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Future Networks : Challenges & Opportunities
Nov.19, 2014
Jaehyun YEO KISDI
1
1. Telecommunication Market Status
(‘14.3Q) Fixed Internet Mobile
Subscribers Market Share Subscribers Market Share
KT 8,106,821 42.4% 17,184,013 30.3%
SKT & SK BB 4,741,382 24.8% 28,403,097 50.0%
LG U+ 3,010,347 15.8% 11,158,666 19.7%
Others 3,257,903 17.0% * MVNO’s subs. are included in Operator’s subs.
Total 19,116,453 100.0% 56,745,776 100.0%
LTE61.1%
WCDMA
27.3%
CDMA
11.6%
LAN37.8%
FTTH29.3%
HFC24.0%
xDSL8.8%
< Fixed internet Subs. by
Technology >
< Mobile Subs. by Technology >
2
Fixed Internet Market
Fixed internet Subs. : 19.1 million (3Q 2014), 104% penetration ratio to household
VoIP Users: 12.5 million (3Q 2014), 65.1% of Subs.
2,428 2,156 1,851 1,774 1,726 1,691
5,031 4,931 4,784 4,725 4,656 4,593
6,355 6,610 6,995 7,054 7,133 7,234
4,045 4,555
5,107 5,300 5,445 5,597
-
2,000
4,000
6,000
8,000
11.4Q 12.4Q 13.4Q 14.1Q 14.2Q 14.3Q
xDSL HFC LAN FTTH
Transition from xDSL & HFC to LAN & FTTH
(unit: ‘000)
1. Telecommunication Market Status
3
Mobile Market
Mobile subscribers : 56.7 million (3Q 2014), 113% penetration ratio to population
MNO : 52.6 million, MVNO : 4.1 million
Smartphone Users: 40.1 million (3Q 2014), 70.6% of Subs.
15,815 10,753
7,742 7,204 6,946 6,599
35,500
27,060
18,489 17,088 16,124 15,506
1,191
15,811
28,449 30,870 32,602 34,641
-
10,000
20,000
30,000
40,000
11.4Q 12.4Q 13.4Q 14.1Q 14.2Q 14.3Q
2G 3G LTE
Rapid transition from 2G/3G to LTE since 4Q 2011
(unit: ‘000)
1. Telecommunication Market Status
4
Mobile & Fixed Networks
Preparing to transit to 5G & Giga internet from 4G & BcN
Service
+ New
Technology
Time 1980s 1990s 2000s 2010s 2020s
2. Network Evolution in Korea
Dial-up (2.4~9.6kbps) (1.5~10Mbps)
(50~100Mbps)
(~Gbps) AMPS
CDMA/CDMA2000
WCDMA/LTE
LTE-Advanced
5
Mobile : LTE-Advanced
Since 2013, LTE-Advanced service has been provided in Korea
LTE LTE-Advanced
Bandwidth (DL) 10MHz 20 MHz (10+10)
20MHz 30 MHz (20+10)
40 MHz (20+10+10)
40 MHz (20+20)
Carrier Aggregation
- 2 band CA - 2 band CA 3 band CA 2 band CA
Max. Throughput
(DL) 75Mbps 150Mbps 150Mbps 225Mbps 300Mbps 300Mbps
Commercialize July ‘11 June ‘13 Sep. ‘13 June ‘14 Early of ‘15 End of ‘15
2nd 20MHz bandwidth spectrum plan to be provided to Mobile Operators in mid-2015
50MHz CA (20+20+10) would be possible in 2016
R&D for 5G technology
2. Network Evolution in Korea
6
Fixed : BcN & Giga internet
BcN Construction Plan (2004~2010)
BcN coverage : over 90%
Coverage expansion in rural area
Giga Internet Construction Plan (2009~2017)
FTTH & LAN base
Pre-Commercial service in major 23 cities : 1 Gbps wired internet, 400 Mbps Wi-Fi
<Network Comparison>
Data Rate Service Feature
BcN 50~100Mbps Video Telephony,
IPTV
Telecommunication-Broadcasting Convergence
Giga Internet 100Mbps~1Gbps UHDTV, 3DTV High quality & Realistic service
2. Network Evolution in Korea
7
Future Network Visions of SKT
Source: SKT, SK Telecom 5G white paper (2014.10)
