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)

What part of "Operator" don't you understand?

In case you didn't follow Korea's latest hacking scandals, the personal data of 9.81 million KT customers have recently been leaked. For the operator, that's a significant improvement since the previous failure (only 8.7 million victims in 2012).

Imagine receiving this charming letter: oops, we did it again. We just found out that we let a few pieces of information reach the wrong hands. No biggie: just your name, your resident number, your phone number, the number and validity date of the credit card with which you pay your bills, your address, your customer number, your subscription information, your subscribed plan, you know, that kind of boring details. Any call from telemarketers lately?

We do apologize. Really.

KT risks a KRW 100 M fine, which may sound impressive if you're not familiar with local currencies, but amounts to a slaponthewristic USD 92,600 nowadays. Furthermore, as a government official quoted by Yonhap deplores*, "unlike credit card-related rules, the country's telecom law does not acknowledge that data leakage is a financial mishap that causes damage to customers' personal assets (...) - a business suspension is not an option unless KT has collected personal data without users' consent." Needless to say customer associations have gone nuclear, tens of groups considering class actions**.

SK Telecom, the undisputed market leader (including in terms of hacking with 35 million victims in August 2011), frugally celebrated its main rival's predicament by crashing its own network for only 5.6 million customers on Thursday***.

I may sound like I'm making fun of Korea's #1 and #2 operators (well maybe I am), but that's to exorcise my fears. Deep down I'm in a cold sweat. As a customer, but also - in a former life - as a former executive for a leading operator: that's the kind of business where security is paramount, and an obligation if you want to get or to keep a license. And in big data times, you want even less the gimchi to hit the fan..



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* see "Gov't mulls fines on KT for data leak, consumers say punishment too weak" (Yonhap News 20140317)
** among which CCEJ, see "KT sued over data leaking" (Korea JoongAng Daily 20140319)
*** "SK mobile network crashes, 5.6 million affected" (Korea JoongAng Daily 20140322)

Korea Inc. united for mobile payments

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore. SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...



The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.


Seoul Village 2011 - initially published on mot-bile (see all posts related to wireless in Korea).
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* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"