3G and HSDPA Data Service

Strategic Implications and Lessons from Korean Mobile Carriers

Publication Date	July 2009
Publisher	Yonku & Kenkyu
Product Type	Report
Pages	20
ISBN Number	not applicable
Product Code	YKI00002

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Summary

As 3G and advanced networks (HSDPA and HSUPA) grow in terms of subscriber numbers and the deployment cases globally, mobile carriers expect more data service revenue. Though most mobile carries have boasted their operations in 3G, especially capabilities to transmit high bandwidth data and content services, they are still relying on the revenue from voice, and most of its recent data growth is still coming from messaging.

As a pioneer for mobile service - by introducing the first commercial service for HSDPA service worldwide - Korea's 3G mobile services (over WCDMA, HSDPA, HSUPA networks) has surpassed 20 millions in total subscriber numbers with 43.4% penetration rate, (as of May, 2009) which indicates that 3G service has a strong foothold in the market.

Along with Japan, Korea's penetration rate for 3G is the highest number in the globe. However, the mobile data revenue accounted for only 17.4% (as of EoY 2008) of mobile carriers' total service revenue. Further, the share has been declining since 2007. There is a considerable discrepancy between 'Qualitative' (Data Revenue) and 'Quantitative' (Subscriber Numbers) matters in 3G service.

Given the status, Yonku & Kenkyu believes that the time has come to assess the state of the 3G mobile-service industry in Korea.

Based on Korean 3G and HSDPA/HSUPA service status and lessons, the report ""3G and HSDPA Data Service: Strategic Implications and Lessons from Mobile Carriers" examined 3G markets especially Data and Content services, the aspect of consumers behavior and perception on 3G services, the real facet and problems in current 3G services, and implications and lessons envisioned by Korean 3G service mobile carriers.

The report suggests a competitive service positioning concept to increase data revenue from the perspective of mobile carriers. The report also entails Korean mobile carriers' strategies to boost data service revenue in 3G by applying USIM based mobile convergence service and HSDPA+Mobile WiMax integrated services via the world first data handover between heterogeneous networks.

The rationale of this brief market report is to suggest more healthy market environment and the eco system for 3G markets. We have also raised some issues that are closely related with 'revenue stream' for mobile carriers and their content aspects.

Content

1 Executive Summary
2 Analysis: 3G Market Status
- 2.1 3G Subscribers in Korea: Exceeding 43% Penetration Rate
- 2.2 Analysis: The Reason for High 3G Penetration Rate in Korea
- 2.3 Analysis: High Penetration Rate, but Low Revenue Stream in 3G Data service
  - 2.3.1 Data Revenue Share
  - 2.3.2 2G vs. 3G: What's the difference in the Revenue Stream?
  - 2.3.3 The Revenue Structure: ""Still Infant Stage""
  - 2.3.4 Mobile Internet: the Usage Frequency
- 2.4 Lessons: Failure in Video Call in 3G vs. 2G based Full Browsing Service
3 Countermeasures envisioned by Korean Mobile Carriers
- 3.1 Countermeasures 1: Flat Data Service Plans for 3G services
  - 3.1.1 SK Telecom: Value Extension
  - 3.1.2 KT: Lumping Fees under a Single Pack
  - 3.1.3 LG Telecom: the lowest Tariff Plan for Full Browsing Service
- 3.2 Countermeasures 2: Service Features
  - 3.2.1 USIM based Mobile Life Service
  - 3.2.2 3G+Mobile WiMAX Integrated Service
4 Strategic Suggestions
- 4.1 The Reasons for Low Uptake of Data Service in 3G
- 4.2 Service Positioning for Competitive 3G
  - 4.2.1 Convergence
  - 4.2.2 Rich Content
  - 4.2.3 Data centric Service
  - 4.2.4 Visualization
5. Appendix - Acronyms
List of Charts
- Chart 1. 3G Subscribers Number (millions) and the Penetration Rate (%)
- Chart 2. Data Revenue and the Share in Carriers' Revenue
- Chart 3. Mobile Content Share in the Revenue Structure
- Chart 4. The Usage Frequency of Mobile Internet
- Chart 5. Voice and Data service - User Acceptance Rate: the U.S. Japan, China, Korea
- Chart 6. Flat Data Service Subscriber number (millions) and the Penetration Rate ('05-'09)
- Chart 7. Subscriber Growth-LG Telecom's Full Browsing Service Oz (000s)
- Chart 8. Revenue Share Formulae: Mobile Carriers vs. Content Providers ('06-'09)
List of Tables
- Table 1. SK Telecom Flat Data Service Plan for 3G
List of Figures
- Figure 1. USIM based Applications and Service Categories
- Figure 2. 3G Service Positioning for its Competitiveness