Samsung and WiBro
>> Samsung Makes Risky Bet on WiBro
Technological Glitches, Market Are Key Challenges, Experts Say
Kim Tae-gyu
Korea Times
08-31-2005
tinyurl.com
Samsung Electronics president Lee Ki-tae, right, poses during a test run of the company’s mobile broadband Internet service, WiBro, at the Fourth Generation Forum in Cheju Island, Monday. / Korea Times
Samsung Electronics’ strategy of heavily depending on locally developed portable Internet, called WiBro, causes concern as its prospects have aggravated as of late.
WiBro is a made-in-Korea technology that allows people on the go to remain hooked up to the Internet at the speed of the current fixed-line broadband.
Lee Ki-tae, president of the world’s third-largest cell phone maker Samsung, articulated its commitment to WiBro during the Fourth Generation Forum (4G) held on Cheju Island earlier this week.
"Korea will be able to go more than half way from today’s 3G to 4G of the future by debuting WiBro next year," Lee told a press conference.
The remarks represent an abrupt shift in the outlook of the indigenous service in just 12 months since last year’s 4G Forum.
"WiBro may become either a stepping stone to 4G or remain as one of many systems," Lee said last August in Cheju at the second edition of the annual 4G meeting.
Based on the changed approach, Samsung tried to adorn this year’s 4G forum with WiBro by allowing participants to experience it via in-car demonstrations or broadcasting the forum using the homegrown platform.
Experts confirm Samsung’s improved evaluation on WiBro this year after the world’s standardization bodies look to adopt it as a global standard for Internet-on-the-move services.
"Samsung is now presenting a better outlook for WiBro than it was earlier this year. The firm seems to have fixed its eyes on WiBro as a way of building momentum to boost market share in the long run," Meritz Securities analyst Jeon Sang-yong said.
However, Mirae Asset economist Kim Kyung-mo cautioned against overly high expectations of WiBro.
"Basically, I am pessimistic on the commercial viability of WiBro services. It will create a niche market in its early stage. We should not have illusions about the service," he said.
Worsening Prospects for WiBro
As Kim pointed out, WiBro has many roadblocks to clear before becoming a mainstream format in the era of ultra-fast mobile connection.
First of all, Samsung should iron out technical issues such as ``handover,’’ a disconnection glitch that occurs when WiBro users move between base stations.
Samsung declared it solved the problem and showed off the achievement during the 4G Forum. But in a test run late Monday, the system failed twice and managed to make it after 15-minute repairs.
"We have been under immense pressure to address the handover in time with this forum just like you reporters suffer from a deadline. Things will be different in the future, because today’s trial run was conducted with prototype terminals," a Samsung engineer said.
In addition, the service’s commercial prospects have deteriorated recently, especially in the domestic market as amply demonstrated by the moves of licensees.
Earlier this year, the Korean government issued three WiBro licenses for KT, SK Telecom and Hanaro Telecom, but only KT, the country’s primary fixed-line operator, has been aggressive in deploying its commercial offering.
Hanaro Telecom, the runner-up fixed-line player, gave up its hard-earned WiBro license, saying that the service will eat up about 1 trillion won and not give it back in return.
SK Telecom, the foremost wireless carrier, is also reluctant to shell out big bucks on WiBro, which is likely to undercut its main revenue sources of mobile voice calls and data services in cell phone.
In this climate, KT, which plans to embark on commercial WiBro next April, faced a regulatory burden as the government designated the former state monopoly as the dominant broadband service provider.
Under the labeling, KT will not easily bundle its wireline broadband services with emerging offerings like WiBro at a discounted rate.
It is a big threat for KT’s marketing tactics for WiBro by bundling the mobile service with landline broadband at a reduced rate.
"We originally planned to offer landline broadband and WiBro together at a monthly fee of 45,000 won but the government regulation blocked it," a KT spokesman said.
Currently, KT levies about 30,000 won a month on subscribers for fixed-line high-speed Internet. The monthly price tag of WiBro is also expected to be around the range.
"The regulation is a serious blow to us. Despite the anti-bundling guideline, we seek to boost WiBro by adding it to broadband," the spokesman said.
WiBro in Worldwide Arena
WiBro’s outlook in global markets is also uncertain.
Samsung president Lee said in a press conference on Monday that the handset maker is now negotiating the sale of WiBro with six overseas outfits, including Japan’s KDDI and BT of Britain.
But a ranking executive at KDDI, Japan’s second-biggest mobile telephony service provider, was not sufficiently aware of WiBro, hinting the carrier’s low interest in the technology.
"The mobile Internet service is called WiMax in the United States and Koreans dub it WiBro," KDDI technology division vice president Yutaka Yasuda said during the 4G Forum.
Actually, the two technologies are clearly different in that WiBro is a mobility-specific service while WiMax, development of which is led by the top global chipmaker Intel, is a wireless offering for people at a standstill.
WiMax is similar to Wi-Fi as both are based on hot spots, or areas around access points in which people can share information or access the Internet without fixed lines.
WiMax has a range of 50 kilometers from an access point, a breathtaking improvement from a few hundred meters of Wi-Fi, but the service cannot be offered to moving folks.
Regarding the standardization issue, a source, which wanted not to be identified, predicted WiBro might be picked as a global standard with the help of Intel but warned Samsung should not feel euphoric just yet.
"Intel seems to accept WiBro as a standard for wireless Internet for people on the road to supplement WiMax, which lacks mobility," the source said.
"Yet, Intel’s real intention would not be to concede the lucrative realm to Samsung, but rather redefine the whole concept of the wireless net in favor of the firm. Samsung should know that and remain alert." << |
