LTE changes the broadband game in South Korea

Marc Einstein and Wung-Jae Lee, Frost & Sullivan
Telecom Asia

South Korea is deservedly known for its innovation in the telecom sphere, as it usually tops the world in global surveys of broadband usage and mobile internet usage, but the market is also remarkably uncompetitive. South Korean users pay some of the highest mobile voice rates in the world while the competitive position of the country's operators has changed little over the last five years.

In July South Korea's wireless industry entered a new phase of development when both SK Telecom and LG U+ launched LTE services, with Korea Telecom to follow in the fourth quarter. Overall the movement toward LTE is forcing operators to become more aggressive in the dongle space and should make the market more competitive as a whole.  

Despite the high level of market sophistication in the telecom segement, the market share of major players has not changed substantially over the last four years.  The mobile market share of SK Telecom, Korea Telecom and LG U+ was literally identical in the first quarter of 2007 compared with the first quarter of 2011 (see chart), a situation rarely seen in mobile markets.  Even more unusual is the fact that the fixed broadband market has changed more than the wireless market over the same period, with KT and LG having almost the same market shares over the time period with SK Broadband (formerly Hanaro Telecom) losing market share to cable modem operators and other independent ISPs.

South Korean consumers still pay the second-highest rates for mobile voice calling next to Japan, and while the South Korean government has mulled a fourth wireless operator for some time there has been little progress so far.

Market leader SK Telecom and challenger LG U+ launched LTE service at the same time, making it the first in the region to have two LTE networks in service.  SK Telecom deployed LTE in the 800-MHz band with the goal of attracting 300,000 users in 2011 and hopes to complete nationwide coverage by 2013. LG U+ also is seeking to become aggressive in the LTE space banking on the 2100-MHz band.  Fixed incumbent Korea Telecom decided to wait to launch LTE services, but recently engaged in a heated bidding war with SK Telecom over the 1800-MHz band which it lost for a price that approached 1 trillion won ($928 million) and was notable as it was the first spectrum auction in the country.

The advent of LTE services in South Korea is notable for several reasons.  One is that the move signals the first step toward having all operators in the country use the same platform, which will benefit LG U+ which has arguably been held back in recent years due to its CDMA infrastructure.

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