissions.  This is not surprising because most, although not all of the applications on the iPhone and other smart phones, rely on internet access.