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.

• Initially published on mot-bile ("Korea's fourth license reload"). 
• See also "Daum Kakao, Google Campus... Korean platforms on steroids", other posts related to innovation in Korea.

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

The Bigger, The Bitter

Yesterday, Daum and Kakao Corp announced that they would merge on October 1st, and Google that its first Google Campus in Asia would be located in Seoul.

The Daum Kakao merger looks rather defensive: before everything, it creates a stronger competitor to NHN, the leader operating among others the main rivals to Daum and Kakao Talk: Naver and LINE.

NHN and Daum are rare exceptions as successful newcomers in a country where start-ups struggle to survive in an ecosystem dominated by chaebols: as soon as a new gem shows some potential, the big fishes try to eat it, or to destroy it with me-toos leveraging on in-house countless entry points, or to control it by becoming its sole 'partner'. 

NHN and Daum could storm the web at the turn of the millennium, when mobile operators where busy building proprietary environments, and other chaebol focusing as usual on hardware. They built competitive platforms that even resisted Google, who only managed to gain strongholds in Korea thanks to Android. Typically, even if Naver maintains its leadership in web searches, Google could 'crowd-boost' Google Maps or Google Translate, with the help of smartphone manufacturers who were too happy to have a platform rivaling Apple to care about the hidden costs.

As we've said before, Samsung and LG helped Google BtoB (OEM) succeed where Google BtoC (portal) failed, and all they can do now is send a Tizen to nibble at the heavyweight champion's ears. 

There's a finite space for major value aggregators in Korea, and as Samsung's latest attempt to build a sustainable platform beyond hardware, Tizen probably accelerated the need for rivals to stretch their reach.

Big G needed to beef up its Asian ecosystem and Korea seems the perfect choice: Android rules, start-ups need competitive platforms to survive chaebol bullies, and Mountain View has the opportunity to weaken some of its most serious competitors on their own turf. Bonus: by supporting Korea's SME and creative ecosystem, you gain the favors of local authorities and regulators.

Anyway, good news for Korea's attractiveness... but yet higher entry barriers for potential major newcomers.


(initially published on my innovation blog as "Daum Kakao, Google Campus... Korean platforms on steroids" - see all posts related to Korea)




ADDENDUM 20140828: let's guess which 'independent' whistleblower suggested Korean watchdog to investigate Kakao Corp in the wake of the merger ("Kakao under probe for allegedly abusing market power: sources")


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CHUN Doo-hwan for the record

The other day, my dictator neighbor received a visit from prosecutors who, beyond his Yeonhui-dong house, raided several homes and companies belonging to his relatives. CHUN Doo-hwan was said to be relaxed and polite while they searched his house. For show, he did leave them a little bit more petty cash than usual for their pain (provided they can link him to the over two hundred artworks collected, including some from famous painters such as Park Soo-keun), but nothing close to the KRW 167.5 bn he still owes to the nation.

I'm surprised to learn that prosecutors were surprised to find his safe empty*:

• Arguably Korea's most hated politician (NB: no small feat, particularly across the aisle these days), CHUN had probably been tipped off thanks to his pervasive network. Judging by his impunity and the frequent visits of V.I.P.s to his place, the man still knows how to pull the strings - if not call the shots (no sick pun intended for the victims of the Gwangju Massacre).
• But you don't need to be a crime genius to know something was coming: lawmakers had just voted an extension of the search for his illegal funds in time (until 2020), and in reach (to the relatives). Even if several members of CHUN's family are now under interdiction to leave the national territory, many suspect that significant slush funds have already traveled to friendlier destinations.





Among Monday tweets: "This time, media don't come to #Yeonhuidong to shoot a drama. Prosecutors raid my neighbor dictator #ChunDoohwan" (http://twitter.com/theseoulvillage/status/357023321507889153) / "Reminder: #ChunDoohwan got not only a "Get out of jail free" card, but his hands deep into the Community Chest" (http://twitter.com/theseoulvillage/status/357044770637492226)

Anyway, Korea needs to recover more than the money still owed by its former strongman**, and even more than the undisclosed total of additional public or private assets rumored to have been offered to his friends.

Korea must recover its credibility as a democracy where justice is not only independent, but respected. Where being a top politician or a top businessman shouldn't mean being granted an unlimited supply of "get out of jail free cards".

I'm not a supporter of death penalty, and I'm glad CHUN's death sentence was commuted to life imprisonment. I also understand some of the reasons why KIM Yong-sam and KIM Dae-jung pardoned him, but still, putting him out of jail sent a very wrong message to the nation and to the world, and every episode of the saga that followed confirmed the nuisance**.  Now I hope that this time, the record is set right, and that all culprits pay, including in terms of prison time.

Now I guess I've made my point: I'm not exactly a fan of this convicted criminal.

But since CHUN Doo-hwan's record must be set straight, I'd like to mention a lesser known part of his legacy. He banned private tutoring and hagwon the way dictators do (the ugly way, leveraging on coercion and squealers), but towards the end of his rule, students could reach top universities on a merit basis unseen ever since.

I don't know if this can explain a boom in successful independent entrepreneurs one decade later. I don't know the backgrounds of people like the founders of Naver, NCSoft, or Daum (LEE Hae-jin, KIM Tae-jin, or LEE Jae-woong, respectively SNU, SNU, Yonsei U), and I know that anyway, the internet boom offered a unique opportunity for non-chaebol players to emerge in brand new arenas, just one click away from endusers.

But maybe, in his own wicked way, the dictator ironically*** helped rise to the top some of the university leaders who accelerated his fall. Who knows?

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* "Prosecutors Find Empty Safe in Ex-President's House" (Chosun Daily 20130718)
** see previous raids, or last year's episode of "Neighborhood watch"
*** irony: Chung used to be basically Park Geun-hye's bodyguard, and in charge of the security of the predecessor he removed from power