Grand NFC Korea Alliance

Ten years ago, SK Telecom would carpet bomb Korea with 400,000 terminals ("dongles") to boost its Moneta mobile payment service. Yesterday, Korea Inc. announced 300,000 NFC-enabled Point Of Sales by the end of 2011 to put the country ahead of the pack in this very very strategic sector.

The difference ? This is not a solo act anymore : SKT alone couldn't succeed in setting the new standard in mobile payments at home and pushing the concept overseas, but this time, the whole value chain and ecosystem is following. And if it works, each player will claim a nice slice of a much bigger pie.

Under the regulator's umbrella (KCC, the herald of "NFC-based Mobile Smart Life Services"), over thirty Korean CEOs met at the Seoul Press Center to sign this decisive MOU in Near Field Communications, and if you throw in the members of the recently formed Grand NFC Korea Alliance, you've got the closest thing to a mobile payment dream team :

- all 3 Mobile Network Operators : Korea Telecom, SK Telecom, U+ (LG Telecom)
- the biggest card players around : Visa, MasterCard, Shinan Card, Kookmin Card (KB), Lotte Card, Hyundai Card, T-Money, MNO partners (Hana) SK Card and BC Card (KT)...
- key authorities and associations : KCC, ETRI, TTA, KISA (Korea Internet & Security Agency), MOIBA (Mobile Internet Business Association), RAPA (Korea Radio Promotion Association)...
- top manufacturers : Samsung, LG, Pantech...
- top enablers: UbiVelox, KEBT, MtekVision, 3ALogics Inc, KICC...
- top payment enablers / billing service providers : KSNet Inc, Mobilians, Galaxia, Danal Corp., KCP...

The only players missing on the picture are the endusers.

And as we saw before, pedagogy will be key in a country where hacking happens to be a national pastime (if you include North Korea in the package), where few people protect their handsets with a PIN code, and where distrust in smartphone security keeps spreading like wildfire.

Of course, "Near Field" meaning 10 cm and below, close encounters of the third thief will require more intimacy than via Bluetooth. Besides, many Koreans are already used to contactless micropayments thanks to T-Money (ie Seoul public transportations and taxis, thousands of convenience stores and vending machines...). Furthermore, NFC trials have been under way for quite a while : for instance KT's "Mobile Stamp" couponing system, SKT's Mobile Commerce Zone or Q Store pilots, or cross border trials between SKT's T-Cash and Japan's KDDI and SoftBank...

This MOU aims at multiplying testbeds and giving momentum to the technology, the bulk of the infrastructure being planned for Q4 2011. So where will NFC-based payments be available ? GS group plans to implement them in its convenience stores (GS25) and gas stations (GS Kaltex). Major retailers (Lotte Mart, Emart...) are joining the party. Seoul and Gyeonggi-do buses and subways, as well as many taxis will be converted. A major shopping area for tourists (particularly from Japan), Myeongdong has been identified as a strategic hotspot to feed the buzz.

Needless to say, the number of NFC-enabled handsets is another essential element in the equation. The alliance targets an ambitious 5 M units by the end of the year, leveraging on existing devices (Samsung Galaxy S II and Sky Vega Racer opened the way), and the Google-Apple war : since Android Gingerbread OS supports NFC, Cupertino had to consider it for iPhone 5.

And oh. This non-event : Samsung is expected to surpass soon Nokia as the world's top handset manufacturer.

mot-bile 2011

* sorry, not yet in English : "국내 통신사·금융(카드)사 CEO 최초로 한자리에 모여 NFC 서비스 활성화를 위한 MOU 체결"

KT and Softbank wed in the cloud

Two years after the merger of Korea Telecom with KTF, the group claims 27% of its turnover in the "non-communication sectors", and targets 45% by 2015. "Non-communication" covers "convergence, IT service/media and global operations", which have something to do with communication but nevermind :
- 'Communication' means wired and wireless comms + call centers (KRW 18 Tn in 2010, 22 in 2015).
- 'IT service/media' stretches over 'SI/NI, cloud, solutions, contents', so typically Software as a Service (SaaS)... (evolution 2010-2015 : KRW 2 to 6 Tn).
- 'Convergence' includes 'communication-finance convergence' (KT will absorb BC Card and challenge more directly Hana SK Card or the duo SK Telecom - Hana Card), 'car' (KT Rental), 'security', 'ad/commerce' (evolution 2010-2015 : KRW 4 to 8 Tn).
- 'global operations' collects the rest : 'investment, IT and communication' (!), and probably real estate (evolution 2010-2015 : KRW 1 to 4 Tn)

In this last category, KT intends 'to expand its global markets for Smart City, Cloud, and ICT Solutions', and 'to secure more than ten new business items, such as Smart Home, Smart City and Digital Signage', or to 'develop globally competitive products and services and consider expanding its business worldwide from the launch of a project, as in the case of KT Kibot and CCC'. For your information : KT Kibot is a cute robot.

CCC means, of course, Cloud Communication Center. And that's where Korea Telecom and Softbank decided to create a 51/49 Joint Venture next September : a huge cloud data center will be created in Busan, with a back-up system in Seoul. A smart risk management move from ethnic Korean Masayoshi Son : the March 11 earthquake + tsunami followed by Fukushima meltdowns caused major business disruptions and massive energy shortages. This center will start with a 6 MW capacity (the equivalent to 700,000 PCs or 10,000 servers according to KT), and quickly reach 20 MW. A dedicated 10 GW line will secure the traffic and that's another reason why Korea's second biggest city was chosen : it's very and one of the closest to Japan (210 km or 130 miles), with all the right IT and human connections.

Yet. If Korea is spared by tsunamis and earthquakes, it is frequently attacked by North Korean hackers, and that's the reason why mobile banking and finance, a traditional strong point in the country, is not booming as fast as smartphone sales.

