IPTV in Korea, an update

Korea Communications Commission (KCC) is now one year old, and IPTV eventually gaining ground.

Korea's 3 IP operators totalled 595,000 IPTV subs at the end of July 2009. They're still dwarfed by cablecos (ie CJ Hello Vision boasts about 800,000 cable TV subs, C&M 700,000), but they gained 26% in one month and 58% over the past two months. And cablecos are feeling the heat as IP players plan to extend the technological wars into new territories.

As we saw earlier*, Korea's 3 IPTV players are also Korea's 3 MNOs. They cannot market VoIP as aggressively as they'd like to, nor propose as wide a choice of TV channels as cablecos, but they keep extending their TV offers, and their triple play offers are claiming new converts.

With 22% of the IPTV market, SK Broadband (SK Telecom) is still lagging behind Qook (KT/KTF, 46%) and LG Dacom (LG Telecom, 32% MS), but it led the small pack with a 35% market share for July and at such a pace, positions could very much change dramatically before the end of the year.

KT intends to remain confortably at the top, and will put more pressure on its competitors by pushing voice over WiBro.

Stuck with cdma2000 for 3G, LG Telecom is speeding up the preparation of LTE (announced for 2013), with the help of its cousin LG Electronics, who will provide NTT DoCoMo with "4G" chips as early as next year for the first LTE devices. LG Telecom can also count on Qualcomm to quicken the transition from cdma2000 to LTE.

In partnership with the National Information Society Agency (NIA), KCC recently announced "Giga Internet" service trials for 2,000 households by the end of 2012. The idea is to lift Korea Inc from the 100M "standard" to 1 Giga all the way across the value chain, with new networks, new devices, and new IPTV services (3D, multi-angle, HD Home CCTV, TV multimedia messenger...). One consortium will be led by KT (the leading "telco") and the other by CJ Hello Vision (the leading "cableco").

Concentration seems bound to accelerate. Most Korea Cable Television and Telecommunications Association (KCTA) operators are not fitted for this kind of race, and some players may be up for grabs for powerful new entrants : controversial new media laws allow press groups and conglomerates to invest in broadcasting, and not all of them may be satisfied with a partner's seat.

mot-bile 2009

* see "One stop selling", "IPTV wars and WiBro truce", "IPTV in Korea"

Gmarket vs Skype and Stumbleupon - e-business as usual for eBay

Losing ground at home vs Amazon, eBay decides to build a new fortress in Korea, combining over two thirds of Gmarket with its Internet Auction Company there. Almost gone the Skype hype, fumbled Stumbleupon... back to core business.

Inter Park, distant third behind Gmarket and IAC (8% vs 47% and 34%) owned 34% of Gmarket, which will operate separately from IAC. Besides, Korean authorities may ask some further concessions, but they already okayed the deal.

Beyond national marketing, technological, and logistical synergies, eBay intends to build an international platform from this new local giant in the long term. Nice way of putting things for a rather defensive move : Korea will neither open the gates to Japan, nor take over eBay's operations in China and Taiwan. Maybe strengthen some positions around LA and Orange counties.

The deal will be completed by the end of H1 2009, Skype will be IPOed H1 2010, eBay will keep non-technological bubbly start ups at bay until the recession itself recedes.

* "eBay to Expand Asian Operations Through Combination with Gmarket, Korea's Largest Online Marketplace" (eBay - 20090416)

One Stop Selling

Sony and Samsung are showing us how major players are bracing up for tougher times. This could be the final call for big players to simplify market interfaces.

Sony Pictures Entertainment decided to organize itself around one global platform. The US and international divisions will merge to address more efficiently a market that demands swiftness and reactivity.

Samsung will regroup all its local mobile and nomadic brands around the samsungmobile.com hub. At home, the brand needed some taming : Samsung being ubiquitous from real estate to life insurance, most business units had to develop specific brands for each line of products (ie Hauzen for air-con, Raemian for appartments). And it was not only a matter of branding : Samsung Electronics managed specific CRMs for its mp3 players (Yepp), laptops (Zaigen), and mobile phones (Anycall). Synergies seem obvious, to the point of scaring competitors : getting a share of a Samsung customer will get even tougher.

But Korea has reached the point where choices had to be made in favor of convergence instead of competition. The country wasted too much time and money in sterile IPTV wars between telcos, cablecos, and broadcasters, threatening Korea Inc.'s overseas (see "IPTV in Korea", "IPTV wars and WiBro truce ?"). Korea could display its technological know-how in convergence, but no commercial offers.

A converged broadcasting-telecom regulator was created last year (the KCC - Korea Communications Commission), and a few months after mobile leader SKT wolfed down #2 fixed broadband operator Hanaro, landline leader KT is merging with #2 mobile operator KTF. At last, triple play offers and VoIP are taking off. Korea Telecom is advertising massively for QOOK, its new brand for convergence.

The current crisis will accelerate concentration, and a few ambitious players will emerge stronger in both size and R&D. Korean, Japanese, European, or American players cannot afford keeping a defensive profile for long : after stimulating R&D and investments (TD-SCDMA, stimulus plans), China will probably force mergers among telecom manufacturers the way it is pushing carmakers to join forces.

