LeeIn Ho

Broadband Internet BusinessAnd Beyond: 

Broadband Internet Business And Beyond Lee, In-Ho Management Research Lab. April, 2005

Agenda: 

Agenda

Growth of Broadband Users in Korea: 

Growth of Broadband Users in Korea (unit: thousands) (source: www.nic.or.kr) 70.2% of population use internet in Korea 77.8% of households are broadband users in Korea

Initial Deployment: 

Initial Deployment 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

Broadband Market Share: 

Broadband Market Share (source: www.mic.go.kr, Jan. 2005) 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

Development of KT’s Broadband Service: 

Development of KT’s Broadband Service

KT’s Broadband Service Portfolio: 

KT’s Broadband Service Portfolio Depending on the speed offered and target users, the service is divided into Lite, Premium, Special, Ntopia, and Nespot Ntopia Nespot Premium Lite Special II

KT’s Broadband Networks: 

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

International Comparison: 

Broadband lines per 100 population (source : Point Topic) International Comparison Israel 13.9 Korea Hong Kong Netherlands 17.5 21 25 3Q, 2004 (unit: lines) Canada 3.7 Hong Kong Korea Taiwan 4.8 11 4Q, 2001 5.6 (unit: lines)

Broadband Success Factors: 

All relevant factors needed Cultural Acceptance Policy & Regulation Demand Supply Dynamic interaction of KSFs needed Broadband Success Factors

Broadband Success Factors: 

Broadband Success Factors “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

Broadband Success Factors: 

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 Broadband Success Factors

Broadband Success Factors: 

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 Broadband Success Factors

Broadband Success Factors: 

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 Broadband Success Factors

Increase of Internet Usage: 

Increase of Internet Usage Users spend 11.7 hours on the internet per week on average 86.7% of internet users have one or more e-mail accounts (unit: hours) Weekly hours spent on internet (unit: %) E-mail usage

From Off-line to Online: 

From Off-line to Online 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 stock trading On-line banking (unit: %) (unit: %) (unit: %)

Prosperity of Cyber Society: 

Prosperity of Cyber Society Cyber politics 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 communities exist 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

Moving to Mobile Data Service: 

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

Wireless Lan: 

Wireless Lan WLAN hotspot network configuration Public hotspots KT deployed a wireless LAN service called “Nespot” in early 2002 Expanding terminals and hotspots

Portable Internet (WiBro): 

Portable Internet (WiBro) WiBro service covering Market potential in Korea (unit: 1,000 users) (unit: million US$) (source: KISDI) Wibro, Portable Internet using IEEE802.11g will upgrade the WLAN service The market potential of WiBro is quite promising so far

IP TV: 

IP TV Contents Provider Live Content VOD T- Internet T-Commerce On-Demand Content On-Demand Encoder Live Encoder IP (DSL) TV via STB Live Streaming Server VOD Streaming Server Subscriber Management Server TV Services of comparable/better quality than existing digital TV services Provides VOD, Commerce, Internet services through broadband network via STB

Home Networking: 

Home Networking Remote controlling and networking of home appliances are becoming possible Various state-of-the-art services carried out in home

NGN: 

Today Single-service NW Servers Clients Backbone Network Access Access Tomorrow Multi-service NW/client-server Communication Control Content Content Access NGN Establish NGN for Seamless access conditions New interconnection systems needed according to the change

NGN: 

NGN VoIP Interconnection Interconnection system in the internet International settlement in the internet Current Situation Developing a new interconnection system for All-IP networks Short-term Issues Long-term Issue

Slide29: 

THANK YOU!