11 Sep 2017
South Korean telcos bank on 5G and digital as traditional business stagnate
According to its latest report, 5G subscriptions in the country will outnumber 3G by 2020, following world’s first commercial 5G deployment during the Pyeongchang 2018 Winter Olympics, in Korea’s rural Gangwon province.
With growth of 5G, traditional communications services like fixed telephony and mobile voice will see a decline in revenue over the coming years. Voice service revenue will decline at an annual rate of 8.4% per year between 2016 and 2021, while mobile voice revenue will drop an average of 7.0% per year over the same period.
telecoms market analyst Malcolm Rogers said: “Operators around the globe faced with the same challenge, evolve to something more than a pipe provider or offer services that come with more utility.
“However, the Korean operators have been among the most proactive in growing business outside the core of communication. Whereas operators in some markets have been slow to react to the digital disruption caused by OTTs and internet giants like Google and Amazon, the players in South Korea have been investing in new digital business for years.”
Like in many mature telecom markets, competition around basic connectivity services is fierce, pushing the service providers to compete on price, resulting in margin squeeze. Telecom companies are now forced to look for more value added and tertiary services to tap growth. KT, LG U+ and SK Telecom (SKT) are now focusing on diverse range of non-core segments such as industrial IoT, payment platforms, media and commerce to boost their business.
In a bid to explore alternative source of revenue, KT recently launched a new Artificial Intelligence (AI) based home assistant service that also functions as an IPTV set top box.
SK Telecom and LG U+ now offer cellular based wireless payment platforms that allow small retailers, traders and vendors to conduct business from anywhere. All three major telecom providers have also invested in B2C and B2B e-commerce operations, venturing into an entirely new industry. 5G networks will enable operators to provide new services for industry, government and consumers. Korea Telecom (KT) has already completed trial to offer 5G enabled entertainment services such as high definition virtual reality and 8K mobile video while SKT and KT are developing driverless car solutions and security platforms based on 5G technologies.