5 trends for 2009 ?

. more concerns about health with the rise of femtocells
. vertical concentration in the media
. more big names (Yahoo!, RIM...?) change hands, more manufacturers go bankrupt
. DoCoMo goes shopping to pave the way for an international launch of LTE - Japan Inc follows suit thanks to a strong Yen
. a 3.0 FCC chairman with a web pedigree

Helio lands on Virgin island

Brand with prepaid subs would seek added value services king with cool devices.

Virgin Mobile USA and fellow Sprint M-VNO Helio may tie the knot after SK Telecom failed to get Nextel for $5 bn (and cyworld to outperform MySpace).

A marketing wizzard, Korea's mobile leader is good at launching brands on the national market but building an international vehicle is a tremendous task. And investing in an ailing MNO on a huge / consolidating market would have been a waste of time and money.

Now SKT has both*, and it should focus on a relevant partner to give its platforms the global reach they deserve. And quick : Korea's new and US friendly president LEE Myung-bak just met with his new IT advisor : Bill Gates... Microsoft's dark period seems over in the country.

* even if it may lose after China Unicom sells its CDMA network to China Telecom - another blow abroad for SKT, which owns a little bit more than 6% of the MNO.

MySpace, My Yahoo!, My Sun

It didn't take long for Vulture Capitalists to start hovering above semelless Yahoo!*

For 25% to 30% of the bride, Ruppert Murdoch offers paper, and boy doesn't he have a lot of the toilet kind (tabloids, MySpace shares...) ?

Yahoo! may follow another lead, but this clearly reminds us the maverick netco has become a media among others, struggling to adapt to the times and spaces. And cheaper** than Dow Jones / WSJ... traditional papers with flesh on 'em.


* see "Near Failed Communications" (20060619)
** people are mentioning $9-12 bn (based on Y!'s valuation), but Sir Ruppert would have spent about half a billion overall.

aQuantive, the ad fad and the virtual estate bubble

DoubleClick @ Google = $3.1 Bn. RightMedia @ Yahoo! = $680 M. Real Media @ WPP = $649 M. aQuantive @ Microsoft = $6 Bn...
The Virtual Estate bubble keeps inflating. Six billion bucks, that's a lot of dough, even for Microsoft who never signed such a big check (except to its owners, that is). Besides, this QuadrupleClick extravaganza is equivalent to a 85% premium vs AQTN's Tuesday's closing price...
Is Redmond that desperate not to miss the next train and this discreet commuter living around the same station (aQ are based in Seattle, WA) ? At this price, they could even go for the real thing, a real adco.
Somehow, MSN's mother company was supposed to have at least some notions of advertising. Ditto Yahoo! & Co. One can wonder whether this really will add sense to Google, today's king of online advertising.
Well. For one thing, it was a matter of taking a fifth P, lifting a powerful leg to mark one's territory. And Razorfish (one of the franchises owned by aQuantive holdings) is not the smallest one in this pond. Actually, there was a competition raging for this prize.
Yet fundamentally, there is the necessity to distinguish the media from the advertising platform. In real life, Viacom enjoys strong positions both as a media and as an adco... but not on the very same turf either. That can be OK when you are a huge conglomerate with the ability to build Chinese Walls. But it can't work when you are used to grow following the microsoftian model.

UNOMobile, COOP and TIM : mobile sells in Italia

"Parlare di più, pagare di meno". Talk more, pay less ; that will be UNOMobile's moto. Is this Carrefour unit a full MVNO or only an ESP (Enhanced Service Provider) ? Anyway, another retailer is launching a MVNO in Italy : COOP will propose CoopVoce to its 6.5M members and their families (18M people overall), aiming for 1M subs in 3 years with a EUR 200 M turnover. CoopVoce will be hosted by TIM.

"Talk no more, unless I pay less". That could be the reason why AT&T declined the same TIM (through the Olympia-Pirelli-Telecom Italia cascade). But American Moviles and France Telecom (now with Morgan Stanley) remain in a shopping mood. For them, it could be "Parlare di più, pagare di piu".

"Parlare di più" ? Vodafone seems to perfectly understand the Italian MVNO dialect : Vodafone Italia will host both UNOMobile and Poste Italiane, and it is even using the same language to talk to fellow brits (BT aims at 10% of the biz market with its convergence offer, but needs a godfather to enter it).

* branded 1Mobile - with the same 1 as the group's trademark logo for its first price products (see unomobile.it - still at the "coming soon" stage).

3GSM 2007 - A brave new World ? A new and improved Vodafone ?

