WiBro is the Korean version of Mobile WiMax. There are two WiBro carriers, KT and SK Telecom, and their WiBro service brands are KT WiBro and T Login respectively.

The WiBro adoption rate in Korea has been vey slow due to the operators’ low motivation and low interest of customer. WiBro subscribers were, by the end of August 2008, 188 thousand for KT and 3 thousand for SK Telecom. The penetration rate at that time was only 0.4% and ARPU was only 10 US dollars.

First of all, the operators were not motivated to create the new markets in wireless broadband. Korean operators such as KT and SK Telecom do not regard WiBro as their alternative product to HSDPA and FTTH, but as the complementary goods to them. A complementary good does not make enough profit as a single business unit and the investments are also limited. Consequently, the coverage of WiBro network in Korea is limited to the Metropolitan area including Seoul. As their coverage focus is limited to outdoor, the indoor network quality where Wi-Fi usually covers does not meet customers’ expectation. Additionally, they are not active in their advertising and promotion to allure subscribers. Consequently the adoption rate of WiBro is relatively slow, and it will unlikely be changed for the next two or three years.

Secondly, the customers are not in desperate need for WiBro. Basically, they do not value WiBro access to the broadband internet while they are moving. Even the professional segment, which is the most attractive market segment, is not interested in WiBro. Given the fact that they can access the Internet through the stable and excellent wired broadband or Wi-Fi, they cannot find strong reasons to use WiBro, which requires extra money. In addition, the WiBro device, a laptop modem style with limited functions fails to induce customers. Recently, however, PMP (Personal Media Player) and navigation are diversifying their device portfolio in order to expand its target segment and to stimulate the unmet needs of customers. In this regards, they consider including WiBro functions in their products. It would be an alternate solution to enhance the adoption rate that we provide customers with WiBro modem in bundled or built-in manner.

However, this slow WiBro adoption in Korea could be changed soon. SK Telecom recently announced that they would focus on WiBro for their wireless internet strategy. SK Telecom will invest 815 billion won in total for WiBro by 2010. Also they are planning to build the WiBro network system with ‘Wave 2′, twice faster than the existing one, by 2009.

KT is also planning to invest 1 trillion won in total by 2011. KT made strategic partnership with device manufacturer such as Samsung Electroninc, LG Electronincs, TG Sambo, and Cowon for improving cooperation system related to WiBro.

The chart above is WiBro subscriber forecast by 2009 based on the data from June 2006 to June 2008. So far, the blue line is more accurately reflecting the current market situation, WiBro Subscribers are still around 180 thousand.

These days both SK Telecom and KT are promoting WiBro a lot. To promote WiBro, both offer free WiBro for 3 to 6 months to their new customers. With such an active promotion, SK Telecom attracted more than one thousand people as their new WiBro subscriber only in 13 days.

Currently it is still hard to predict whether WiBro is going to be a success in Korea or not. I assume that most of the present WiBro subscribers are using WiBro thorugh the free promotion, so it is yet difficult to say how the market will look like for the longer term.

Following charts are from the 2009 Korea Communication Market Forecast Report by KT Management Research Labotory, Digieco (www.digieco.co.kr). To see in detail, click the charts.

KT Management Research Labotory forecasted that the Korean communication market size will grow to 308.1 trillion won (appox. 220 billion us dollars)

According to the report,  VoIP subscribers will increase by 8.2 billion and market revenue will increase by 270 billion won (appox. 157 million us dollars).

Everybody in this industry is monitoring the IPTV market closely these days. The subscribers for IPTV were, according to the data from June 2008, around 1.5 million. This chart was drawn based on the actual data from July 2006 to June 2008. It describes two possible scenarios, shown by a orange and a blue line, about the future subscriber base of IPTV in Korea.

To see whether the outcome will result in the blue or orange line I searched for other sources for subscriber base and found that there were 1.6 million subscribers by September 2008. Consequently it seems that the prediction shown by the orange line is more similar to the reality than the blue line so far.

Report also pointed out three changes of paradigm from 2008 Korean communication industry as follows:

1. IT governance changes

2. Government policies for IT industry growth changes

3. Competition dynamics change in Korean communication industry

Report also forecasted that the Korean communication industry will change through convergence of media such as broadcasts, telecom, internet, newspapers especially with the start of Korea Communications Commisions, equivalent to Ofcom in UK,

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.