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Telecom Industries of Korea and Japan

Telecom Industries of Korea and Japan. Brian Toll Greg Zelenka Aaron Cowen Jennifer Barker. Outline. Telecom Overview Korean Competitors Japanese Competitors Regulatory in Korea Regulatory in Japan Discussion of Korea Telecom Questions for Korea Telecom. Technology Primer. Land Line

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Telecom Industries of Korea and Japan

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  1. Telecom Industries ofKorea and Japan • Brian Toll • Greg Zelenka • Aaron Cowen • Jennifer Barker

  2. Outline • Telecom Overview • Korean Competitors • Japanese Competitors • Regulatory in Korea • Regulatory in Japan • Discussion of Korea Telecom • Questions for Korea Telecom

  3. Technology Primer • Land Line • Dial-up • ISDN • Broadband • DSL • Cable • LMDS • Wireless • 1G, 2G, 2.5G, 3G

  4. Korean Competitors

  5. Japanese Competitors

  6. Active Regulation - Korea • Multi-ministerial purview (FTC, MOFE, MIC, KCC) • Potential regulatory conflict • Excessive regulation • ‘Dominant player’ regulation • Regulators control rates • Caps on wireless handset subsidies • Other players • File tariffs, but no rate controls • In January 2000, banned handset subsidies

  7. Ramifications of Regulation • Geographically • 5 national players in wireless, no regional • Technologically • CDMA standard nationally • Competitively • For wireless, price competition is severe (over 33% drop in 3 years). • Similar technology, similar marketing strategies, no handset subsidies. • 3G postponement announced by SK Telecom.

  8. Movement to Passive Regulation- Japan • Ministry of Post and Telecom is single regulatory body in Japan. • NTT Incumbent maintains wireline monopoly. Still very high new phone installation fees. • Late 80’s deregulation with advent of wireless • Increased wireless phone use by removing user deposit system and handset leasing fees (approx $2,700 per user) • Since 1996, MPT exercises no pricing restrictions, which has increased price competition and caused wireless prices to decline by 56% in last 5 years.

  9. Ramifications of Regulation • Geographically • NTT DoCoMo dominates, smaller players compete regionally • Technologically • Newer technologies cultivated, or; • Multiple technological standards compete • Competitively • Non-price differentiation based on technological differences and service quality and coverage. • NTT continues to dominate, but faces serious threats as competitors build infrastructure.

  10. Korea Telecom • Korean incumbent - $11Bn in revenue. • Local, domestic and int’l long distance, business & data communication services, DSL, cellular service • Virtual monopoly in local services, 85%+ share domestic LD and 60%+ share Int’l LD • Leads broadband at 44% market share. • KT Freetel, wireless subsidiary, is #2 with 31% market share.

  11. KT – Responding to Competition • Aggressive Restructuring • Broadband in 92% Korean Households • KT developing new broadband services

  12. Questions for Korea Telecom • What are revenue drivers for 3G in Korea? How much will you spend on 3G and how will you recover this investment? • What marketing techniques are used to attract customers and reduce churn? • How will CLEC industry develop in Korea? • What are the three most important challenges you face in the next 5 years?

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