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WiBro Still Facing Difficulties

Even though government hopes to promote WiBro, the Korean version of mobile WiMAX, to lessen the burden for consumers and drive growth in Korea’s information technology industry, it seems that WiBro's future is in question.

The Korea Communications Commission (KCC), the country's broadcasting and telecommunications regulator, proposed new ideas for boosting the WiBro service, such as allowing voice calls on WiBro-enabled devices and requiring a number for using the service, as in mobile phones. The KCC expects these offerings will increase local demand of WiBro service to 1 million subscribers by 2011. As of December 2008, KT counted 180,000 WiBro subscribers, while SK Telecom had 11,000. 

WiBro was depending on cable television operators to expand availability of the service as a way of expanding beyond a saturated pay-TV market. But cable providers are thinking twice because of the initial upfront investment required. These operators also need a massive investment to change current analog system to digital to compete the newly started IPTV service.

Incumbent WiBro operators KT and SK Telecom also have hesitated to expand WiBro network. SK Telecom has worried that voice calling on WiBro will cannibalize its mobile business. The WiBro front-runner KT is also reluctant to inroad for fear of affecting its affiliate KTF wireless business, and the two companies may merge later this year.

For KT and SK Telecom, voice calling on WiBro is not an urgent issue and the need for cable operators to enter the telecom market may not materialize in a short time, Jong-in Yang, analyst of Korea Investment & Securities said in a recent report.

Can Mobile VoIP Save WiBro?

With Korean telecommunications regulators allowing mobile VoIP, or voice-over-Internet protocol, and imposing an identifier number on Wireless Broadband (WiBro) services like mobile phones, WiBro operators are now able to compete with current mobile service providers, including SK Telecom, KTF and LG Telecom.

The Korea Communication Committee (KCC), in allowing voice communication service, expects WiBro subscribers to increase to 1 million by 2011. Wibro operators, KT and SK Telecom, secured only 190,000 subscribers over two years after its  first commercial service was launched in June 2006. Futhermore, mobile VoIP service will trigger a lowering of telecom service charges and fierce competition among telecom service providers, the KCC said. Emerging the mobile VoIP service will help push down the cost of making a phone call by 30 percent, the watchdog group estimated.

Technically, it seems that there are no obstacles. KT, a leading WiBro service provider, has already developed 'Voice Call Continuity,' technology handed from WiBro to CDMA that supports seamless telecom service even outside of WiBro network coverage areas.

However, market watchers are not agreed with KCC's rosy expectations. "To provide voice communicationss service through WiBro, a service provider should invest more than double its CAPEX (capital expenditure). Reaching the mobile penentration ratio of 93 percent, WiBro providers are not easily securing new subscribers," Jong-in, Yang, a financial analyst with Korea Investment & Securities, said in a recent report. "Expanding its WiBro service to secure more subscribers may cause KT may cannibalize its subsidiary KTF's mobile business revenue," Mr. Yang added.

The other WiBro operator SK Telecom is keeping its stance the WiBro service is a complementary good rather than a competitive good for 3G mobile service.

The third WiBro operator may be a variable factor. The KCC said it will issue one more license for WiBro business soon. Owing to low license fee, newcomers can provide mobile voice and data service for one-tenth of the initial investment compared with 3G operators, SK Telecom, and KTF.

C-motech WiBro Modem Offers Differentiated Service

A USB modem for WiBro access provided to SK Telecom by C-motech, a local telecommunication equipment maker, is drawing attention because of differentiated specifications. 
 
C-motech Cacao (CBU-410S) modem is twice as fast as previous version to support WiBro Wave 2. It supports automatic program installation, automatic software upgrade and micro SD memory.
 
What distinguishes Cacao from other products is Z Pack and My PC service. Z Pack service can activate any program in any computer by saving software such as the Office program in USB modem. My PC service offers a remote access to computers at home or work with WiBro modem to let people use content and software in computers that are away from them.

Mobile WiMAX Opens up New Opportunities for Minor Companies

Mobile WiMAX is giving latecomers which have been overwhelmed by major companies in the telecom industry great chances to expand market share.

One of the latecomers is Samsung Electronics. The world-class manufacturer of semiconductors and cell phones has been struggling in the telecom equipment market. However, the company is rapidly gaining power by providing Mobile WiMAX equipment for a growing number of operators including KT and Sprint which has recently started commercial service.

Instead of LTE, the strongest candidate for 4G, Samsung focuses on Mobile WiMAX in an attempt to take advantage of the absence of major players.

Woonsub Kim, executive vice president of Samsung Electronics said, "The LTE standards will be fixed in the latter half of 2009 at the earliest and the market will be developed in the remote future. Meanwhile, we will concentrate on Mobile WiMAX. If the market is there, we have no reason to avoid it." He also said, "Samsung is providing Mobile WiMAX solutions for over 11 operators including Sprint and preparing for service launching with over 30 operators. In particular, the US, Japan and Russia have the greatest potential for us to increase the market share."

