From our analysis of keywords that led traffic to our Korean Insight website, we were able to notice an increasing demand for information about KMI. KMI is short for Korea Mobile Internet, a consortium that consists of various companies willing to invest in WiBro (aka mobile WiMax) network as next-generation mobile technology. The consortium plans on developing and establishing a nationwide WiBro network to provide mobile networking service, such as mobile broadband and mobile voice calls. Those corporations participating in the consortium will be able to utilize the network for mobile telecommunication, thus spawning forth a series of MVNOs in the near future.
In our last newsletter, we mentioned in a dramatic tone that,

“In the midst of this, the hottest news now in Korea is that the three MNOs of Korea will become four soon; Korea Mobile Internet (KMI), a MNO that will be based on WiBro (mobile WiMAX) service (instead of the current WCDMA or HSDPA system) plans to enter into the Korean telecom market next year. What is especially noteworthy is that KMI will be a joint consortium consisting of MSOs and various corporations, such as Samsung Electronics and Intel.”

Now that proximity of a month has passed from the day our last newsletter was written and sent out, a few changes have taken place to alter some minor details of KMI.

1) Previously, it was covered in veil as to who was participating in the consortium as investors. The tentative list, though, has now been disclosed to the public as KMI has officially registered applications to Korea Communications Commission (KCC) for approval of MNO business. It turns out now that Samyoung Holdings Co. has nearly 20% of the entire KMI share as an investor although recently there has been a controversy over whether Samyoung Holdings Co. will be “kicked out” from the consortium or not. Regarding the matter, we will have to wait and see how everything turns out. Indeed, the list really is tentative for now.

2) As for Samsung Electronics, they will be investing in KMI in kind as Samsung (as well as Intel) is a vendor of WiBro equipments. After all, Samsung and Intel together are currently working on WiBro Evolution, a form of 4G technology next to LTE and UMB (which Qualcomm had once been developing and given up at the end of 2008).

3) In the case of MSOs, there was a word that KCT (Korea Cable Telecom), a nationwide consortium of seven cable operators (MSOs) providing home VoIP service, was to take a share in KMI, but there isn’t any news pertaining to KCT as of now. It is probable, though, that KCT will have enough motivation to start a MNO business anytime soon, because of the continuous pressure that comes from the telecom industry’s customer “lock-ins.” LG U+, for instance, recently merged its subsidiaries, LG Dacom, LG Powercom, and LGT to provide consumers with combined telecom services at a discounted price. Olleh KT and T are similar cases. MNOs often partner up with fixed line services (for example, KTF with KT, and SKT with Hanaro Telecom, now known as SK Broadband) so that they will be able to provide FTTH broadband service and IPTV service, all the while possessing an ownership over fixed lines and transferring landline users to “070 Internet/VoIP phone” service.

The history of KMI over the last few months

2010.7.11 - KMI submits applications for approval of a new WiBro service to KCC

2010.8.4 - KCC allocates 2.5GHz for WiBro usage. (2.3GHz – 2.4GHz frequency range is already dominated by KT and SKT for WiBro service. SKT owns 2.3~2.327 GHz, and KT owns 2.331~2.3585 GHz)

In order to utilize 2.5 GHz range now allocated for WiBro service usage, KMI must apply for the frequency range within three months of the allocation notification by KCC, which will be the end of this November. In November, KCC will go through frequency usage plans submitted by various businesses willing to utilize WiBro service, including KMI consortium, and by December, KCC will complete its frequency allocations for 2.5 GHz WiBro service.

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.