KTF re-focuses on W-CDMA

22 May 2006

KTF, Korea's second largest mobile carrier, will put increased focus on rolling out W-CDMA and HSDPA services from the second half this year.

Until now Korean operators have baulked at the prospect of the high investment cost of ensuring nationwide W-CDMA coverage. The barely 100,000 W-CDMA subs are actually being handled by CDMA networks in most of the country outside the Seoul, Busan and Cheju areas by virtue of their dual-mode handsets.

Last month Dr Young-Chu Cho, who became KTF president late last year, announced plans to increase W-CDMA related investment from 540 billion won to 770 billion won ($584-$833 million) this year and the company plans to launch HSDPA networks in 84 cities starting later this year.

This announcement follows the tie-up last December with W-CDMA pioneer NTT DoCoMo, which acquired 10% of KTF for $560 million and appointed one board member.

In its efforts to cut the investment cost, KTF has even developed a M*N MUX transmission system that can make the leased lines handling the different networks compatible, enabling investment savings of over 50 billion won.

But KTF is not alone in plumping heavily for W-CDMA and HSDPA. Korea's leading operator SK Telecom is also expanding its W-CDMA network to urban areas and readying its HSDPA services.

Migration from CDMA to W-CDMA will become easier from June when number portability becomes possible for subscribers using the 010- prefix, which the Ministry of Information and Communication (MIC) would like in the future to be the sole prefix for mobile phones.

So what does this mean for the future of CDMA in Korea‾ According In-Q Han, senior analyst at IDC Korea, it simply means the two companies will operate both CDMA and W-CDMA networks in the foreseeable future. 'SKT and KTF will run both networks but reduce their network investment in CDMA,' says Han.

In fact, KTF and the third mobile carrier, LG Telecom were last month again strongly lobbying the MIC to allocate to them part of the 800-MHz bandwidth that was granted exclusively to SK Telecom for CDMA services.

'KTF wants to use the 800-MHz band because of its frequency efficiency - equipment spending on 800 MHz is lower than 2 GHz,' explained Han, adding that 'although the MIC hasn't officially said anything, there is a possibility that KTF and LGT will be given some of the bandwidth.' The quality of calls using 800 MHz is also known to superior to those on the networks of KTF and LGT.

In KTF's case, it would probably focus W-CDMA investment on urban areas and try to use 800 MHz in rural areas.

The key issue for KTF will soon be the timing of ramping up its W-CDMA marketing, and this still depends on the availability and pricing of the handsets.

Can KTF seize the initiative in W-CDMA and HSDPA‾ IDC Korea's Han doesn't think so. 'SKT will dominate the HSDPA market,'' he predicts. KTF's HSDPA service will not only compete against SKT's, but will also have to face off against its parent company's WiBro service.

KTF may have a better chance to grab the initiative when fixed mobile convergence services are launched. 'KT and KTF will have an advantage compared with SKT because SKT doesn't have a fixed-line network and so will have to do something like buy or merge with Hanaro,' Han noted.

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