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Monday, June 29, 2015

Seoul subway to gain 89 km by 2025

If you follow this blog, you know how it usually goes with new subway projects: a very ambitious master plan pops up about one year before major elections, but you don't hear much about the new lines until the next election cycle.

Out of the new lines announced by Seoul city two years ago*, only Seobuseon managed to maintain some momentum a couple of months later**. Work will start by the end of this year, but only for the section South of the Han River ("Sillim Line"). As usual, money flows more easily on the gangnam side.

Well now it seems that Seoul City and the Korean government are reaching an agreement, and that all 10 LRT projects could be actually built by 2025, adding 89 km to a 327 km network.

Too good to be true?

I mean both miracles: politicians reaching across the aisle and subway lines stretching over parts of the city that most need them.

Seoul Village 2015
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*  see "Seoul LRT Projects Update (Part 1/2)" and "Seoul LRT Projects Update (Part 2/2)" (following "If you ain't broke, fix it: Seoul, Welfare and Railways Deficits")
** see "Seobu Line confirmed as Seoul's LRT top priority"


Wednesday, June 3, 2015

Korea revives the project of a fourth mobile license

According to The Korea Herald (May 29), the Korean government is considering reviving the project of a fourth Mobile Network Operator license as part of a plan to stimulate the market.

Is there a need for another 4G network? Korea is well covered with LTE to LTE-A, beefed-up locally through pervasive femtocells and WiFi. And the three incumbents don't want to sit on their laurels: Korea Telecom promised 5G trials for the 2018 Pyeongchang Olympics, and SK Telecom announced a partnership with Google on augmented reality ("T-AR for Project Tango").

Is there a need for more competition? It depends on the profile of the new player, and the impacts on a M-VNO ecosystem that, at long last, is biting into a pie still dominated by SK Telecom, Korea Telecom, and LG U+.

According to the Ministry of Science, ICT and Future Planning (MSIP), Mobile Virtual Network Operators were claiming a 8.8% market share as of April 21 (up from 2.9% in June 2012), thanks to prices on average 57% cheaper than the MNOs.

But it's not as if you had one fourth player with a 8.8% market share, big enough to contest the leaders on more profitable segments. Today, Korea has 27 M-VNOs, most struggling to make their first profit, and likely to never see it. Significantly, their number of subscribers started to explode when they targeted more discount-seeking audiences (the youth, Chinese migrant workers...).

A perennial candidate for the 4th spot is actually a consortium of M-VNOs: KMI (Korea Mobile Internet) revived their candidacy in October 2013, and defending the existing M-VNO ecosystem could be a stronger argument today. In December 2011, the Korea Communications Commission not only rejected KMI's bid, but also that of IST (Internet Space Time lost the backing of Hyundai Group at a critical moment). Note that the KCC also canceled the auction for the WiBro spectrum. I explained a few months earlier ("A Kbiz MNO ? SMEs vs Korea Inc") how the attempt by the Korea Federation of Small and Medium Businesses (Kbiz) to enter the market looked more like a lobbying stunt to push WiBro.

A much bigger fish could also seek the fourth license, with more brand power. Typically, CJ Group is already a major player in telecom, IPTV, or multimedia contents. It has the money to invest on new networks (Daum Kakao or Naver would need serious backing), the customer bases to leverage, and the contents to fill the pipes..., but don't bet on price wars with fellow chaebol on the juiciest segments. 
A true new entrant from overseas? Global MNOs know how difficult it would be in a country where foreign majors are seldom allowed to take or maintain leading positions (see retail for example: Carrefour and Wal-Mart already gone, Tesco on the back seat). But joining a consortium, or creating one remains a rare opportunity for international platforms to push their solutions in an otherwise locked Korean market. And nowadays, the dominant platforms do not necessarily belong to telecom operators...

Anyway, expect more lobbying ahead of the government's guidelines, expected by the end of June.

Seoul Village 2015
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* "Consortium to bid for 4th mobile carrier in S. Korea" (Yonhap News - 2013/10/08)

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