Following the recent decision by the Korean telecoms regulator, the KCC to drop the requirement that all handsets sold in the country support the home-grown WIPI (wireless Internet platform for interoperability) platform - analysts expect that SK Telecom and KTF will be the main beneficiaries of the arrival of foreign handsets into the market.
Currently, 86% of all mobile phones used in the country are WIPI-enabled (the remainder are smart-phones or handsets with no wireless Internet functionality). Following the KCC¡¯s decision to ditch the requirement, the portion of WIPI-installed handsets should plummet. This will likely benefit SKT and KTF who can provide 3G services through WCDMA handsets on the import of foreign models and the procurement of various non-WIPI smart-phones that will animate wireless Internet services. Given the large global market share of 3G services, the economies of scale effect from 3G handsets manufacturing should be great.
Introducing MVNOs and easing rate regulations to have little effect
A Korea Investment and Securities report expects that the introduction of MVNOs and eased rate regulations to feature insignificant effects. Given the high penetration rate of wireless telecom services in Korea, MVNOs will find it hard to attract new subscribers. In addition, fees to rent network space from other operators will be set according to market principles, which will burden the MVNOs.
Eased rate regulations are also conditional as KT and SKT are still required to seek approval from the government when raising rates. If lowering rates, they have only to report the change to the government (rates subject to change include KT's telephony, broadband Internet, and SKT's mobile). But KT and SKT are likely to take a conservative approach to rate cuts as they already offer discounts for their fixed-line/mobile bundled services.
Posted to the site on 16th December 2008
Posted to: www.cellular-news.com/story/35190.php