Following is interview with Kim Faura, the CEO of Telefonica, Cataluna, by ET News. I translated the interview script in Korean into English. Please mind the possible errors in the course of re-translating.

Q. What is the purpose (reason) of your visit to Korea?

▲ We would like to enhance the competitiveness of our company. The technology in Korea has been upgrading. Telefonica will also develop its level of technology in the mobile field. We expect KOTRA would play a significant role to support global cooperation between Telefonica and Korean companies.

Q. Which particular areas of Korean IT are you interested in?

▲ It would be “HSDPA”. Telefonica is behind in area of “HSDPA”. I was very impressed by seeing Korean people using it. We have an intention to apply Korea’s mobile technology not only to the HSDPA area but also to other areas. It was interesting to know about ‘Optical Fiber’ technology of LG Nortel in spite that it is part of wireline communication technology. We’d like to learn the technology and provide it to Spain as well as other countries.

Q.There is a plan for disposal of Nortel’s stake in LG Nortel. Do you have an intention to acquire the stake?

▲ I only talked about technologies that NG Nortel has on this visit.

Q. I know that you’re also planning to visit SK C&C.
▲ We are having a meeting this afternoon. I’m interested in what they’ve got for us but not sure what would be suggested.

Q. Which companies in Korea are you hoping to cooperate with?

▲ We are looking for various companies. Because of this our CTO is along with me. We will decide what types of cooperation we suggest to each of them after ensuring whether price and technology is suitable to Spain market.

Q. What do you see the level of Korea’s mobile technology?

▲ Korea is always one of the best countries. Spain is behind with that and wants to improve. I’ve met with Pantech and there are 4 or 5 cell phones which are interesting to me. It could be evaluated as innovative products in Spain or England. We would negotiate a price with the marketing team.

Q. How much are you expecting to be the purchase amount of Korean brand cell phones?

▲ It was 400 million euro in previous year. It’s been rising since this August; we expect it to be 500 million euro for this year. Our role is to deliver products that customers want. People buy Korean brand cell phone because they want it. Consumers in Spain want to get Samsung or LG cell phone.

Q. How much would it be next year?

▲ I can’t tell exactly how much but with this regards, it would grow to be 6 million euro excluding Pantech. Pantech has to be run through test market.

Q. 7 million euro was put on a global R&D last year. Did Telefonica invest in Korea?

▲ I’m not sure. This investment is for world wide. Investment in Korea will be decided concerning this week meeting.

Q. Have you considered direct investment in Korea?

▲ We intended to 2 ~ 3 years ago but it didn’t work out. Korea market is conservative.

Q. What is Telefonica’s vision?

▲ We need various companies. We were an operator before but now we need to give out the value to our end customer through other application. We are showing steady growth now and looking for contents business.

Q. Is there any condition for Korea Company to cooperate with Telefonica?

▲ The answer is No. If there is a competitive product we will find a solution for the cooperation under any circumstances and of course the company has to be reliable.

Q. What about the global business plan?

▲ We acquired the part share of Telecommunication Company of Italy and China. We have a plan to cooperate with them for developing one mobile platform, which enables Samsung and LG benefit from it.

“App Store” is a buzzword for many mobile operator and Korean companies are no exception. We covered previously the launch by LG this summer and its now who SK launched yesterday its own version : www.tstore.co.kr . Tstore should go global in 2011. LG  will follow in October.

The KT proposes not only applications but also game, phone decoration, games, music, movie , education materials and funny features. Being based on the WIPI, a south-Korean middleware enabling interoperability to run application, it aims to be largely open regardless of the phone you use. The platform can be reach by visiting the website with your phone or your computer or by installing a management software. At the end of the year, Tstore should be available whatever is your telecommunication provider.

A strong developpers community is the key of a vigorous appstore and Tstore seems to be friendly towards them.  SK will propose freely to developers to use SKT DRMs, upgrade infrastructure or organize contests. The review and approval process will not be necessary for developers who already have recognition from professional organizations. Developers will pay a registration fee each year, starting next year. SK will take a 30% commission on sales revenues of applications.SK may invest in venture companies to secure contents.

To be open or not to be open, that is the question for Korea’s IT industry. It is difficult to judge what right answer is. But the market is obviously shifting toward the openness. This week, however, LG App Store beta-version is launched. Its strategic direction seems against the mainstream of the market trend. In other words, LGE sticks to walled garden rather than to be an open platform.

The current deployment of the service is only available for Windows-based LG GM730 and LG KS20 handsets. The virtual marketplace features 1400 apps.

[LGE’s App Store]

[GM 730 & KS20]

The reason for why LGE takes walled garden strategy is related with the positioning of the service among LGE’s business portfolio. “Unlike other mobile phone manufacturers, LG’s Application Store is not intended to be a new or separate business model,” said Skott Ahn, CEO of LG Electronics Mobile Communication. “It’s an added-value service that comes with LG’s high-end phone and smartphone ownership.” The world’s 3rd largest handset maker still struggle as a minor player in the fast-growing smart phone category and want to keep up with competitor moves, with minimum effort. LGE is just filling the gap in its service offer, copying blindly competitors past practices and missing the shift to “openness” paradigm.

As a matter of fact, Korea’s internet market is often seen as a “walled-garden.” Korea’s leading internet companies such as Daum and Naver is quite walled. For example, significant amount of information in Korea is created and exchanged in the online communities, which are powered by Naver to Daum. But if you search information through Daum, you cannot find information available at Naver’s online community. This closed nature of internet searching platform will not increase benefits of users.

When it comes to App Store, many users are waiting for unique virtual marketplace for all windows-OS based application, without restriction of model or operator. They argue that multiplication of branded marketplaces is a way to create exclusivity. However, the wall is being cracked.

SK Telecom, Korea’s biggest mobile operator, will launch its own App Store in Korea this August on an open platform that supports Windows Mobile, Symbian, Android and Linux, regardless of the phone carrier or phone type, unlike Apple’s App Store. Moreover, Governmental agency KITA in collaboration with Dreamline (one of ISPs in Korea) work on a open platform content portal ( www.wapool.co.kr ).

Even if LGE is quite advancing in terms of its hardware strategy (for example, they are now entering into smart phone market using haptic user-interfaces), it is still old fashioned in terms of software strategy as in the example of walled garden App Store. Beware the wall.