2008 Asia - Telecoms, Mobile and Broadband in North and South Korea

Publication Overview

South Korea is a country leading in technology use. The report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major Players, Revenues, Subscribers, ARPU;
• Internet, VoIP, IPTV;
• Mobile Voice and Data Markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and Digital Media.

Researcher:- Lisa Hulme-Jones

Current publication date:- March 2008 (14^th Edition)

Next publication date:- March 2009

Executive Summary

South Korea has one of the most vibrant and interesting telecommunications markets in the world. Supported by a visionary government program of stimulating development through liberalisation, deregulation and early privatisation of the incumbent, a creative and energetic private sector and a technology savvy population, the Republic of Korea continues to push forward on this front.

Loans were given and licences awarded to alternative operators to build networks and increase penetration. To foster a knowledge-based society, a major government education initiative provides Internet education to all segments of the population. Electronic commerce is common in private and public sectors. Of particular interest are the developments in the broadband market including market interest in VDSL, the shift away from DSL, the move to A-LAN and FttH services, the development of mobile DMB services and the launch of WiBro services.

Around 90% of South Koreans have at least one mobile phone. South Korea is considered a leader in 3G mobile technology and has the world’s highest percentage of mobile users on 3G. By 2007 the introduction of the faster HSDPA platform was making these services more attractive and the 3G market received a real boost as a result; this lead to the introduction of HSUPA.

South Korea has the world’s highest number of broadband services per capita. By early 2008, around 30% of the population, or 90% of households, were broadband subscribers. South Korea is an early adopter of triple play models, which provide TV, broadband Internet and voice telephony as packaged services from a single provider.

The fixed-line telephone market in South Korea continues to be dominated by the incumbent KT Corp. The three main mobile operators are SK Telecom, KTF and LG Telecom. At the start of 2008, SK Telecom held just over 50% of the mobile market, KTF about 30% and LG Telecom almost 20%.

The South Korean Government is committed to transitioning the country to digital terrestrial, digital cable and digital satellite TV broadcasting by 2010. By 2010 incumbent Korea Telecom plans to have transformed its network into an NGN running over 50 times faster than current rates.

By contrast, the development of the telecoms sector in the Democratic People’s Republic of Korea (DPRK) is seriously impeded by the country’s parlous economic state and the government’s general repression of communications. North Korea’s obsession with secrecy has made it extremely difficult to get a clear picture of the sector. The announcement in February 2005 that the DPRK had nuclear weapons did nothing to help the flow of useful telecom technologies and expertise into the country.

Key highlights:

• In early 2008, South Korea’s Fair Trade Commission gave approval to the proposal by SKT to buy a large stake in Hanaro, the country’s second-largest broadband service provider. The acquisition brought SKT’s stake in Hanaro to 43.6% and allows it a quadruple play offering bundling mobile with fixed-line services.
• South Korea is the most penetrated broadband market in the world, with around 30% penetration (broadband subscribers as a percentage of population). Going into 2008, Internet usage rate of the population ages 6 and over had reached 76.5%.
• By mid-2007, South Korea had the fourth largest broadband subscriber base in the world. The country had just over 14.4 million broadband subscribers at the time, putting it 3 million behind third placed Germany.
• Of the 14.8 million broadband subscribers at February 2008, 4.4 million were DSL subscribers. While DSL subscribers fell by 686,000 during 2007, other forms of broadband access including FttH increased by 1.553 million. This provided a good indication of the alternative developments taking place in South Korea going into 2008.
• 3G-based HSDPA services by SK Telecom and KTF show great success, with KTF planning to migrate all its subscribers to 3G by 2012 or earlier. By October 2007, KTF had signed up 2.11 million users to its 3.5G HSDPA network in just seven months.
• KTF launched HSUPA in five major cities, including the capital Seoul, with SKT well on its way to commence commercial operation in 2008.
• A law was passed by South Korea’s National Assembly in early 2008 allowing the country’s telecommunications companies to offer real-time broadcasting over their broadband networks. This allowed KT and Hanaro to launch full IPTV services amid slowing growth in the traditional broadband and telephone markets. KT expected the number of its IPTV subscribers to rise to 1.5 million in 2008 from 330,000 at end-2007 when only VoD could be offered.
• In February 2008, Egypt’s Orascom Telecoms Holding won a licence to launch a Greenfield operation in North Korea, granting a de-facto monopoly in North Koreas’s almost non existent mobile market.

