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Broadband Internet Business And Beyond

Broadband Internet Business And Beyond. Lee, In-Ho Management Research Lab. April, 2005. I. Broadband Internet in Korea. III. Impact of Broadband on Society. IV. Beyond the Broadband Internet. Agenda. II. Success of Broadband Internet Business in Korea. I.

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Broadband Internet Business And Beyond

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  1. Broadband Internet BusinessAnd Beyond Lee, In-Ho Management Research Lab. April, 2005

  2. I Broadband Internet in Korea III Impact of Broadband on Society IV Beyond the Broadband Internet Agenda II Success of Broadband Internet Business in Korea

  3. I Broadband Internet in Korea 1 Growth of Broadband Users in Korea 2 Initial Deployment 3 Broadband Market Share 4 Development of KT’s Broadband Service 5 KT’s Broadband Service Portfolio 6 KT’s Broadband Networks 7 International Comparison

  4. Growth of Broadband Users in Korea Subscribers are increasing dramatically due to high internet penetration • 70.2% of population use internet in Korea • 77.8% of households are broadband users in Korea (unit: thousands) (source: www.nic.or.kr)

  5. Broadband technologies Demand up • ISDN • xDSL • Cable modem Hanaro telecom, 2nd Local carrier Launched ADSL • Cost? • - High equipment cost • Demand? • - Low demand due to high price • QoS? • - Varying with distance & quality of copper line Deployment Cost down Service Price down Initial Deployment Courageous deployment of a new comer caused positive cycle • At the initial stage of broadband, full-scale commercial deployment of broadband seemed like a risky road to take • Hanaro Telecom’s bold trial succeeded and brought booming in demand for broadband internet

  6. Technology market share Carrier market share Broadband Market Share xDSL is a dominant technology, KT is a dominant player in Korea • More than 57% of broadband users subscribe to xDSL • KT, a latecomer in broadband market, became the dominant carrier occupying over 50% of the total Korean market (source: www.mic.go.kr, Jan. 2005)

  7. 2003.1– Megapass Subscribers Exceeded 5 million 2002.6– VDSL Service Launch 2002.1 – Nespot Service Launch General Public 2002.3 – Megapass Reaches 4 million Subscribers 2001.6 – Megapass Reaches 3 million Subscribers Open Minded User Group 2001.2 – Megapass Reaches 2 million Subscribers 2000.11 – Ntopia(G-bit Ethernet service) Launch 2000.6 – Achieved No. 1 player 2000.5 – Megapass(KT’s Umbrella Brand) Launch 1999.10- B&A(Building & Apartment) Service Launch Internet Mania Group 1999.6- ADSL Service Launch (Commercialization) 1999.5- Satellite Service Launch 1997- First Trial ADSL Service Development of KT’s Broadband Service KT made continuous efforts for advancing services to create demand

  8. Description Technology Speed Charge (USD) Target xDSL,Satellite, BWLL,LAN 4Mbps(Up/Down) 30 $ Large group of households xDSL 4Mbps(Up) 13Mbps(Down) 40 $ Large group of households VDSL Large apartment Complex (high-priced&speed) Special I 4Mbps(Up) 20Mbps(Down) 42 $ 4Mbps(Up) 50Mbps(Down) 45$ Ethernet 100Mbps(Up/Down) 36$ Newly-built building & apartment Wireless-LAN 11Mbps(Up/Down) Lite/ Premium/ Ntopia+10 $ SOHO, SMEs, Hotspot (Use wired / wireless access at the same time) KT’s Broadband Service Portfolio KT launched Megapass, umbrella brand of KT’s broadband service • Depending on the speed offered and target users, the service is divided into Lite, Premium, Special, Ntopia, and Nespot Lite Premium Special II Ntopia Nespot

  9. KT’s Broadband Networks 29.377G Ilsan NORTH AMERICA , EUROPE Incheon Hangdong 45M Hehwa AUSTRALIA SOUTHEAST ASIA Kooro USA POP 760M CHINA HONGKONG Suwon JAPAN WonJu 16.200G 2.794G 3.969G OVERSEAS BACKBONE GIX CheonJu DaeJeon 1.956G TaeKu total : 36.945G JeonJu KwangJu 40G ~ 49G PuSan 30G ~ 39G 20G ~ 29G 10G ~ 19G 2.5G x 2 Lines CheJu 2.5G x 1 Line

  10. International Comparison Korea is a world leader in broadband business Broadband lines per 100 population 4Q, 2001 3Q, 2004 25 (unit: lines) (unit: lines) 21 17.5 13.9 11 5.6 4.8 3.7 Hong Kong Korea Israel Netherlands Hong Kong Korea Taiwan Canada (source : Point Topic)

  11. II Success of Broadband Business in Korea 1 Broadband Success Factors 2 KSF 1: Cultural Acceptance 3 KSF 2: Policy & Regulation 4 KSF 3: Demand 5 KSF 4: Supply

  12. Policy & Regulation Cultural Acceptance Supply Demand Broadband Success Factors Broadband success in Korea attributed to four major factors • All relevant factors needed • Cultural Acceptance • Policy & Regulation • Demand • Supply • Dynamic interaction of KSFs needed

  13. Cultural Acceptance Broadband Success Factors KSF 1 : Cultural Acceptance • “Hurry” psychology • Increasing demand for faster and faster connection speed • Socially competitive: peer pressure • Intolerance for slower connection having a slower connection than my neighbor • “Digital or die” • Historical lessons driving national consensus for digitalization

