Abstract

WiBro Services Face Various Challenges

The Korean government and research organizations believed that WiBro had good development potential back in WiBro's initial development days. However, according to data released by KT and SKT on subscriber numbers, Korea's total number of WiBro users had not exceeded 10,000 by the end of 2006, excluding promotional users and users testing the services. These figures show that initial promotions did not go as well as planned.

Lack of Service Coverage

Coverage rates are one reason why Korea's WiBro services have not developed smoothly. KT's service coverage rates only cover 0.2% of Korea's total area and service only 4.2% of the population. SKT's commercial services only service seven densely populated areas.

KT and SKT understand that coverage rates have affected the promotion of their services. Under pressure from the Korean government they have said that they will expand WiBro coverage rates.

Lack of Terminal Devices

Although Korea was the first country in the world to release WiBro services, problems with signal coverage and service content and a limited initial market scale have affected the investment of major manufacturers such as Samsung, LG, Posdata, and Reigncom in WiBro terminal products and the pace of R&D. Amongst Korean manufacturers, Samsung, Posdata, and Reigncom are actively developing WiBro terminal products. Samsung originally planned to launch a PDA (SPH-M8000) and mobile phone (SPH-H1000) for the WiBro system in June 2006, but these were postponed until 2007 due to problems with the stability and power consumption of these products.

WiBro equipment manufacturer Posdata and MP3 player company Reigncom are developing a PDA phone and a handheld game console for the WiBro system respectively. Reigncom's handheld game console was scheduled for release in August 2006, however game service content was incomplete and due to a limited market scale, it decided to indefinitely postpone the launch of this product. Posdata and LG will launch terminal products depending on the maturity of the market.

Mobile phone makers, which originally stated that they would actively enter the WiBro terminal market, are still developing WiBro terminal products, but with the market for WiBro services unclear and a lack of killer applications, manufacturers are keeping conservative attitudes toward WiBro development. Thus, they are slowing down the pace of their WiBro terminal product development and will be adjusting their release times based on market development.

At the end of 2006, Korea only had two WiBro terminal products available. A total number of only two terminal products is a clear lack of products for a market. Also, the only current WiBro terminal product PCMCIA card costs 300,000 Won (US$324) after subsidies, which is more than buyers are willing to pay. In the future, it will be necessary to offer cheaper WiBro terminal products and offer different models for buyers to choose from. This is a major problem that the WiBro industry must solve.

Competition with Other Technologies

WiBro was developed from IEEE 802.16e. Korea originally saw WiBro as a way to make fixed broadband technology mobile. It would be capable of satisfying broadband demands in rural and remote areas in Korea. In other words, the scope of WiBro services was not just limited to mobile environments. Also, due to competition restrictions and in order to avoid crossing over with the services of mobile communications service providers, WiBro is not allowed to provide VoIP services.

Korea has high hopes for WiBro technology services and hopes that WiBro can help the growth of the Korean communications industry like CDMA did, but WiBro has not developed as smoothly as hoped by the government and private companies.

Viewed in terms of mobility, portability, and transfer speed, HSDPA is a service that will directly affect WiBro's service development. Fixed network broadband will compete with WiBro's services indirectly. The Korean Ministry of Information and Communication, which has the power in deciding rates for communications services has said on many occasions that WiBro service rates will be basically the same as ADSL rates and no higher than ADSL rates. Whilst SKT's flat rate plan for HSDPA service costs 30,000 Won (US$32.4) and is lower than WiBro's highest rate of 40,000 Won (US$43.3), the HSDPA rate plan limits users to linking to SKT's internal portal sites June and Nate. If users wish to link to external sites they must pay extra data transfer fees. WiBro has a definite advantage in this area because WiBro services do not distinguish between internal and external websites.

Comparing Korea's current WiBro and HSDPA services, the HSDPA networks of SKT and KTF cover more than 90% of the Korean population. WiBro only covers Korea's capital, Seoul. Therefore, HSDPA services have a distinct advantage in this regard. In terms of mobility, WiBro can currently only provide a 60km/hr speed of mobility at the most, which cannot compete with the 300km/hr of HSDPA.

In terms of terminal devices, Samsung and LG have supplied HSDPA service providers SKT and KTF with two mobile phones. Also, SKT and KTF also plan to adopt HSDPA mobile phones from foreign providers in 2007. This is a stark contrast with WiBro which lacks terminal device support.

Although WiBro services do not compare with HSDPA in terms of coverage and terminal products, however with its downloading speed of 4Mbps and uploading speed of 1.2Mbps, it does have a definite advantage over ADSL. Currently, Korea's HSDPA service download speed is only 1.8Mbps. According to equipment supplier Samsung's plan, WiBro's transfer speed can reach 30Mbps by the middle of 2007 and by the end of 2007 can be further upgraded to 50Mbps. Also, mobile reception speed can also be increased to 100km/hr.

Currently, Korea's fixed network broadband market is at the VDS and FTTH stages, with upload and download transfer speed at 100Mbps. In terms of transfer speed and stability, fixed network broadband has a competitive advantage over WiBro, with its current download speed of 4Mbps and 50Mbps which it will reach by the end of 2007.

VoIP Services

When the Korean government was issuing WiBro service licenses, it used special laws to stop service providers offering any form of VoIP service under WiBro environments. This was done in order to avoid any possible conflict between WiBro and other mobile communications services. Due to these legal restrictions, terminal device manufacturers such as Samsung, LG, and Pantech develop dual-mode devices that are capable of combining WiBro with mobile communications. However, due to slower initial development of WiBro and a lack of investment by service providers, the Korean government has somewhat changed its attitude to WiBro providing VoIP services.

In October 2006, the minister of Korea's Ministry of Information and Communication said in parliament that WiBro includes a VoIP application layer. Therefore, WiBro can provide VoIP services. The minister's remarks caused another debate over whether WiBro should be given the permission to provide VoIP services. SKT believes that the minister's comments are against the rules and regulations that were stipulated when the original WiBro licenses were given out. SKT was also unhappy about the huge price gaps between 3G and WiBro licenses. SKT paid the huge sum of more than 1.3 trillion Won (US$1.4 billion) when they obtained their 3G mobile communications license, however the highest charge for a WiBro license was only 125.8 billion Won (US$136.0 million). This is a very significant price difference, and caused SKT to be unhappy with these new developments.

With rates the same as broadband, mobility speed of only 60km/hr, inability to provide VoIP services, no special service content, lack of service coverage rates, and very different attitudes towards the technology amongst service providers, WiBro's future development is unclear. WiBro's service definition and positioning are unclear and it is hard to say whether WiBro can escape the problems it is currently facing and develop strongly in the future.