South Korea – Internet, broadband and telecoms statistics – 2004 - 2007

(Source: BuddeComm based on NIDA and industry data)

For those needing high level strategic analysis and objective analysis on Korea, this report is essential reading and gives further information on:

• The consideration by the government to allow MVNOs to offer services by leasing capacity on the networks of existing mobile companies.
• South Korea moving to top spot in terms of FttH market penetration according to an updated global ranking issued by the FTTH Councils of Asia-Pacific, Europe and North America.
• WiBro’s relatively limited success due mainly to limited coverage, unreliable connectivity and lack of ‘killer applications’. HSDPA continued to outperform even though WiBro is cheaper.
• Several key regulatory changes planned for 2008, all of which add up to mass uncertainty for operators but should see the country lose its reputation as one of Asia’s most heavily regulated markets. As part of his presidential campaign, Lee Myung-bak vowed to lower the telecoms expenses of South Korea’s households 20-30%.
• Special prosecutors probing claims of corruption at Samsung Group over allegations the conglomerate used a slush fund to bribe influential legal figures.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

• 1. North Korea
  • 1.1 Key statistics
  • 1.2 Telecommunications market
    • 1.2.1 Overview of North Korea’s telecom market
    • 1.2.2 Market analysis
    • 1.2.3 Relationship with South Korea and the world
  • 1.3 Regulatory environment
    • 1.3.1 Foreign investment
  • 1.4 Fixed network operators
    • 1.4.1 Lancelot Holdings
    • 1.4.2 Loxley Pacific (Loxpac)
    • 1.4.3 KT Corporation
    • 1.4.4 Shin Satellite Corp
  • 1.5 Telecommunications infrastructure
    • 1.5.1 National telecom network
    • 1.5.2 International infrastructure
  • 1.6 Internet market
    • 1.6.1 Overview
    • 1.6.2 Internet Service Providers (ISPs)
    • 1.6.3 Websites
    • 1.6.4 Email service
    • 1.6.5 Voice over Internet Protocol (VoIP)
    • 1.6.6 Internet cafes
  • 1.7 Broadcasting market
    • 1.7.1 Overview
    • 1.7.2 TV stations
    • 1.7.3 Cable TV
    • 1.7.4 Satellite TV
  • 1.8 Mobile communications
    • 1.8.1 Overview of North Korea’s mobile market
    • 1.8.2 Mobile technologies
• 2. South Korea
  • 2.1 Key statistics
  • 2.2 Telecommunications market
    • 2.2.1 Overview of South Korea’s telecom market
    • 2.2.2 Competitive market
    • 2.2.3 Fixed-line and mobile services
    • 2.2.4 Television broadcasting in South Korea
    • 2.2.5 Telecommunications service markets
    • 2.2.6 Digital Korea statistics – convergence
    • 2.2.7 Market highlights and analysis – 2007
    • 2.2.8 Market highlights and analysis – 2006
    • 2.2.9 Market highlights and analysis – 2005
    • 2.2.10 Market highlights and analysis – 2004
    • 2.2.11 Market highlights and analysis – 2003
  • 2.3 Regulatory environment
    • 2.3.1 Overview
    • 2.3.2 Ministry of Information and Communication (MIC)
    • 2.3.3 National Internet Development Agency of Korea (NIDA)
    • 2.3.4 Korea Communications Commission (KCC)
    • 2.3.5 National Computerisation Agency (NCA)
    • 2.3.6 Korea Broadcasting Commission (KBC)
    • 2.3.7 Master plans for an information society
    • 2.3.8 Deregulation
    • 2.3.9 Privatisation of Korea Telecom (KT)
    • 2.3.10 Licensing
    • 2.3.11 Ownership rules
    • 2.3.12 Number portability (NP)
    • 2.3.13 Policy overview
    • 2.3.14 Highlights
  • 2.4 Major fixed-line network players
    • 2.4.1 Overview
    • 2.4.2 KT Corp
    • 2.4.3 Dacom Corporation
    • 2.4.4 Hanaro Telecom
    • 2.4.5 Onse Telecom
  • 2.5 Telecommunications infrastructure
    • 2.5.1 Overview of infrastructure developments in South Korea
    • 2.5.2 Regulatory issues
    • 2.5.3 Next Generation Network (NGN)
    • 2.5.4 Major national infrastructure players
    • 2.5.5 Fibre-to-the-Home (FttH)
    • 2.5.6 Broadband over Powerline (BPL)/Powerline Communications (PLC)
    • 2.5.7 IPv6
    • 2.5.8 IP-Virtual Private Network (IP-VPN)
    • 2.5.9 Voice over Internet Protocol (VoIP)
    • 2.5.10 Apartment LANs
    • 2.5.11 National submarine cable infrastructure
    • 2.5.12 International submarine cable infrastructure
    • 2.5.13 Satellite infrastructure
    • 2.5.14 Data communications
  • 2.6 Broadband and Internet market
    • 2.6.1 Internet market
    • 2.6.2 Broadband market
  • 2.7 E-services
    • 2.7.1 Overview
    • 2.7.2 E-commerce
    • 2.7.3 Online trading
    • 2.7.4 E-banking
    • 2.7.5 E-government
    • 2.7.6 E-entertainment
    • 2.7.7 Social networking
    • 2.7.8 Google
  • 2.8 Convergence
    • 2.8.1 Overview of media convergence
    • 2.8.2 Triple play models
    • 2.8.3 Regulatory issues
    • 2.8.4 Digital TV
  • 2.9 Mobile communications
    • 2.9.1 Overview of South Korea’s mobile market
    • 2.9.2 Regulatory issues
    • 2.9.3 Mobile technologies
    • 2.9.4 Major mobile operators
    • 2.9.5 Mobile voice services
    • 2.9.6 Mobile data services
    • 2.9.7 Mobile content and applications
• 3. Glossary of Abbreviations