  14. Policy & Regulation Broadband Success Factors KSF 2 : Policy & Regulation • Gov’t projects / initiatives • KII, Korea Information Infrastructure • Global Leader, e-Korea Initiative • e-Government Initiative • Pro-competition • Facility-based competition • Deregulation for ISP Business • Certification System for Super High-Speed Building • Cyber Apartments & Buildings • Classification: Premier Class, 1st Class, 2nd Class, 3rd Class

  15. Demand Broadband Success Factors KSF 3 : Demand • Enthusiastic adoption of new services • Affluent, savvy, young users • Various contents & killer applications • Online games, cyber stock trading • Use of IT in education from elementary to university • Wholesale demand • PC cafes as aggregators • .com ventures

  16. Supply Broadband Success Factors KSF 4 : Supply • Stiff Competition • 3 major players • Aggressive pricing competition • Facility-based competition • Geographical Advantages • More than 50% households in apartment complexes • More than 93% of all residents within 4km of central offices • Dropping network costs • Cost effective deployment • Mass Deployment and Operating Know-How

  17. III Impact of Broadband on Society 1 Increase of Internet Usage 2 From Off-line to Online 3 Prosperity of Cyber Society

  18. Increase of Internet Usage Broadband stimulated usage of internet in our daily lives • Users spend 11.7 hours on the internet per week on average • 86.7% of internet users have one or more e-mail accounts Weekly hours spent on internet E-mail usage (unit: hours) (unit: %)

  19. From Off-line to Online Broadband changes every aspects of our daily lives • 47.3% of internet users have bought goods/services on-line • 58.2% of internet users use on-line stock trading • 31.6% of internet users use on-line banking On-line purchasing On-line banking On-line stock trading (unit: %) (unit: %) (unit: %)

  20. Prosperity of Cyber Society Broadband accelerated the prosperity of cyber community Cyber community • 41.7% of internet users use internet messenger 6.3 hours per week on average • Main reason is for friendship/chatting(87.1%) • 50.1% of internet users belong to online communities • Over 7million cyber communitiesexist Cyber politics • Internet votes during the presidential candidate elections in 2002 • 2.5% of votes, during April 18~27, 2002 • More than 81% of congressmen have personal homepage • 84% of netizens feel that internet is an effective way to express one’s political opinion

  21. IV Beyond the Broadband Internet 1 Moving to Mobile Data Service 2 Wireless Lan 3 Portable Internet (WiBro) 4 IPTV 5 Home Networking 6 NGN

  22. Moving to Mobile Data Service Increase in mobile data usage requires mobility to broadband • Mobile Data Service Users nearly Doubled in one and half years • 2.5 G service is currently available and 3 G service in preparation Mobile data service subscribers Data service positioning (unit:1,000 users) Mobility Very high W-CDMA (3G) Cellular,PCS (2G/2.5G) 2.3GHz Portable Internet High WLAN Low xDSL/HFC/B-WLL 2 1 0.1 10 20 Speed (Mbps) 2003.6 2003.12 2004.4 2005.2

  23. Wireless Lan Providing wireless broadband access to home and public hotspots • KT deployed a wireless LAN service called “Nespot” in early 2002 • Expanding terminals and hotspots WLAN hotspot network configuration Public hotspots

  24. Wireless LAN Internet Wireless LAN 2.3 GHz Wireless LAN Portable Internet (WiBro) 2.3GHz wireless service enhancing mobility for multimedia communication • Wibro, Portable Internet using IEEE802.11g will upgrade the WLAN service • The market potential of WiBro is quite promising so far WiBro service covering Market potential in Korea (unit: 1,000 users) (unit: million US$) (source: KISDI)

  25. IP TV TV Services Delivered over a closed IP, QoS enabled Network • TV Services of comparable/better quality than existing digital TV services • Provides VOD, Commerce, Internet services through broadband network via STB Live Streaming Server VOD Contents Provider Live Content Live Encoder IP (DSL) T-Commerce Subscriber Management Server VOD Streaming Server TV via STB On-Demand Content On-Demand Encoder T- Internet

  26. Home control Home surveillance Remote health care • VoD / Multicast • Tele-metering / Energy saving • Medical / Health • Security / Safety • T-Commerce Appliance control VoD Tele-metering Scheduled shutoff Home Gateway Content filtering xDSL Ethernet FTTx Home Networking Convergence of telecom, broadcasting and home appliances • Remote controlling and networking of home appliances are becoming possible • Various state-of-the-art services carried out in home

  27. Services PLMN PSTN/ISDN Data/IP Networks CATV Access Transport & Switching Networks NGN Core Network environments of user-oriented ubiquitous services • Establish NGN for Seamless access conditions • New interconnection systems needed according to the change Today Single-service NW Tomorrow Multi-service NW/client-server Servers Content Content Communication Control Media Gateways Media Gateways Backbone Network Access Access Access Clients

  28. NGN New Interconnection System Needed Current Situation • Transiting from PSTN to IP Networks • Peering & Transit Dominant • Generates zero revenue Problem : Losing Main Revenue Sources Short-term Issues VoIP Interconnection Interconnection system in the internet International settlement in the internet Long-term Issue Developing a new interconnection system for All-IP networks Solution : Co-developing & Cooperation among carriers

  29. The Value Networking Company THANK YOU!

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