Samsung's strategy seems to be paying off. ABI Research's report in March ranked Samsung first among WiMAX equipment providers including Motorola, Cisco, Nortel, and Fujitsu.

Posdata and SK Telesys are also producing successful outcomes in the world market. An SK Telesys official responsible for the company's global business said, "We will provide Mobile WiMAX solutions for 5 operators including one in the Middle East.  Mobile WiMAX is yielding better results than other items. The majority of operators interested in Mobile WiMAX are third-tier companies. They want to take their first step into mobile broadband service through Mobile WiMAX."

Mobile WiMax to Nudge its Way through LTE?

Although mobile WiMax a.k.a. WiBro in Korea has achieved disappointing results in the nation, the service recently was brought to spotlight after Sprint, a U.S mobile operator, launched an official mobile WiMax service.
 
If the Sprint service becomes successful, mobile WiMax might strengthen its position as one of the strongest candidates for 4G standard. Whether Sprint will succeed or not would have a determinative impact on the final decisions of several countries which had considered adopting the standard.
 
Currently, major mobile operators in Europe, the U.S., China and Japan expressed their support for LTE and are working on related technologies. The biggest problem is that the service is expected to be available in 2010 at the earliest and in 2012 in Europe. 
 
NTT DoCoMo is now at the forefront of developing commercial LTE service. It recently succeeded in demonstrating the most alike LTE service. DoCoMo set a goal to complete technology development by the next year and launch an official service in 2010. Verizon of the U.S. also plans the service in 2010. Against this backdrop, mobile WiMax still has two years to predominate the market. In addition, it might be especially attractive to countries with less communication infrastructure.
 
Still, it is unlikely that mobile WiMax would win over LTE which has support from the U.S., China, Japan, and Korea. Mobile WiMax can only depend on niche market. But the question is that the niche can be wider than expected and how wider it will be.

"Sprint, Don't Forget How WiBro Failed in Korea"

Sprint Nextel, a U.S. mobile operator, officially launched mobile WiMax (known in WiBro in Korea) in Baltimore. At this time of moment, WiBro has been failed in Korea and it's why eyes are on the U.S. version of the service.
 
WiBro equipment and device manufacturers including Samsung might hope the success of the service more than Sprint does. Also, they want it to be a tipping point for other mobile operators around the world.

In 2004, the Korean government anticipated that WiBro service subscribers would be 600,000 in 2006, or the first year of the service and would reach 8.5 million in 2010. In reality, however, WiBro subscribers in Korea as of September 2008 numbered only 190,000, which is 1/40 of the previous estimation.
 
The government's rosy expectation that WiBro would generate 24.7 trillion won worth production inducement effect, 13 trillion won worth of value added effect, and the equipment industry would grow as big as 7 trillion won, has proven wrong long ago.
 
The government should face the consequences because it thought that once it selects technology and standard, market will be created automatically.
 
Sprint is lucky at least because it can learn from KT, the first-ever, but failed WiBro provider in Korea. What affected the failure of WiBro in Korea includes high broadband penetration, growth of HSDPA, and poor service. As the situation is different in the U.S., the result might be different, too. Therefore, it remains to be seen whether mobile WiMax can be a useful tool for Americans to experience a new type of communication as Sprint Nextel wished.

What Does WiBro Mean to Qualcomm?

Among the three most prospective candidates for the 4th generation mobile communication, LTE, Mobile WiMAX and UMB, it is Long Term Evolution (LTE) that has built the strongest camp of supporters. In comparison, Mobile WiMAX led by Intel and Samsung Electronics, and Qualcomm’s UMB look rather insignificant.

A number of mobile carriers in Korea and abroad already chose LTE and preparations are under way. It is likely that many more will join them. Manufacturers of telecom equipment or handsets have made up their mind to follow the big trend.

Even though UMB has little chance, Qualcomm is not pessimistic about the expansion of LTE, because the chip maker owns OFDM, the core technology for LTE, which means the further LTE grows, the more Qualcomm earns in royalties.

Qualcomm which held less than 20% of the 2G market with GSM overpowering CDMA is earning a fortune in the bigger 3G market thanks to the victory of WCDMA. The US-based company is leaving competitors far behind in technology and the gap is likely to become wider. EMP(Ericsson Mobile Platform), STMicro and NXP turned to M&A to join forces against Qualcomm, but the US chip maker is too strong to overcome. Other companies such as Infineon are also suffering a gradual decline of market share.

Then, what does WiBro mean to Qualcomm? It seems the best scenario for Qualcomm is WiBro creates a niche at the right moment.

In a recent report, Samsung Securities says, "Qualcomm is not demanding high rates of royalty in the beginning stage of 3G, but will probably raise the rates gradually from about 2012 when 3G reaches 50% of the overall telecom market. However, it is more likely that Qualcomm prefers the overall market becoming bigger to pushing for extremely high royalty rates. The latter might open the way for new services using disruptive technologies such as WiFi and WiBro that have nothing to do with Qualcomm, according to the report.

For Qualcomm, WiBro is one of possible choices, but is something better being left as a market niche.