• Table 1 – Country statistics North Korea – 2008
• Table 2 – Telephone network statistics – 2005
• Table 3 – Mobile statistics – 2005
• Table 4 – National telecommunications authorities
• Table 5 – Fixed lines in service and teledensity – 1990 - 2005
• Table 6 – Country statistics South Korea – 2008
• Table 7 – Telecom revenue and investment statistics – 2006
• Table 8 – Telephone network statistics – 2007
• Table 9 – Internet user statistics – February 2008
• Table 10 – Broadband statistics – February 2008
• Table 11 – Mobile statistics – 2007
• Table 12 – National telecommunications authorities
• Table 13 – Telecom service subscribers and market share by sector – November 2007
• Table 14 – KT Corp’s fixed-line subscribers and market share – 2004 - 2007
• Table 15 – Fixed lines in service and teledensity – 1991 - 2007
• Table 16 – Fixed-line subscribers by operator and market share – November 2007
• Table 17 – Number portability, fixed line services – 2003 - 2007
• Table 18 – Number portability, mobile services – 2004 - 2007
• Table 19 – KT Corp broadband subscribers and market share – 2005 - 2007
• Table 20 – Hanaro broadband subscribers by access type – September 2006
• Table 21 – ISDN subscribers – 1994 - 2006
• Table 22 – Registered .kr domains – 1996 - 2008
• Table 23 – Internet users – 1994 - 2008
• Table 24 – Internet subscribers – 1996 - 2007
• Table 25 – Broadband Internet subscriber growth and penetration – 1998 - 2008
• Table 26 – Broadband subscribers and annual growth by access type – 2007
• Table 27 – Broadband subscribers and households - February 2008
• Table 28 – Broadband Internet subscribers by system – 1998 - 2007
• Table 29 – Broadband users by access type (wired and/or wireless) - 2006
• Table 30 – Broadband subscribers and market share – major providers – April 2007
• Table 31 – Broadband subscribers by access type – February 2008
• Table 32 – Cable modem subscribers – 2000 - 2007
• Table 33 – Cable modem (HFC) subscribers by service provider – March 2007
• Table 34 – DSL subscribers – 1999 - 2007
• Table 35 – DSL subscribers by service provider – March 2007
• Table 36 – A-LAN subscribers by service provider – March 2007
• Table 37 – FttH subscribers by service provider – March 2007
• Table 38 – E-commerce volume – 2001 - 2006
• Table 39 – E-commerce volume by transaction type – 2001 - 2006
• Table 40 – Internet banking service subscribers – 2001 - 2007
• Table 41 – Financial service by delivery channel – 2002 - 2006
• Table 42 – BcN implementation goals in households/subscribers – 2005; 2007; 2010
• Table 43 – Mobile subscribers – 1994 - 2007
• Table 44 – Mobile subscribers and market share by operator – 2007
• Table 45 – Mobile operators, subscribers and annual change – 2007
• Table 46 – Overall mobile ARPU by operator – 2006
• Table 47 – CDMA2000 1x subscribers by operator and system – 2004; 2007
• Table 48 – WCDMA subscribers by operator – 2007
• Table 49 – Wireless Internet subscribers and market share – November 2007

• Exhibit 1 – Regional TV broadcasters
• Exhibit 2 – Classification of service providers
• Exhibit 3 – Bits and Bytes
• Exhibit 4 – Foreign ownership restrictions
• Exhibit 5 – Overview of KT subsidiaries
• Exhibit 6 – National submarine fibre optic cables, capability, length and launch dates
• Exhibit 7 – International submarine fibre optic cables, capability, length and launch dates
• Exhibit 8 – Confusion surrounding DSL statistics in South Korea
• Exhibit 9 – Estimated B-WLL frequencies, bandwidth and applications
• Exhibit 10 – LMCS network operators
• Exhibit 11 – Types of telecom convergence
• Exhibit 12 – Overview of licences awarded to mobile carriers
• Exhibit 13 – Wireless Internet operators and services
• Exhibit 14 – Comparison of S-DMB and T-DMB application in South Korea