Korea Readies Second WiBro Wave

ARTICLE

Korea Readies Second WiBro Wave

By Jeff Orr, Senior Analyst - Consumer Electronics
Contact the author at jeff@maravedis-bwa.com

Amid lackluster subscriber numbers and limited network coverage, South Korea’s WiBro service is planning a resurgence. The WiBro launch in June 2006 served as the prototype for 802.16e-2005 networks. A revision to infrastructure and devices is in the works to improve network performance and coverage, conforming to the WiMAX Forum Wave 2 certification requirements. Mobile broadband adoption in Korea hasn’t been stellar. While Samsung executives we spoke with point out that the WiMAX service is outpacing the country’s W-CDMA adoption from years earlier, the numbers remain small for the broadband savvy country. Will the migration to Wave 2 WiMAX equipment be the catalyst for mobile broadband in South Korea?

WiBro services have been the exclusive playground of two operators: Korea Telecom (KT) and SK Telecom. That is unlikely to change in the near future, as the pair have the only licenses available in the allocated 2.3 GHz frequency band. KT took an early lead in WiBro and has maintained that over the first two years. Infrastructure build-out was awarded to Samsung, while subscriber devices were qualified from a number of sources. During the second half of 2007, the operator started filling in Seoul coverage gaps with micro and pico cell stations from Korean suppliers. As of Q1’2008, the operator surpassed 145,000 subscribers, according to Maravedis service WiMAXCounts [1]. Around 80% of KT subscribers use the service for non-business purposes at an ARPU of 22,500 won (US$21.63). Subscriber devices for KT users are primarily computer peripherals though handsets and embedded laptops have diversified the mix in the last year.

While significantly outnumbered in subscribers, SK Telecom launched WiBro coverage with a different focus – universities and hot zones. Only 1,500 subscribers are counted as of Q1’2008, but at a slightly higher ARPU of 29,900 won (US$28.72). The operator partnered exclusively with Samsung for an end-to-end solution of infrastructure and devices. SK Telecom has also invested in a number of technologies and markets rather than get locked into a single technology path. KT and SK Telecom are the two operators deploying the HSPA family of protocols in Korea. Bridging 3G cellular and WiBro services through seamless handovers has been an emphasis promoted through the IEEE 802.21 project, dubbed Multimedia Independent Handover (MIH). Markets for SK Telecom regularly reach outside the borders of South Korea, including China, Japan, United States MVNO Helio, and Vietnam. Bangladesh is considered a future growth opportunity for the Korean operator.

In April, WiMAX Forum announced that four mobile stations (CPE or user devices) had passed conformance and interoperability testing using the 2.3 GHz WiBro profile. As the first WiMAX Forum Certified products, the WiBro profile is exclusive to Wave 1 certification requirements. All subsequent profiles and frequency bands require Wave 2 requirements, which incorporate MIMO and beamforming smart antenna techniques. The launch of a Wave 2 compliant WiBro network is intended to overcome the coverage challenges from the initial launch. Consumers will receive coverage in more places with faster uplink and downlink speeds possible. KT and SK Telecom plan to unveil Wave 2 gear by October for Seoul and adjacent provinces. The current trajectory of WiBro subscriber growth should close out 2008 between 250,000~300,000 users. Estimates from within the country of 500,000 users in that timeframe are unlikely without a significant change to the offering. The new capabilities of Wave 2 equipment will not translate to consumer value and double subscriber growth in such a short period of time.

One must question what is attracting users to the WiBro service and which changes over time will contribute to the growth of the service. Assuming that the same broadband applications performed in the home are the key drivers for WiBro, the availability of Internet access anywhere and anytime is the initial market enabler, though not a usage scenario that will cause consumers to flock to any mobile service by the millions.

The speeds of mobile broadband continue to increase. Initial WiBro aggregate speeds of 18.5 Mbps in the downlink and 5 Mbps in the uplink per base station sector are expected to double to 37 Mbps in the downlink and 10 Mbps in the uplink direction, respectively. Sustained user speeds of 1~3 Mbps are currently possible. Tariffs for the WiBro service are relatively low compared to fixed and mobile broadband costs in other parts of the world. Korean consumers enjoy 20 Mbps and higher fixed broadband over DSL, cable modems and fiber optics today with average subscription costs of $30-$50 per month [2]. Some concerns remain that wired broadband performance 5~10 times greater than mobile will limit its applicability to a broader Korean market.

The younger population of Korea has grown up with broadband Internet access and on-demand content. WiBro adds the anytime, anywhere attributes to that trend. Enterprises are migrating services and applications from the desktop to the mobile handheld, albeit at a very slow, controlled pace. Enabling the mobile workforce to remain connected to corporate services has shown customer service and productivity improvements. Mobile-only services are emerging that were simply not possible before, including user-generated video and social networking applications. These capabilities are attractive to limited, vertical segments of the total population who have WiBro coverage.

Increasing the attach rate of WiBro services to computing devices is a strategy with merit. KT recently aligned with mini-notebook computer manufacturers for rebates when systems include a WiBro adapter and service. Asus, HP, and Singapore’s Kohjinsha partnered with the operator for a complete system solution that requires an 18~24 months WiBro service contract. If consumers are in the market for a low-cost computing solution on-the-go, the solution bundle strategy could positively alter WiBro uptake and generate appeal to the mass market. The audience for mini-notebook computers is considered separate category from emerging Ultra-mobile PCs (UMPCs) and Mobile Internet Devices (MIDs) being offered by KT WiBro and other distribution channels. WiMAX solutions for notebook integration are starting to roll-out now with products such as Intel’s Echo Peak mini-PCI modules, though the silicon giant is initially focused on the 2.5 GHz band and not the one specified for the Korean Republic.

No one can argue that South Korea wants to stay ahead of the technology curve and enable its citizens with mobile broadband services. After two years of WiBro deployment and government support, mobile WiMAX has not resulted in pervasive Internet access. However, WiMAX is not the issue. Identifying significant market segments and developing applications that create new value for consumers and business users alike is the missing link. Whether it is mobile Internet access, personal navigation devices, or remaining in constant contact with friends, the answer to WiBro and mobile broadband adoption is content and applications. Once services are identified that create value for the market, mobile broadband will mature and contend with fixed broadband access.

[1] WiMAXCounts, Maravedis, July 2008 at: www.wimaxcounts.com
[2] “Broadband Policy and Growth in OECD Countries”, OECD, June 2008

For more information you can contact the author: jeff@maravedis-bwa.com