WiBro - Will it work as promised?
Posted: November 25th, 2008, by Yunho Chung
WiBro is the Korean version of Mobile WiMax. There are two WiBro carriers, KT and SK Telecom, and their WiBro service brands are KT WiBro and T Login respectively.
The WiBro adoption rate in Korea has been vey slow due to the operators’ low motivation and low interest of customer. WiBro subscribers were, by the end of August 2008, 188 thousand for KT and 3 thousand for SK Telecom. The penetration rate at that time was only 0.4% and ARPU was only 10 US dollars.
First of all, the operators were not motivated to create the new markets in wireless broadband. Korean operators such as KT and SK Telecom do not regard WiBro as their alternative product to HSDPA and FTTH, but as the complementary goods to them. A complementary good does not make enough profit as a single business unit and the investments are also limited. Consequently, the coverage of WiBro network in Korea is limited to the Metropolitan area including Seoul. As their coverage focus is limited to outdoor, the indoor network quality where Wi-Fi usually covers does not meet customers’ expectation. Additionally, they are not active in their advertising and promotion to allure subscribers. Consequently the adoption rate of WiBro is relatively slow, and it will unlikely be changed for the next two or three years.
Secondly, the customers are not in desperate need for WiBro. Basically, they do not value WiBro access to the broadband internet while they are moving. Even the professional segment, which is the most attractive market segment, is not interested in WiBro. Given the fact that they can access the Internet through the stable and excellent wired broadband or Wi-Fi, they cannot find strong reasons to use WiBro, which requires extra money. In addition, the WiBro device, a laptop modem style with limited functions fails to induce customers. Recently, however, PMP (Personal Media Player) and navigation are diversifying their device portfolio in order to expand its target segment and to stimulate the unmet needs of customers. In this regards, they consider including WiBro functions in their products. It would be an alternate solution to enhance the adoption rate that we provide customers with WiBro modem in bundled or built-in manner.
However, this slow WiBro adoption in Korea could be changed soon. SK Telecom recently announced that they would focus on WiBro for their wireless internet strategy. SK Telecom will invest 815 billion won in total for WiBro by 2010. Also they are planning to build the WiBro network system with ‘Wave 2′, twice faster than the existing one, by 2009.
KT is also planning to invest 1 trillion won in total by 2011. KT made strategic partnership with device manufacturer such as Samsung Electroninc, LG Electronincs, TG Sambo, and Cowon for improving cooperation system related to WiBro.
The chart above is WiBro subscriber forecast by 2009 based on the data from June 2006 to June 2008. So far, the blue line is more accurately reflecting the current market situation, WiBro Subscribers are still around 180 thousand.
These days both SK Telecom and KT are promoting WiBro a lot. To promote WiBro, both offer free WiBro for 3 to 6 months to their new customers. With such an active promotion, SK Telecom attracted more than one thousand people as their new WiBro subscriber only in 13 days.
Currently it is still hard to predict whether WiBro is going to be a success in Korea or not. I assume that most of the present WiBro subscribers are using WiBro thorugh the free promotion, so it is yet difficult to say how the market will look like for the longer term.
November 26th, 2008 at 5:49 pm
Maybe they should had have given out wi-bro modems for free or prepare a list of interesting services and content, like NTTDoCoMo did with i-mode.
I believe the big mistake is done with the coverage. If Wi-Bro itself is intended to cover more territory why the signal level indoors is low? And why did not they start the service outside metropolitan area? At least they would have gather a bunch of subscribers through which they could test and promote, and move to cities after.
November 26th, 2008 at 6:03 pm
good point Max. I think not having the Killer Application or Killer Service excuslively for Wibro can be the most big mistake. And also too many competiting alternatives in Korea can also be the reason.
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