A Pan-Asian Telecom strategy emerges

Telecommunications Americas, July-August, 2004 by Stephen McClelland

It's a world where Korean TV soap stars are mobbed by screaming fans when they arrive in Japan at Tokyo Airport. It's also a world where 90 percent of the computer and mobile games used in China and Taiwan originate in Korea.

The link? High-quality telecom network proliferation in Korea has had cultural influences far beyond the national boundary. Korea, a country of 48 million people, can boast the most extensive fixed broadband Internet access network in the world, delivering an average of 4.5 Mbps to 73 percent of the households in the country.

It can also boast of a burgeoning near-3G mobile capability delivered from CDMA mobile networks and probably the biggest single operator investments in Wi-Fi anywhere in the world. The world now flocks to Korea to learn state-of-the-art applications, discussed recently at a high-level meeting, the Asia Pacific Conference on Emerging Technologies.

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With fixed broadband growth saturating, where does the region head next? Korea's executives admit probable market saturation in fixed broadband Internet access take-up, albeit at a high level. Profitability at the incumbent operator, KT, may have slumped, but executives are even now preparing for a fork-lift upgrade of their telecom businesses that will involve a massive increase in broadband capability over the next few years.

In the meantime, operators are introducing a slew of innovations this year designed to combine Wi-Fi and cellular technologies, and fixed and mobile ones in various ways. There are signs that telecom is pushing itself and the region into something like a common information society bloc--so-called CJK after the initials of the countries involved. Even among traditional rivals like Japan and Korea, common approaches to an information society are evident. Both countries see continued opportunities in China still, say experts, capable of massive telecom growth particularly in the central and western parts of the country away from what has become a highly developed coastal strip from Beijing to Guangzhou and Hong Kong. Technology commonalities help too.

The spur may be simple technological commonality. All three countries have significant involvement in CDMA technology (although only Korea is exclusively a CDMA territory). That helps speed up technology transfer and replication of business model development. A sign of the times may be the new joint venture formed between two CDMA operators, China Unicom and SK Telecom, the first foreign operator of its kind allowed in China. It's a major achievement for the Korean operator, but a pragmatic one for both sides. "We intend to transfer value-added services developed by SK to the joint venture and Chinese market," says John Liu, president and CEO of SK Telecom (China).

China may be the critical piece of the bloc. But some developments are still waiting in the wings. China's Telecom Law, which would make explicit industry regulation, has been expected for at least a decade, but still has not arrived. The most significant wait has been for Chinese 3G licenses. "Many analysts were convinced that licensing would have to happen by mid-2003 following 3G elsewhere," says Tara Tranguch, an independent consultant, "but now they are saying 'definitely' by early 2005." Tranguch says it's anyone's guess. But observers point out what could be a fundamental reason for the delay--the need to assure China's own homegrown 3G standard, TDS-CDMA, gets to an acceptable developmental stage before licensing and commercial rollout. In China's fevered telecom market, widespread adoption of a new mobile standard has the potential, say observers, to cause pivotal changes in the telecom world markets well beyond East Asia.

Even so, East Asia's leading edge telecom may be the first to experience market behavior in all its forms, suggests one of Korea's leading lights, ex-SK Telecom CEO and visionary, Dr Jung Uck Seo. Mobile and broadband behavior may be predictive, at least insofar as other societal factors such as high newspaper readership and even electrical power capability are concerned. High preponderance of both, says Seo, may well indicate that information technology is likely to be well received. But Seo also cautions against the downside, which he terms "digital pollution" in an information society that may continually find itself cluttered up with information "waste."