Tech-Savvy Koreans Trying Out Wireless Web Systems
Dow Jones News Service ~ June 12, 2002 ~ 6:15 pm EST
By John Larkin in Seoul
TO GLIMPSE THE future of wireless Internet, go no further than the ritzy Seoul suburb of Samsong. Next to a massive media centre for foreign journalists covering the soccer World Cup tournament, Korea Telecom has erected a pavilion to showcase a trial version of its sleek new 3G, or third-generation, mobile phone. Click here, says one of the sultry young women in mini-skirts demonstrating the phone, and you can download video on demand. The built-in camera allows videotelephony and snapshots that can be e-mailed to a personal computer. "This is the most powerful wireless Internet solution," says Ryu Jin Kon, a Korea Telecom technician.
But there's an even better guide to the world of next-generation wireless Internet, one that might erase persistent doubts about the technology's long- term market potential. South Korea, where a passion for the Internet has bred some of the world's most advanced cyber technology, is the test bed for a new standard being hyped as the most powerful 3G service anywhere -- despite the fact that it uses frequency spectrum designed for the current generation of mobile phones. "Koreans are a very tech-savvy crowd, and they're not afraid of new technology," says Terry Yen, Asia-Pacific director for Qualcomm's CDMA, or code-division multiple access, development group. "If 3G doesn't go well there, it doesn't bode well for the rest of the world."
This new technology has a typically ugly name -- Evolution Data-Optimized system, or EV-DO. It's an enhancement of the current so-called 2.5G service, and can transmit and receive data at the hitherto unheard-of speeds of up to of 2.4 megabytes per second. That's around seven times faster than the world's first 3G service launched last October by Japan's NTT DoCoMo. Korea Telecom, the country's biggest telecoms company, and SK Telecom, its biggest mobile carrier, both launched the service this year and are expanding coverage nationwide. " What's happening in Korea is very exciting," says Sanjeev Verma, co-founder of Airvana Inc., a Boston-based infrastructure manufacturer for wireless Internet companies. "As usual it's taking the lead in advancing wireless technology."
EV-DO's biggest attraction is that it can handle virtually every application, except global roaming, that full-blown 3G would be capable of under the official wideband-CDMA standard. When fully developed, W-CDMA will be capable of transmitting at 10 megabytes per second. But it will take years to reach that speed. Right now EV-DO is faster, and because it is based on an older technology it requires only a small fraction of W-CDMA's capital expenditure. With NTT DoCoMo's 3G service failing to attract consumers in significant numbers, the world will be watching closely how Korea's population of Internet fanatics takes to the applications offered via EV-DO.
"All eyes are on Korea," says Bill Sohn, UBS Warburg's Hong-Kong based head of telecoms research for North Asia. "If consumers embrace these service areas it will open the door for other operators to proceed."
With mobile telecoms companies still awaiting decent returns on their investments in the current 2.5G standard, EV-DO will give them another reason to delay the expensive W-CDMA roll-out perhaps beyond 2005. This doesn't mean W- CDMA won't happen. In fact, EV-DO could act as a bridge to the next generation, whetting consumer appetites for speedier data transmission and allowing carriers to collect the huge revenues needed to fund full-blown 3G. SK Telecom announced in April it would delay its full-blown 3G launch by a year to 2004.
Julius Kim, telecoms analyst for ABN Amro in Seoul, says he was told by European telecoms carriers during a recent trip that they preferred to wait for 4G, in the form of data speeds approaching 10 megabytes per second, in the absence of solid markets for W-CDMA's signature applications like videoconferencing. "About 75% of them said they don't need 3G. They were very curious about EV-DO, but some said they don't want to go to 3G at all. They thought they should skip to 4G."
That attitude isn't so surprising, given the pinched finances at many European and United States telecoms companies. But a combination of political and competitive pressures will ensure 3G gets its day in the sun. European carriers have paid out billions of dollars for 3G licences. In Korea, where SK Telecom, Korea Telecom and LG Group paid out $1 billion each for licences, there is even more pressure to be among the first to usher in the 3G era.