NFC-based Google Wallet* will have to overcome even more resistance there considering the company's image in Korea these days and the intense lobbying campaign from local netcos against its potential dominant position.


mot-bile 2011

* see "Coming soon: make your phone your wallet"

Communication-finance convergence: KT joins SKT

Seems like SK Telecom's debuts as a credit card operator (see previous posts about the SKT-Hana Bank deal) spurred the competition. Korea Telecom announced yesterday that their participation in BC Card, the national leader, would increase from 1.98 to 35.83% after purchases from Woori Bank (20%) and Shinan Bank (13.85%). KT also negociates a further 4.03% participation with Busan Bank.

Lucky Koreans MNO: they can become content majors or financial institutions just by signing checks. And they formed a common lobby with other financial institutions to promote mobile banking in Korea (SK Telecom and KT with Mastercard, Shinhan Card, Samsung Card).

"Finance-communications convergence" comes handy as MNOs need to completely revamp their business models : voice revenues keep decreasing, and the data equation went crazy.

Significantly, KT is now insisting on Wifi coverage in its smartphones advertising campaigns, and promoting uCloud for consumers also as an IPTV service (Smart TV tomorrow I guess). Remaining a leader in cloud computing is an absolute must... and it sure beats car rentals as diversification (KT are also campaigning about that peripheric service of theirs).

mot-bile 2011

Android Smart TV, Dual-Core Phone, Dual-Mode Policies

A few news from Korea :

LG will release Q4 2010 an Android smartphone running with Tegra 2, a 1GHz dual-core processor made by NVIDIA bound to enhance the mobile multimedia experience (3D, games, video...), and the manufacturer's position in the smartphone race.

Rival Samsung confirmed its ambitions in smart TV, probably also on Android.

At the app level, mobile commerce also benefits from the (late) smart wave, leveraging on a long history in mobile banking. But Hana SK Card (SK Telecom's TouchSeven Card with Hana Bank) "only" claimed 20,000 holders end of May. Yet, KT's Show Touch (with Shinan Bank) joined the party, so the market should grow much faster.

The mobile arena is the perfect space to boost reforms in Korea's SME ecosystem : operators are starting to understand the need to open up and to stimulate diversity, and the government is pushing for a "fair society" : in the country, chaebols (big conglomerates) tend to absorb value as soon as it pops up, leaving crumbs to smaller players, who themselves are not used to surviving off these giant hooks.

On the other hand, the same government is about to grant broadcasting rights to major press groups, accelerating concentration in the medias...

The people doesn't seem to care, provided panem et circenses keep getting better. And that's also what smart TV and dual core handsets are about.

mot-bile 2010

As Daum goes (a bit) mAd, SK Telecom jumps to L Commerce and Mobile Virtual Banking Operator

I've been expecting a lot from Korea's leading portals Naver and Daum*, but so far, they've not exactly revolutionized mobile internet. For instance, they've only recently set a timid foot into mobile advertising**.

To their credit, it's hard to get a slice of the wireless pie consistent with their impressive web portal market share, even after the implementation of USIM cards, which undermined Korean MNO's lock on handsets, and even after the rise of smartphone apps, which also weakened their positions on the value chain.

According to KoreanClick, #1 NHN / Naver controls 63% of the portal market (31 M Unique Visitors for Naver.com in April 2010) and #2 Daum 21% (28.9 M UV), but #3 Nate (10% MS, 24.7 M UV) can leverage on key enablers provided by owner SK Telecom : the leading cellco, already a quadplay giant, has always put a lot of importance on Location Based Services and financial enablers.

That focus has become even more evident with the creation of the Hana Bank - SKT JV (see "SK Telecom's Wild Hana Card"), confirmed by the first services earlier this year***. The recently rebranded Hana SK Card targets 400 to 500,000 cardholders by EOY 2010.

SKT has also been redefining the "mobile wallet" concept over the past few weeks : leveraging on Visa PayWave radio frequency technology, the "T Smart Pay" (always that "T" umbrella brand of SKT's) concept allows the consumer to monitor up to 8 credit cards, 30 mileage / point cards, and 50 coupons with the same '13.56MHz RF SIM' card (always that "technerdy" trend of SKT's), to the risk of storing all your most critical information on one single device. Each time you present it for a contactless payment, you're proposed the choice between all registered cards.

Of course, Hana SK Card holders can also enjoy a simplified UI :



Here, SKT almost acts like a Mobile Virtual Banking Operator roaming on tens of rival networks and helping the consumer make the most of each buck, picking the best provider depending on the store, account status, promotion... Needless to say that this entry point will be massively exploited for contextual offers : ever since NATE Coupons, SK Telecom has been a major innovator in couponing and in July, SKT will launch 'L-commerce', a new set of Location Based Services bound to confirm the return of its mojo.

About ten years ago, I was impressed by how deep this player ventured into new trades like media or banking. Since then, SK Telecom didn't fully succeed overseas as a classic mobile operator, and at one moment lost some appeal as the marketing king at home, but lately, it seems to be experiencing a revival. Even telematics are back in fashion (SKT MIV / Mobile in Vehicle).

Note that on the more traditional battlefield, SK confirmed 8 more Android handsets by EOY (see "SK Telecom pushes Android"), and KT remains the most likely guess for the iPad exclusivity : Apple's latest gizmo is being approved for import, and TriGem, Samsung, and LG will suffer from a minimized delay before their own tablets****.

mot-bile 2010


* see "KT claims 500,000 iPhones"
** "Daum rolls out mobile advertising network" (JoongAng Daily 20100511)
*** see "Wal-Mart's Vudu Trance - home entertainment and apps"
**** see "Samsung S Pad in a Flash"