2007 Asia - Telecoms, Mobile and Broadband in North and South Korea

North Korea

The development of the telecommunications sector in the Democratic People’s Republic of Korea (DPRK) is seriously impeded by the country’s parlous economic state and government repression of communication. It has been a difficult journey indeed for telecommunications in the DPRK. Though mobile services finally began in the capital Pyongyang in 2002 on a limited scale, North Korean citizens were banned from using mobile phones as of May 2004.

North Korea’s obsession with secrecy has made it extremely difficult to get a clear picture of the sector. (In the absence of official statistics, we have made estimates in the report where we can.) The announcement in February 2005 that the DPRK had some form of nuclear weapons was likely to further prevent the flow of useful telecom technologies and expertise into the country, as well as ensuring that the country remained isolated from the rest of the world. Recent talks to resolve this situation involving nuclear arms development had reached a level of agreement, but there remained much work to be done before serious and significant engagement with North Korea can take place.

For the country overview see chapter 1, page 1.

South Korea

Supported by a visionary government, a creative and energetic private sector and a technology savvy population, South Korea has one of the most interesting and innovative telecommunications markets in the world. The Republic of Korea has proven itself a leader in many facets of the telecommunications industry. After years of progress, the country continues to push ahead. According to a report by the International Telecommunication Union in early 2007, Korea had topped the global list of countries in the ITU’s Digital Opportunity Index for the second consecutive year, confirming its status as an IT and telecoms powerhouse. For more information, see chapter 2.2.1, page 17.

South Korea has the highest number of broadband connections per capita in the world. By early 2007, broadband subscriber penetration was running at 30% of the population; or, put another way, 90% of all households had broadband access as the broadband market in country was reaching near saturation. The much anticipated launch of WiBro services (South Korea’s locally developed version of WiMAX) in 2006 certainly did not meet expectations, despite substantial investment and effort by the service providers. The general feeling was that to launch such a service while a choice of suitable handsets was not available was a premature move.

The South Korean mobile market, which continues to look like it has reached a point of saturation, again found a way to grow by a further 5% (in subscribers and revenue) in 2006 and this growth pattern was continuing into 2007. Mobile penetration was around 85% in early 2007, the majority of services being new generation. Not surprisingly, the country continued to be considered a leader in Third Generation (3G) mobile technology. WCDMA, the second 3G standard to enter the South Korean market after CMDA2000, became commercially available in December 2003, though the service had failed to attract a significant number of subscribers. There was increasing interest in the task of upgrading the 3G networks using HSDPA technology, sometimes described in the industry as 3.5G. Both SK Telecom and KTF launched their HSDPA services in 2006. This seems to be the new service offering the market had been waiting for. It effectively did what WiBro was meant to do. With the launch of HSDPA 3G services by SK Telecom and KTF, the mobile market was given a significant boost. By June 2007, there were 1.6 million customers on the upgraded WCDMA networks. For more information, see chapter 2.8.1, page 94.

Satellite-based Digital Media Broadcasting (S-DMB) was moving in a positive direction coming into 2007. TU-Media, a subsidiary of SK Telecom, claimed to have signed up 950,000 S-DMB subscribers by end-2006. In other words, the subscriber base has increased by about 100% in 2006. Even more importantly, the operator reported that the average TV viewing time per subscriber was running at 62 minutes per day. This was a much higher usage rate than in other markets.

For the country overview see chapter 2, page 16.

Key Highlights

• South Korea’s mobile market continues to expand both in subscribers and revenue. By early 2007, there were 41 million subscribers (penetration 85%) and the annual growth was around 5%.
• The launch of HSDPA 3G services by SK Telecom and KTF has provided a significant boost to the mobile market. For more information, see chapter 2.8.8.4.4.1, page 105.
• By June 2007 there were 1.6 million customers on the upgraded WCDMA networks, this segment of the market having been revitalised with the higher speeds on offer.
• South Korea has also seen increased ARPU in the mobile sector as the operators promote value-added services and customers respond enthusiastically.
• In 2006, for example, mobile market leader SK Telecom had increased its blended ARPU by 13% to US$49.3 per month by year-end.
• Total revenues in the mobile sector topped US$20 billion in 2006, up by around 18% on the previous year; the trend was continuing into 2007.
• The launch of WiBro services (South Korea’s locally developed version of WiMAX) in 2006 has not met expectations, despite substantial investment and effort by the service providers.
• By early 2007, there were only a handful of WiBro subscribers. The consensus was that this market would not move much until more appropriate handsets are available. For more information, see chapter 2.6.2.5.8.4, page 74.
• In early 2007 the government was preparing legislation to cover IPTV; while the government remained committed to the convergence of the telecoms and broadcasting sectors, it was facing stiff opposition from these two competing industries.
• Satellite-based Digital Media Broadcasting was moving in a positive direction coming into 2007. TU-Media, a subsidiary of SK Telecom, claimed to have signed up 950,000 subscribers by end-2006. In other words, the subscriber base has increased by about 100% in 2006. For more information, see chapter 2.8.6.8.1, page 130.
• Even more importantly, the TU-Media reported that the average TV viewing time per subscriber was running at 62 minutes per day. This was a much higher usage rate than in other markets.

South Korea - Overall mobile ARPU by operator - December 2006