South Korea: broadband ambitions undimmed

Broadband internet access in South Korea, the telecom world's most heavily penetrated country, has probably peaked with market saturation, admits the country's dominant fixed operator, KT. According to figures taken at the end of 2003, some 11.4 million households--around 73 per cent--have broadband access. But growth rates in the last few months now suggest only marginal increases in subscriber numbers, perhaps to 75 per cent says Sanghoon Lee (until last year the CTO of KT, and now EVP of the Network Group in the operator), in an exclusive interview with Telecommunications[R] International. The Korean numbers are probably the first indication anywhere that appetite for broadband access may in fact have a ceiling.

But KT, says Lee, has already embarked on a new strategy: "We have saturated the broadband access market, but what we want is to be a 'broadband communication provider'." Broadband communication, says Lee, means a different focus involving an end-to-end service that moves the business focus away from network service to a services solution, and from a niche market to a mass revenue market. Broadband communication means seamless file transfer, very high quality video communication, peer-to-peer communication at effectively unlimited bandwidths in the future, and a future network architecture massively rich in bandwidth and massively dependent on 'ubiquitous' and 'personalised' solutions involving fixed wireless access.

At stake is the future of fixed-line operations, says Lee. He points out that the Korean 'success story' in broadband was actually planned as a 'survival story' in the face of decreasing narrowband voice revenues. "Now the broadband access market is saturated in terms of looking at KT's revenue generation--which is now flat--so this is the time to have another 'broadband success story', [which is also] a survival plan," he says.

The eventual step, he says, is to change the complete PSTN into a single line broadband, but this will be a phased approach.

While all this suggests a massive technology investment, Lee points out that "technology is not a problem, although there are things to worry about". He acknowledges the key obstacles remain (finding the killer application, consumer acceptance, and regulatory concerns).

Users want the same experience when they go out as they have at home, insists Lee. Critically, KT wants to remove the restrictions current broadband internet imposes on users--specific locations, specific times of day, specific terminals, and in some senses, specific applications. There are distinctive but related elements to the emerging KT portfolio. Currently, fixed broadband internet users enjoy an average speed of around 4.5Mbps from a combined ADSL/VDSL portfolio that will deploy potentially (in the case of VDSL) a 50Mbps capability. In the future network, FTTH will provide 100+Mbps.

Critical to the success of KT's strategy to date, however, has been what Lee calls an "aggressive" promotion of WiFi, principally 802.11a and 802.11 g, to deploy up to 54Mbps per access point. Lee reckons WiFi activity in Korea, including KT's own NESPOT brand, has probably accounted for half the installed access point population globally, and has a user base already approaching 500,000. However, "in between" WiFi and near-3G broadband is a new 2.3GHz technology that KT calls WiBro, capable of delivering 1Mbps per device--licensing go-ahead is expected at the end of 2004. Finally, there are conventional cellular services, including 1X EV-DV and W-CDMA (384Kbps). However, executives at KTF, KT's mobile operator, are reluctant to contend that such a massive emphasis on WiFi could be at the expense of mobile internet, saying that the exact business model was still "under discussion". Lee says KT's approach will be to keep increasing bandwidth availability for users so that it becomes an almost irrelevant factor and to push wireless access, even though he admits WiFi is not producing profits for the operator: "We see it as a [necessary] part of the telecom infrastructure," he says.

COPYRIGHT 2004 Horizon House Publications, Inc.
COPYRIGHT 2004 Gale Group