There is a battle outside and it is raging, for two Korean giants are struggling. KT & SKT threw all their strengths in the fight, downsizing investments and innovation. The recent interesting events concerning a hypothetic launch of iPhone are a part of this bigger picture.

[ iPhone’s deployment planning – Can you see Korea ? ]

“A penny is a penny and we need it”, Korean operators are in a tight spot, looking to keep their income to fuel the tussle. SK Telecom is the biggest Korean mobile operator with a 50.5% market share while KT, which merged KTF, has 32 %. The two giants are trying to retain customers while seducing competitor ‘ones in the saturated market caught in economic slowdown. Hence, companies cut network investment: on a year-to-year basis, KT reduced 60% down to KRW 621.9 billion, while marketing expenditure reached more than KRW 4 trillion.

Furthermore, a recent OECD report shows that annual Korean telcos customer spending are higher than OECD average (227$ > 171$) . Government and the Korean Communication Commission are aiming to lower prices, to suppress monthly basic fees and will maybe introduce MVNOs(mobile virtual network operators) to increase competition. Right now, every won is needed to maintain marketing pressure.This consideration weights heavily in the iPhone’s cold reception in Korea

Double-edged iPhone. A survey among smart phone users shows that more than 9 out of 10 are eager to buy an iPhone. As it comes from a tech-savvy portal with specific profile visitors, it doesn’t tell us that much about how successful iPhone will be in Korea. Anyway, telcos expect to secure at least 500 000 buyers and probably one million. But one of the main reasons Apple and Korean telcos cannot reach an agreement has to do with business model. Korean telcos do not want share any profits from communications service with Apple. In addition, Korean telcos are threatened by Apple’s business model like Appstore since Korean telcos have had full control for mobile contents.
The iPhone passed through restrictive technical norms, handset manufacturers lobby and now face half-hearted operators. SKT seems to be in a position to win iPhone exclusivity, with a release next month, but KT ‘s CFO also announced ambiguously two weeks ago:

“Apple iPhone will be in our smartphone line-up. [We expect that the] iPhone will help to expand the smartphone market and will contribute to increasing the ARPU”

Some jumped to conclusion and consider it is an official announcement leading to a launch both by SKT and KT, a first in iPhone exclusivity-only deployment history. However KT announced one week later customers with iPhone bought overseas will be allowed to subscribe its service, a violation of Korean regulations. SKT denounced a luring PR operation.

The strategy of KT is not clear. Did KT play a trick to force iPhone exclusivity negotiation to push SK telecom or to get maximum exposure for its own non-exclusive launch? iPhone is tangled in a complex tactic operation, involving large spending and market face-shaping. For the moment, customers yet have to wait and expect firm and precise releases.

Can you imagine that you collect your nectar point with your mobile phone? It might be possible in the near future because your nectar card function can be embedded in the USIM card in your mobile phone. This will definitely lighten you wallet, which are usually filled with a number of credit cards, royalty cards etc.

However, it is already the reality for the customers of SK Telecom in Korea. SK marketing & company and SK Telecom today launch their new service called ‘OK Cashbag Happy Box’. OK Cashbag by SK marketing & company is Korea’s leading royalty program (80% of Korea’s economically active populations are members of OK Cashbag). And SK marketing & company is unique integrated marketing services provider in Korea covering communications, royalty, research & consulting, commerce etc.

Previously, you have to carry your OK Cashbag card all the time in order to collect your point. And you should visit their website for checking your current points. This inconvenience hinders customers to collect and spend the points more actively. However, you can now collect and check your points with your mobile phone more conveniently as long as you can download the ‘Happy Box’ with your 3G phone.

3G phones which required USIM chip began to be deployed in Korea since 2006. Approximately 40% of customers are now 3G subscribers and this 3G migration is progressing so smoothly. The USIM is not just a small chip that has customer information for mobile subscribers but it has much more potential for providing various mobile applications.

[OK Cashbag in USIM chip]

The Happy Box provides not only royalty card function but also other valuable services. Basically, you can collect your OK Cashbag point at the 4,000 SK petrol stations all over the country. The wireless devices available at the petrol station will accept your 3G mobile phone instead of the card. The Happy Box also provides other services such as Giftycon, Mobile Research and Today’s Fortune etc.

[SK OK Cashbag Happy Box]

Personally, I once involved in a new biz development project regarding USIM. At that time I could find huge potential for USIM applications as a marketing tool. 90% of people now carry their mobile phones in which a chip with significant capacity is embedded. I believe the launch of Happy Box is just a tip of iceberg of USIM based service. Please keep watching on Korea regarding what’s happening with USIM.

KT, South Korea’s largest fixed-line and WiBro operator, has created new business opporunities combining WiBro with other services in ways to expand its WiBro market and increase users. Last year KT kicked off a trial run of its WiBro-based Mobile IPTV, which was successful. Now it is expected among Korean WiBro operators, KT and SKT, that their WiBro business will gain momentum with the launch of Mobile IPTV service after the roll-out of 4G networks capable of providing 100Mbps data transfer rates that mobile IPTV requires.

Mobile IPTV is widely regarded as an IP-based multimedia service platform that embodies a combination of ubiquity, IP, and personal. Through Mobile IPTV users will be able to make a phone call over the internet, watch TV programs or UCC videos on the web, and enjoy various interactive services in an all-in-one device having relatively high efficiency when compared to DMB.  

Source: Samsung Electronics

According to KT insider it is assumed that the numer of subscribers to mobile IPTV can amount to the number of mobile phone users, which is four times bigger than possible fixed IPTV subscribers. So, it is certain that mobile IPTV will be an attractive service platform for IPTV service providers to use.

Source: Samsung Electronics