1x services and ARPU - the Korean example
By James Moore, Research Analyst
cdma2000 services are proving popular in South Korea with a quarter of users using cdma 1x services with 7,583,000 subscriptions at 31 March 2002 of which 68% are SK Telecom users, according to data from the operators. The number of subscriptions has more than doubled since 31 December 2001 when there were 3,645,000 subscriptions. With KTF and SK Telecom launching cdma2000 1x EV-DO services across South Korea, the number of new cdma 1x subscriptions could accelerate.
Source: KTF, LG Telecom, SK Telecom
Not all those listed as having subscriptions are regular users. According to press reports in December 2001 the regulator, the Ministry of Information and Communication (MIC), said that only 69% of cdma 1x subscribers are actually using the wireless internet.
Looking at the number of cdma 1x subscriptions, one can see that as a proportion of the overall base, there is a marked difference between networks. SK Telecom launched seven months earlier than the other operators and this is one reason why cdma 1x makes up a higher proportion of the base than the other operators. 32% of its overall subscriptions are cdma 1x compared with 19.2% for KTF and LG Telecom with 12.4% The lack of wireless number portability makes the time advantage particularly important. MIC has said that number portability is expected to launch within six months of two operators introducing 2GHz-based mobile services and hence number portability is unlikely to be introduced until at least Q3 2003. Another reason for SK Telecom's much higher proportion of cdma 1x users is its more affluent subscriber base.
Mobile data revenue generation
ARPU varies from month to month with factors such as tariff changes, as well as seasonal factors with peaks in wireless data usage at certain times such as over the New Year.
KTF and SK Telecom have both seen overall increases over the months from June 2001 to March 2002.
However, the Ministry of Information and Communication (MIC) forced the operators to reduce tariffs and interconnection charges, which they carried out in January 2002. The changes are reflected in the drop in overall ARPU between December 2001 and January 2002. SK Telecom cut its tariffs by 8.3%, LG Telecom by 6% and KTF by 4%.
In the case of LG Telecom data ARPU has not been rising. Data ARPU was KRW 2,086 in March 2002 compared with KRW 2,232 in June 2001. A churn of high-end users from LG Telecom to its competitors is thought to be a reason for the decrease. LG Telecom's relatively low ARPU is reflected by its low outgoing MOU. SK Telecom's MOU (outgoing) is significantly higher than KTF, which is in turn higher than LG Telecom. LG Telecom has seen its MOU decline. The average monthly MOU was 124.3 minutes for Q4 2002 compared with 128 minutes for Q3 2002. LG Telecom's MOU has continued to fall with an average of 118.3 for Q1 2002. For KTF, MOU remained fairly stable at 151 for Q4 2001 compared with 150 for Q3 2001. MOU for SK Telecom, however, increased from 184.7 in Q3 2001 to 192 in Q4 2001. In the case of SK Telecom, MOU and voice ARPU was also pushed up by the introduction of a number of value added services such as caller ID service and global roaming services. Caller ID service generated additional monthly service fee revenues as well as increasing the return voice traffic between subscribers.
ARPU by month
Operator ARPU Jun 01 Sep 01 Dec 01 Jan 02 Feb 02 Mar 02
KTF Monthly data ARPU 1,922 2,005 2,391 2,471 2,173 2,531
Overall ARPU 40,402 40,082 41,181 39,082 36,723 40,909
Data ARPU as % of overall ARPU 4.8 5.0 5.8 6.3 5.9 6.2
LG Telecom Monthly data ARPU 2,232 2,142 2,538 2,156 2,022 2,086
Overall ARPU 39,319 34,929 35,500 32,437 30,141 32,725
Data ARPU as % of overall ARPU 5.7 6.1 7.1 6.6 6.7 6.4
SK Telecom Monthly data ARPU 1,728 2,140 2,707 2,680 2,625 3,061
Overall ARPU 45,855 48,248 48,227 42,826 40,596 43,508
Data ARPU as % of overall ARPU 3.8 4.4 5.6 6.3 6.5 7.0
Source: KTF, LG Telecom, SK Telecom
Overall ARPU includes activation and interconnection fees.
SK Telecom merged with Shinsegi Telecom in January 2002. Overall totals before January 2002 do not include those of Shinsegi.
Data ARPU for KTF excludes KT resale subscribers.
Overall ARPU figure for KTF for March 2002 is an estimate only and KTF will revise this in the future.
KTF's wireless ARPU does not include any revenue from free SMS and data. KTF's wireless ARPU including this is KRW 2,301 for June 2001, KRW 2,349 for September 2001, KRW 2,919 for December 2001, KRW 2,995 for January 2002, KRW 2,672 for February 2002 and KRW 3,145 for March 2002.
USD 1 = KRW 1,214
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