Korea Telecom announced yesterday that it is opening up its network to MVNOs (Mobile Virtual Network Operators) and launching MVNO services for the first time in Korea. KT has partnered with “Entaz” (http://www.entaz.com), a mobile contents provider, and with “Free Telecom” and “Evergreen Mobile,” both of which are prepaid service providers. KT will open its mobile network to these selected MVNOs so that they can utilize KT’s network infrastructure to offer inexpensive data and voice services, especially to consumers within a niche market.

(source: JoongAng Daily)

Entaz, Free Telecom, and Evergreen Mobile

Entaz has a mobile portal service called “Free Mobile Town” that provides various contents including mobile game, cartoon, photobook, and ebook services. As Entaz will be taking advantage of KT’s low wholesale rates for data service, consumers will be able to access “Free Mobile Town” contents with no charge for mobile data service itself. While Entaz is utilizing KT’s network for data usage service, the other two are using the network for a prepaid voice call service; “Free Telecom” and “Ever Green Mobile” are targeting foreigners or short-term users, to whom they will offer their services at a low rate thanks to KT’s MVNO policies that aim to create a mobile ecosystem.

The first MVNO service in Korea?

It is only recently (March, 2010) that the Korean government passed a bill allowing the leasing of mobile networks, or MVNO business in the country. Previously, MVNOs were not allowed, and the Korean telecom market was fully dominated by the three MNOs, creating a huge market barrier for new entrants. The advent of MVNO companies is expected to work for the benefit of consumers by driving accelerated price competition into the market. By September 23rd, KCC (Korea Communications Commission) will prepare a complete set of guidelines and regulations for MVNO services. Once the guidelines are out, many changes are bound to take place as SKT, currently holding over a half of the market share, will be legally obliged to open its network, and as other companies, such as Onse Telecom and KCT (Korea Cable Telecom: a consortium of seven cable operators providing VoIP services throughout Korea) have demonstrated their willingness to start a MVNO business.

A fourth MNO in Korea

With KT launching its first MVNO services, which are not yet complete MNOs themselves in that they only offer either data usage service or voice call service, the idea of a fourth MNO in Korea seems to be gradually turning into reality. Soon, mobile phone users in Korea will have more options to choose from, compared to when they had only three choices: SK Telecom, KT, or LG U+. In addition, the advent of KMI (Korea Mobile Internet), a MNO that will be based on mobile WiMAX network and one that will generate many other MVNOS there forth, is imminent as well. (more about KMI at an upcoming entry) It will be interesting to see how such factors will play out in Korea’s telecom market. Meanwhile, let’s wait to see a myriad number of MVNOs rolling out starting from next year.

Amongst the 3W mobile networks available in Korea - WCDMA, WiBro, and WiFi - WiFi had not been receiving much attention from the mobile business circles. However, since the inception of iPhone and the following smartphones, WiFi has become the critical resource of competitive advantage for mobile network operators to serve their smartphone users. In particular, the WiFi became one of the most conflictual policy issues for Korea’s local government election coming up early this June. Concerned with earning the favor and votes of the public, politicians have been insisting on the free use of WiFi in public places. However, each related stakeholder clearly has different perspective on this matter.

Policy makers are insisting on making WiFi a free public network to improve the benefits of public interests. They asserted that free mobile network infrastructure is necessary to boost the use of smartphones. Further regarding the investment costs for the policy makers, WiFi has the most appropriate budget option compared with other W networks.

The industry on the other hand showed different reactions. KT, who has already made substantial investments on WiFi coverage throughout the nation, strictly disagreed with the free use of WiFi. KT strongly asserted that it will discourage investment on mobile network from private sectors and also that WiFi has great deal of security issues, which should be dealt by expert operators rather than local government. They instead suggested that the vitalization of smartphone usage can be achieved through inexpensive price plans. However, SKT conversely insisted that local government should cooperate with telcos in its use within certain public areas and facilities, like the case with street lights, in order to avoid overlapping investments.

Lastly, the KCC (Korea Communication Committee) emphasized their policy principle that government’s role should lie in promoting, rather than creating, an efficient market. In other words, WiFi should be built based on market competition rather than by local government’s sole initiative. But they partially accepted the open use of WiFi network in cases with public benefits such as education or accident prevention. 

Telecommunication infrastructure should serve to benefit the public by its nature. However, by over-emphasizing on public benefits, the private sector will likely lose their motivations for making investment. WiFi will play a critical role for the future mobile internet ecosystem, especially concerning the spread of smart devices like smartphones. Hence, the policy on WiFi should not be decided based on politicians’ own interests. Rather, it should be by balancing between market mechanism and public benefits, and vigorously evaluated the feasibility of execution for each action.  

Second left is Choi See-Jong, CEO of KCC (Korea Communication Commission)

and to his right is Andy Bird, Chairman of Walt Disney

Why did Andy Bird, Walt Disney’s chairman visit Seoul?
On May 11th, SKTelecom and Walt Disney completed signing of their joint venture company PP(Program Provider). The joint venture PP was made to establish Disney’s content broadcasting for Korea’s cable TV, IPTV, and satellite DMB, and also for subscriber based mobile phone VOD service. They are planning to launch two Walt Disney channels next year, and targeting the 3S (3screens) mobile phones, TV, and PCs. This will also mean the world’s first movie contents program provider for mobile phones.

Before, Disney had to retransmit their contents through local cable companies, but now they will be able to broadcast their contents directly. And with the broadcasting service experience and expertise of SKT, Disney’s contents are expected to be aired in a more Korean viewer-friendly method.

It has been revealed that SKT has the leading shares of 51% and Walt Disney has 49% of their joint venture company, and also planning to appoint the CEO form SKT.

They are certainly expecting to generate more shared profits as Disney fosters a more Korean suited content delivery, but there are also individual interests at hand.
Andy Bird has expressed their desire to strengthen Disney’s international competitiveness and business capacity through this joint venture.

Whereas, Choi See-Jong, CEO of KCC (Korea Communication Commission) indicated hopes that Walt Disney will support further overseas expansion of Korean broadcasting content.

SKT and Walt Disney have also stated that they are planning to further their cooperation in content development into games and other diverse fields. How will all this turn out? We will just have to wait and see. Nonetheless, the joining of hands between a world major studio and Korea’s largest telecommunication operator is surely going to make waves for the domestic media market.