ZDNet Korea posted that 2008 top 10 news at Korean communication industry. In that article, author said, the keyword of 2008 at Korean communication market is

“Convergence”

Followings are top 10 issues that ZDNnet Korea picked,

1 Korea Communications Commission(KCC) has been founded

As convergence between broadcating and telecommunication is progressed fastly, the needs for integrated government agency for both broadcasting and telecommunication has increased as well. In that reason, Korean government founded Korea Communications Commission (KCC), the goverment agency similar to Ofcom in UK, early this year.

2 Commercial IPTV service has began

From last November, the first commercial IPTV service, KT’s Mega TV has began in Korea. Actually many experts thought that it would be difficult to launch commercial IPTV service this year because broadcasting agreement between broadcasts and IPTV providers was facing rough. However Korean government eager to make IPTV successful as Korean next growth engine, other IPTV operators also will provide commercial service by next January.

3 Leak of personal information issue

In 2008, people heard several accidents about leak of personal data from companies. Not only internet based company such as Auction and Daum, but also the comanies in other industries including GS Caltex and Hanaro Telecom had those accidents. By several accidents, people realized the leak of personal data as serious problem more. Also Korean government is actively looking for protecting privacy more than before.

4 Deliverying scandal of KT and KTF

KT and KTF had been bad this year. Former KTF’s president Cho and Former KT’s president Nam was arrested for taking bribes from the deliverying companies. Due to this scandal, M&A between KT and KTF was also postponed.

5 Duty of loading WIPI will be released by next April

As I posted already, KCC released the duty of loading WIPI by next  April. This will affect mobile operator as well as mobile device manufacturer. It seems to be more foreign mobile device like iPhone or Blackberry will be launched in Korea next year due to this releasing.

6 M&A between communication companies

As the convergence between broadcasts and telecommunications, M&A has been accelerated more and more. SK Telecom, the leading mobile operator, merged Hanaro Telecom, the broadband operator, last February. M&A between KT and KTF seems to be progress next year and LG Dacom, LG Powercom, and LG Telecom are considering M&A as well.

7 Communication firms began selling Bundling packages

In 2008, bundling packages like DPS, TPS or QPS has sold initially. SK Telecom has mobile, broadband, IPTV and VoIP through M&A with Hanaro Telecom (as is SK Broadband). KT and KTF also launched bundling products including mobile based on fixed or broadband products.

8 VoIP market is ready to grow

I also posted about this issue previously. As number portability for VoIP has began, VoIP for home market has increased and is forecasted to grow more next year. As KCC also allowed to provide Voice over Wibro recently, wireless VoIP is expected to come next year.

9 Grand National Party proposed to reivise the law on broadcating

Grand National Party proposed to revise the law on broadcasting, mainly about releasing the restrictions on press holdings.  However the opposition party and NGOs are against that law. Also The National Union of Media Workers decided to begin strike from December 26th in the face of opposition. This issue would be continuing next year.

10 Intense marketing competition at mobile communication market

During the first half, three mobile operators, SK Telecom, KTF and LG Telecom spent lots of money into marketing. Marketing cost of MNOs reached 31% of their revenue at the first half. This was totaly zero sum game for players, so players changed the policies as keeping their subscribers not attracting new customers from competitors.

KCC (Korea Communications Commission) allowed Voice over Wibro service from next year. KCC is hoping that Wibro market will be more active with this decision. Wibro subscribers in Korea are  only 200 thousand since its launching in 2006.

KT are expected to start mobile network business by itself with its Wibro network. If KT will provide mobile network business with Wibro, the cost will be cheaper than other MNOs’ operating cost.  KCC decided to assign the remaining frequency for Wibro, 2360 ~ 2400 MHz, to new operator preferentially. KCC is also considering to assign 2.5 GHz to new Wibro operator. Due to this, Cable TV operator and other company could begin mobile network business through Wibro.

Today, KCC will allow to use 010 access code, mobile phone prefix in Korea, for Wibro operator. That means Wibro operators can provide mobile network service like existing MNOs. If more companies are comming mobile network industry with Wibro network, more various mobile services would be available for Korean customers.

On April, I posted that LG Telecom realeased the mobile full browsing service called OZ. OZ is a mobile internet service that offers full browsing and it costs 6,000 won (about 5 dollars) per month for 1 GB traffic (2,000~4,000 web page views).  On the 28th of October this year LG Telecom announced that the subscribers of OZ were more than 400 thousand, about 6% of their subscribers, since it was launched in April. So does OZ make significant financial results for LG Telecom? Let’s look at the ARPU development of LG Telecom and their competitors and see how they are doing.

Here are each MNO’s ARPU Development from 2007 2Q to 2008 3Q.

As you can see, MNO’s ARPU have not been increased, they have in fact decreased a little bit overall. In the case of LG Telecom, ARPU of 2008 3Q has been decreased by 2.2% from previous quarter and 3.4% from previous year.

Let’s look at the Data ARPU development which is directly related to OZ.

Data ARPU includes SMS, mobile internet, mobile contents and so on. Korean MNOs reduced the SMS prices by 33% from January 2008. SK Telecom’s Data ARPU in 2008 has been decreased mostly due to the SMS price reduction. KTF and LG Telecom’s Data ARPU have instead shown increased figures in 2008. In the case of KTF, the increasing subscriber base for SHOW (3G service of KTF) is the main factor for the improving Data ARPU. LG Telecom’s Data revenue of 2008 3Q was 80.6 billion won, which is an upturn by 0.6% from previous quarter and 7.5% from previous year. As LG Telecom said that OZ subscriber’s Data ARPU is 1.7 times more than other subscribers, the expansion of OZ subscribers would be the main factor to increase LG Telecom’s Data revenue. It seems that OZ made some improvement in revenues for LG Telecom. However offering just full browsing is not enough.

The total number of subscribers for OZ are increasing but the monthly net increase in OZ subscribers are in fact decreasing. I think this points out that LG Telecom needs to provide more than just full browsing, and that would be to focus on the CONTENTS that people want to consume and use. If those are not provided, LG Telecom’s OZ might just be a temporary fad for Koreans.