WCDMA Emerges As a Hot Potato (in Korea)
By Kim Kyu-tae
Friday, August 09, 2002
While equipment investment for WCDMA IMT2000 service is being delayed, some recently argue that WCDMA is useless, raising controversies over the service modes and even criticism about the government¡¯s telecommunications policies in the industry.
The argument over the uselessness of WCDMA is connected with plans of telecom operators to reduce investment in the next-generation equipment. But such an argument runs counter to the government¡¯s plan to seek activating the economy by linking the reduction in telecom charges to the industrial policies and invites strong criticism from investors and equipment makers.
The telecommunications industry sees that the delay in the investment into WCDMA and the argument would be ¡®hot potatoes¡¯ in the second half and indicates that the government is required to play the right role.
* Spread of Argument Over the Uselessness of WCDMA
The issue of investment in IMT2000, which was put in the back burner after lawmakers scolded the government for the delay of the IMT2000 service in the Science, Technology, Information & Telecommunication Committee of the National Assembly in February, recently resurfaced.
Mobile telecom carriers, who are cutting down on or putting off investment, are even asserting that WCDMA is of no use.
In a bull session with reporters on Aug. 6, new president of KTF Lee Kyung-joon suggested that it would be inevitable to put off investment in the WCDMA service because it has no advantage. His remark carries weight in that he was involved in the investment in the Office of Planning & Coordination of KT and now takes the helm of the wireless telecom carrier that is about to merge itself with KT ICOM.
President of SK Telecom Pyo Moon-soo also expressed on Aug. 7 that the company would not hurry investing in WCDMA. Consequently, large shareholders of IMT2000 corporations, in particular, are increasingly in sympathy with the argument over the uselessness of the service.
* Backlash of Equipment Makers
Telecom equipment manufacturers are strongly opposing such a movement. In particular, such ones as Samsung Electronics and LG Electronics pay attention to the fact that right after they argued for the necessity of making investment in the 3G service in a meeting with the minister of Information and Communications on Aug. 6, mobile telecom operators circulated the rumors of delaying the investment.
The telecommunications industry sees that wireless telecom carriers are intentionally deferring the investment to maximize their profits for a couple of years in the profitable 2G service, so that they raise the issue to justify their procrastination.
"IMT2000 corporations said in a briefing session for shareholders in February that they were pushing ahead with the investment as planned, but given the recent circumstances, they seem not to do so," said one official of a small and mid-size equipment maker. "Companies developing equipment according to the investment schedule of IMT2000 corporations are going to suffer from difficulties like financial stringency and piling inventory."
"The telecommunications industry is in a transition. It is urgent to turn to the next-generation service like video telephone," said Lee Jay-ryong, LG Electronics¡¯ executive director in charge of the operation division of digital mobile telecommunication. "If Korea executes the investment in an early stage by taking advantage of the delay in the transition to the 3G service in foreign countries, Korea will take the initiative not only in cdma2000 but also in WCDMA."
* Controversies over Flip-flopping
At a time when Ministry of Information and Communications (MIC) was in the process of selecting service providers of IMT2000, the ministry advised companies to adopt the synchronous system. But large shareholders of KT ICOM and SKIMT advocated the superiority of the asynchronous system and accomplished their purpose.
Now, however, those companies say that the WCDMA mode has no advantage, inviting criticism that they suddenly change their attitudes,
"If so, isn¡¯t it reasonable for them to return their business rights to the asynchronous system and apply for the synchronous one?" said one source of the industry.
* Hot Potato in the Second Half
WCDMA has a big influence not only in telecommunications services but also in the overall venture industry, including equipment makers and content companies. Therefore, the investment delay is likely to be the most controversial issue in the market in the second half.
MIC is embarrassed at the controversy because in case large shareholders of IMT2000 corporations defy the government and put off the investment as in 2000, the ministry will be criticized that the government is influenced by telecom operators.
"With regard to mergers between 2G service providers and IMT2000 corporations, voices are growing that MIC's policy governing the 3G service has actually failed. Against this backdrop, if even WCDMA IMT2000 corporations defer investment, such criticism will gain momentum more and more," predicted industry experts.
etienglish.com
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