2011 South Korea - Telecoms, Mobile, Broadband and Forecasts

South Korea embraces the smart-age

South Korea has one of the world’s most active telecommunications and Information Technology (IT) markets backed by strong support from the government. As well as the commitment of the government, the sector is boosted by an innovative private sector and a technologically savvy population. Spending on ICT and high-technology equipment helped lead a transformation of the economy to one that is more progressively knowledge based. Having invested significantly in ‘basic’ telecommunications infrastructure over past decades, the country has well developed submarine cable and satellite infrastructure as well as solid internet resources to support the growing demand for national and international communications. The government aims to transform the country into a knowledge-based information society in a ‘smart-age’.

The 2010/2011 period has seen significant developments in the South Korean telecommunications market after some restructuring amongst the major operators in 2009. Although the fixed-line telephone market in South Korea continues to be dominated by the incumbent KT, VoIP services are becoming increasingly popular as operators bundle services in a bid to stop the decline in ARPU.

The South Korean Government is committed to transitioning the country to digital terrestrial, digital cable and digital satellite TV broadcasting by 2012. The pressure created by convergence had South Korea rewrite its regulatory arrangements for the broadcasting and communications sector. The operators continue to invest heavily in fibre based broadband deployments and IPTV subscriptions have passed the 4 million mark as more content is available and the operators are able to compete more effectively with their own live broadcasts.

South Korea continues to be a booming mobile market as it innovatively explores the options for value-added services. The market passed the 105% penetration rate mark in 2011 with many individuals carrying at least one mobile phone. Having launched 3G networks in 2003, these account for over 80% of all subscriptions. New investments are intended to drive revenue and gain market share and the year has seen the launch of LTE and the rapid increase in smartphone adoption. SK Telecom holds a 50% share of the mobile market, KT about 32% and LG U⁺ almost 18%, levels that had remained relatively unchanged over a five year period. South Korea is considered a leader in 3G mobile technology and KT has taken the lead in having 93% of its subscriber base using WCDMA.

South Korea has the world’s highest number of broadband services per capita. By mid-2011, over 35% of the population and 85% of households were broadband subscribers. FttX accounted for 55% of total subscriptions. Since 2006, Korea’s policy emphasis has been on completing a BcN with wireline speeds of 50-100Mb/s per household and 1-2Mb/s on wireless connections. The plan moving forward is for a UBcN (Ultra Broadband convergence Network) with 1Gb/s speeds on fixed lines or 10Mb/s on wireless by 2012/13. In addition to upgrades to the backbone network a plan was established to link the public sector to a sensor network by 2012.

The drive towards a ‘new economy’ has seen significant investments in Smart Infrastructure including Cloud Computing, Smart Grids and Smart Cities. The emergence of a National Strategy for Green IT has seen government promotion of new industry creation into 2018 such as 4G broadcasts and 3D and Smart television.

Market highlights:

• In 2011, fibre technology accounted for 55% of all broadband subscribers in South Korea and 81`% of households had internet connectivity. The country had the seventh largest broadband subscriber base in the world at 17.4 million subscribers.
• Government spending of US$2 billion in education over five years to 2016 was approved to drive a full transition from textbooks to e-books.
• Mobile penetration increased to over 105%; LTE was launched and LTE-Advanced testing started.
• Increased investment in Wi-Fi and femtocells to reduce pressure on the core mobile networks.
• A Smart Grid pilot was underway on Jeju Island with plans for a nationwide Smart Grid by 2030.
• Green Economy initiatives were driving investments in Smart Cities.
• South Korea ranked 4^th in the world as IPTV subscriptions took-off.
• The country ranked 1^st globally for the Government Broadband Index 2011.
• Increased share of the ICT industry contribution to GDP as the government intervened on tariffs in a bid to fight inflation

South Korea – key telecom parameters – 2004; 2010 - 2011

(Source: BuddeComm based on industry data and BuddeComm forecasts)

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

• The end of an exclusivity period for the iPhone with smartphone users topping 10 million in 2011 and an 11-fold jump in mobile data traffic over a one year period.
• potential introduction of a fourth mobile licensee and the introduction of MVNOs in 2011
• The New Songdo City Development planned to be a future Korean “Smart City”.
• The Korean government’s “Smart Work” initiative that aims to have 30% of public employees work from home or nearby smart-work centres by 2015 with smartphones, laptops and other mobile devices.
• A trial broadcasting service of 3D DMB scheduled for 2011.
• SK Telecom’s first operator-based mobile apps store with plans to take it global by 2011.
• WiBro subscribers passing the 500,000 mark after investments of over KRW 2,000 billion.
• Government aims to become one of the top 10 aerospace powers in the world by 2015 which is backed by investments of over KRW 2.5 trillion into 2011.
• the country’s goal to capture 10% of the global cloud services market by 2014 and to halve the cost of operating the public sector’s ICT infrastructure

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