2. Network Evolution in Korea
8
Future Network Visions of KT
Source: KT, Gigatopia (2014.8)
2. Network Evolution in Korea
9
Future Network Visions of LGU+
Source: LGU+, Innovation and Migration toward 5G (2014.10)
2. Network Evolution in Korea
10
Fixed Network Operators
M&A among operators for preparing convergence
3. Preparing Convergence by M&A
~ ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ’10~’14.3Q
SMP in fixed voice services KT (42.4%)
New Entrant Hanaro Telecom SK Broadband (24.8%)
(SKT’s subsidiary)
New Entrant
Thrunet
Long Distance Onse Telecom
KEPCO's Division Powercomm (KEPCO's subsidiary) LG Powercomm LG U+ (15.8%) Long Distance LG Dacom
Cable TV SO's (Local Franchisees)
T-Broad, C&M, CJ, CMB, HCN etc. (16.6%)
Others Dreamline, Constructors (0.5%)
11
Mobile Network Operators
# of Mobile Operators: 5 -> 3
‘84 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10-’14.3Q
Cellular KMT SK Telecom
SK Telecom (50%)
Shinsegi SK Shinsegi
PCS
KTF
KTF KT (19%)
Hansol PCS M.COM
LG Telecom LG U+ (31%)
3. Preparing Convergence by M&A
12
Line-up by operators
Fixed Broadband Mobile Broadcasting
(IPTV or CATV)
KT Group KT KT KT
SK Group SK Broadband SKT SK Broadband
LG Group LG U+ LG U+ LG U+
Cable TVs T-Broad, C&M, …. MVNOs T-Broad, C&M, ….
Other Important Players
Internet Platforms : Naver, Kakao & Daum, Nate, Google, Facebook, etc.
Terrestrial Broadcasting : KBS, MBC, SBS, etc.
Device Manufacturer: Samsung, LG, Apple, etc.
Traditional Industries: Banks, Hospitals, Utilities, Automobiles, etc.
3. Preparing Convergence by M&A
13
Market Saturation, Slowdown of Growth
Increasing Network Investment Cost for advancing network infrastructure
Increasing Customer Attraction Cost for severe competition in saturated market
Price cutting by commoditization of service
→ Degradation of Profitability, Decreasing Network Investment incentives
Challenges: Service Commoditization & Profit Degradation
4. Challenges & Opportunities
자료: Merrill Lynch 『Global Wireless Matrix』('14.2Q)
< EBIDTA margin of major mobile operators (%) >
14
Challenges: Platform-led Ecosystem
Platform-led Ecosystem
Pre-Smart Phone: MNO controlled the closed value chain
Post-Smart Phone: OS controls the C-P-N-D alliances
Telcos: Traffic Explosion without returns Dumb Pipes ?
< Aggregate Market Value (Oct. ’14, billion US$) >
4.7
8.1
21.6
8.8
26.3
- 10.0 20.0 30.0
LGU+
KT
SKT
Daum
Naver
4. Challenges & Opportunities
Source: Shin Cho (2014.6)
15
Opportunities
How to Overcome Profit Degradation
Cost Minimization by Economy of Scales
• Sharing: Network Sharing, Co-construction, Resource Sharing
• Structural Changes: M&A , Cooperation with other operators
Searching for New Growth Engine & Cash Cow
• IoT, cloud, etc. New growth opportunities for telcos
• Telcos can provide connections, manage platforms, and control overall system
• Competition using network as a leverage in Platform, S/W, Device market
• Cooperation with Strong Players in Platform, S/W, Device market
4. Challenges & Opportunities
16
Thank you.