KT announced voice mobile phone service will be launched in November using WiBro technology as carrier. Network installations and infrastructure are already initiated. The homegrown long range and in-motion standard will deserve Korean market at cheaper rates for customers and aims to demonstrate positive results to back up its losing-ground worldwide struggle against LTE standard, said KT.

I suggest the underlying truth may be different. This blog has already covered here the governmental walled-garden strategy and pressures over Korean companies to champion WIBRO despite their increasing reluctance.  Contrary to publicly expressed motivations, this move have to be understand in a long-term strategic perspective and have little to do with WIBRO success - or rather lack of success -  abroad. KT is indeed preparing the up-coming IT disruption : the mobile VoIP.

<!–[if !vml]–><!–[endif]–> According to Gartner - and my own experience as consultant -,  VoIP is the inevitable evolution of mobile phone market. The American firm estimates that 50% of mobile voice traffic will be under VoIP in 2019.  Only the companies providing such services will have opportunities to make comfortable benefits from the global mobile voice market, whose size is today 692.6 $ billions. The key factor is a wide 4G coverage, LTE or WIBRO whatever, reached around 2017. Once this condition meet mobile VoIP will full bloom, wrote Gartner analyst Tole Hart.

Until now, mobile network operators was really suspicious of VoIP. Terms of service for mobile data  exclude VoIP use, which displease most competition authorities, even pushing  the European Commission to consider regulation issuance.

Because with mobile VoIP will come new competitors, some of them very threatening. VoIP Players such as Skype, already the first operator in international communication with a 8% marketshare, can leverage valuable expertise. Powerful Internet giants may enter as well : Gartner predicts than more a third of mobile voice traffic will go through portals and social networks like Google, Facebook, Myspace or Yahoo.

A business saying goes : “If your core product can be cannibalized, better will be by you”.  VoIP is not only a technical issue, it’s a disruption in the business model. The value will shift from the call itself to its integration in an ecosystem.

The report was released in May and predicted a quick stance change from MNOs. As Korea is known to be a window to the future, we hope KT decision will give us a glimpse to this radically different future and we will follow this topic thoroughly.

Last Sunday, the Korean Blue House (the presidential office) publicized Ericsson’s plan to invest $1.5 billion in Korea for the R&D of LTE technology. The statement came after a meeting of Korean President Lee Myung-bak and Ericsson`s CEO Hans Vestberg in Sweden. The Blue House touted it as one of Lee`s major achievements in attracting foreign investment into the country. But it was corrected quickly by Ericsson spokesman asserting company had not such intention. Why does this happen?

[Handshake between Chairman of KCC and CEO of Ericsson]

The context is the current battle for the 4th mobile communication dominant technology. Two standards are competing: WiBro is the South Korean developed variant of mobile WiMax, while Ericsson champions 3GPP Long Term Evolution, LTE. Currently, LTE progresses globally, and Ericsson Korea said LTE would become the dominant technology in the market, accounting for 90 percent of the global market in 2014. Rival mobile WiMax will account for only 1 to 2 percent, according to Ericsson Korea.

Korean manufacturers show different positions. LG Electronics is supporting LTE while Samsung Electronics supports WiBro technology. In fact Samsung owns significant amount of original technology for WiBro and thus are not willing to develop LTE.

The government’s position is quite mixed. On the one hand, they want safeguard its homegrown WiBro in their domestic market. On the other hand, they want Korean manufactories lead global LTE market through exporting. That is why the Korean government wanted Ericsson to cooperate with Korean manufacturers to develop and export LTE devices targeting for the global market.

However, Ericsson’s position is that it would invest in Korea only if the government creates LTE opportunities in Korea.

But Korea stays adamant: “We cannot give up our homegrown technology,” said Korean Communication Commission head yesterday.

It will be interesting to watch if the Korean government’s strategy can succeed. I will follow up with this issue continuously.

Do you still remember Korea’s IT839 Strategy? The Ministry of Information and Communications (MIC), the former communications regulator in Korea, had suggested the government driven IT policy introducing and promoting 8 services, building 3 infrastructures, and developing 9 ICT new growth engines. It has successfully transformed Korean IT industry so competitive today until their dissolution with the new government. After that, there seemed no more significant government push for Korean IT.

[IT839 by MIC]

However, the new government comes up with new scheme called 3-3-7. The Ministry of Knowledge Economy (MKE)’s new strategy aims to support Korean IT sector to penetrate global market. Providing customized marketing support, they selected 13 items and divided them into three categories: 3 strategic items (DMB, WiBro, E-Government), 3 flagship items (Semiconductor, Display, Wireless) and 7 potential items (RFID/USN, Robot, Network, Software, E-Health, LED, Security).

According to this marketing strategy, MKE will play the significant role to help relevant Korean players in those areas to pioneer global market by hosting IT road show, enhancing government relationships and inviting foreign venture capitals etc.

Its first attempt seems to be already in action. Since the president MB Lee’s comment “Mountainous country like Peru definitely needs WiBro” during the last visit to Peru in November 2008, two governments have maintained highly business oriented relationships each other.

[Korean Delegation led by MKE]

As a result, a new delegation led by MKE composed of 100 people from both public and private sector will be sent on 9th March. They will host ICT road shows at the three hub cities  in Central and Southern America such as Bogota (Columbia), Lima (Peru), Sang Paulo (Brazil). Korea’s leading players in DMB, IPTV and WiBro including Samsung Electronics and Posdata will participate in the event. Mr. Lee Han Chul from KOTRA (Korea’s trade-investment promotion agency) mentioned “This event will open the door for exporting our advanced IT such as WiBro” Mr. Choi Won Joon from Posdata commented “Opportunities for WiBro can be found in big countries without established fixed line IT infrastructure like Brazil.”

What Korean ICT companies are good at is developing new innovative services. On the other hand, what they are not good at so far is marketing & sales in overseas market. At least in IT industry, which is directly related to national IT standard and other significant issues, the government surely has a role to support exporting, for example, a political support to help their private sectors to contact foreign public organizations. It is expected that this new government marketing support scheme re-vitalizes the globalization of Korean ICT sector.