The government is pushing telecoms companies hard to move to the next level of wireless Internet, in part to burnish Korea's reputation as a hi-tech economy. It wants roll-out next year, and Korea Telecom's third-generation unit, KT-ICOM, is determined to comply.
That's in defiance, say some industry experts, of rickety projections of potential returns on the billions it would cost to roll out the network. "If you push for W-CDMA in the near future it could be received by the market as a negative," says Chang Sung Min, a telecoms analyst for Samsung Securities in Seoul. It's in defiance, too, of Korea Telecom's mobile operator, KT Freetel, which wants to maximize revenues from the current generation of mobile services and EV-DO before moving on to an expensive new era. "It's a power game," said a KT-ICOM executive. "But KT Freetel has more power because it makes more money."
Those factors mean any 3G roll-out will probably be very limited in coverage, clearing the way for EV-DO to make a splash before the market starts demanding the kinds of services that only W-CDMA can deliver. "If global roaming becomes popular, W-CDMA is much better," says SK Telecom's spokesman Kwon Chul Keun. " That's why we got the W-CDMA licence."
So what will be learned from EV-DO, the first-ever high-speed wireless Internet to be introduced into a sophisticated market? The Korean experience will be crucial to refining the marketing strategies and applications needed to make full-blown third-generation services profitable, say industry insiders. Consumer reactions to services featuring video-streaming and videotelephony in particular, which EV-DO will introduce for the first time, will be closely watched. SK Telecom, for example, plans a service allowing users to view goods using streaming video and buy them through a handset equipped with a chip linked to a credit-card account.
Vast improvements will be available for location-based services, which can be patchy on handsets using the slower 2.5G technology. These handsets contain global positioning system receivers that allow users to communicate their whereabouts and send digital maps showing the fastest route to a destination. " This experience is very important," says SK Telecom's Kwon. "We can predict what kinds of contents will be possible during the 3G era."
Qualcomm, which developed EV-DO technology, points to the experience to be gained from marketing these services to an Internet-savvy market. Pricing, too, will be new territory as consumers will be charged for the amount of information they send or receive, rather than time spent on-line. "Koreans are the first to get into the game and figure out what it is they want," says Qualcomm's Terry Yen.
But caution is the watchword in any hi-tech industry. Even if this early take on 3G proves a hit in Korea, it may be that other countries try to emulate its success at their peril.
"I can't say that just because it does well in Korea it will do well everywhere else," says Bill Sohn of UBS Warburg. "Korean consumers are unique. They have high spending power." That's sound advice. In the end it will be spending power, not sending power, that determines the success of the latest 3G dream.
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SURVIVAL OF THE FITTEST
EV-DO is crucial for its developer, Qualcomm, which aims to make a chipset that will win widespread acceptance when W-CDMA 3G begins. W-CDMA is based on the rival European Global System for Mobile Communications (GSM) standard. But if Qualcomm can show EV-DO has faster data transmission and can be integrated into GSM, it will grab market share. "This is a survival tool for Qualcomm," says Julius Kim of ABN Amro Asia. "If it doesn't come up with a working model in Europe, it won't have any customers."
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KNOW YOUR GENERATION
1G, or first generation, refers to technology from the late 1970s to early 1980s. The networks used analog voice signalling. They were the first true mobile-phone systems, initially known as "cellular mobile radio telephones."
2G, or second-generation, began in the 1990s. Much of this technology is still in use. The 2G cellphones feature digital voice encoding.
3G, or third-generation wireless, refers to developments in personal and business wireless technology. 3G is expected to have enhanced multimedia and be usable in all popular modes, such as cellular telephone, e-mail, paging, fax, videoconferencing, and Web browsing.
CDMA stands for code-division multiple access. It refers to any of several protocols used in 2G and 3G wireless communications. As the term implies, CDMA allows numerous signals to occupy a single transmission channel, optimizing the use of available bandwidth.
W-CDMA, or wideband CDMA, is a 3G mobile wireless technology offering much higher data speeds to mobile and portable wireless devices than commonly offered in today's market.
(END) DOW JONES NEWS 06-12-02
06:15 PM |