This week, Vodafone decided to send a few messages to the market :
- Purchase of Hutchison Essar ($11.7bn for a 67% controlling stake... provided Essar doesn't launch a counterattack tainted with economic patriotism*) : I intend to remain in the World's top 3 operators for subscribers and I'm gonna post exciting growth rates for the years to come. Certainly not for ARPU but I'm investing for the long term. And by the way : I'm still able to invest for higher purposes than the loyalty of my shareholders.
- Another deal with Orange on 3G network sharing : I prefer to invest on CAPEX in India where it will make a difference. I'm bracing for a fiercer competition in mature markets, where I will focus on service.
- An impressive collection of old and new partnerships with almost all major web players (Google for mapping, Yahoo! and Microsoft for IM, YouTube, eBay, MySpace...) : you think these newcomers are smarter and swifter, and you believe they will get the bulk of the value but look ! everybody wants to work with me and I'm certainly not begging for partners. They know who's ruling the game and you don't want to miss this train or else...

At last the big red machine decides to move. But I cannot see much disruption out there. It actually looks like their last smart move in Turkey, only at a bigger scale. I'd like to have more movements in the home / office spheres. Beyond WCDMA900, that is (Nokia providing UMTS900 for SFR after Portugal and Finland). To be continued...

Otherwise, 2007 doesn't look like a year for new paradygms :
- Qualcomm still wants to be the King of the Universe, but its Universal Broadcast Modem (UBM) combines MediaFLO technology, DVB-H and 1seg / ISDB-T without caring much for DMB... a slap on the wrist for those naughty koreans who want to kick it out of their country.
- Quadplays are getting mainstream. The Virgin-NTL combo, Virgin Media, charges £20 for 2, £30 for 3 and £40 for the first no-frills quads (the 125 pound gorilla offers unlimited calls in the fixed arena and 500 mn of mobile babbling plus a monthly data package including £60 in airtime and 1,000 SMS, along with the hardware - handset and PVR). Virgin Mobile will also strengthten its controlled distribution.
- Either terrified by Viviane Reding or cornered by an ever tougher competition, O2 extends My Europe to 31 countries. For £10 per month or £60 per year, business subscribers to My Europe Extra won't be charged for incoming calls whatever the network on which they are roaming. Intraeuropean calls will cost 25p per mn flat.

That could be the best news for 2007 (but for MNO shareholders) : the landline / mobile gap in calling rates is bound to decrease even before VoIP gets fully mobile. The competition goes beyond mobility and furthermore, from the customer's point of view, that's the minimum you could expect from convergence in a broadband world.


* Voda downsizes its participation in Bharti but still keeps a few toes in the venture.

Far and Middle East predators

China Mobile recently had to deny rumors of bidding for MIC (Millicom International Cellular), the most exotic mobile arm of the late Jan Stenbeck, once a specialist in military mobile comms (you RACAL you).
More than a tactical weapon, MIC could even become a Weapon of Mass Differenciation for today's most ambitious cellcos. Etisalat (Emirates Telecommunications Corp) and China Mobile already fought for a slice of Pakistan Telecommunications Co last year, but MIC offers more than a few crumbs (10M clients across 16 markets totalling 390M people).
Millicom's "strategic review" started with a cleanup of participations and the purchase of minority shares. The "Up for sale" sign has not yet been painted but deep-pocketed purchasers already left fingerprints all over the place (the heavier the smearer). Beyond deep pockets are required patience, expertise in risk management and a knack for caligraphy (this may not look like your usual J or S curve).

Alcatel - Lucent : the swiftness of paper

5 years ago, Lucent would refuse a merger with Alcatel because it wasn't a merger of equals. I'm not sure it is this time either, but do Lucent shareholders have a choice ?
This non-event simply epitomizes the end of Ma Bell as we knew her. AT&T, the born again brand, seems to enjoy a new life from Plano, TX... but whatever happened to those prestigious labs ?
It's no more about the creativity of human beings, the ability to cope with new environments, to face the future. It's about the swiftness of paper, the ability to purchase evolutivity, to buy a few months.
Today's R&D does require a pervasive networking approach, but beyond the imperialistic / Cisco model. At the end of the day, you can waste a few months if you gain a beautiful mind.

NTT - DoCoMo : remerge, split-up, disrupt ?

You don't want 65% of your group's profits wandering too far away. So NTT want DoCoMo back. But new entrant MNOs strongly disagree. While announcing the selection of Ericsson as eMobile Ltd's main 3G network provider, CEO Sachio Senmoto asked for an AT&T-like split-up of the whole shebang, including DoCoMo because of their 56% market share. NTT is already a patchwork of regional units, but who would dare touch m-Japan Inc's champ ?

eMobile's extreme request was mainly meant to prevent the reconstitution of NTTsama Bell. Even DoCoMo can be a struggling leader... but with the full back-up / backhaul of its mother company, no competitor could ever dream of annoying them.

I'd like to know what DoCoMo's top execs think about a remerger with NTT. The cultural gap with the fixed dragon has been widening for years, the group would be under even more scrutiny, and the "everything mobile / pervasive mobility" vision would badly suffer the contradiction... But shouldn't they somehow be asking themselves how much they need a truly convergent profile to remain at the top ?

Orange are logically adopting France Telecom's integrated vision and even at Vodafone, former Mannesmann - Arcor people keep pushing for a descent in the "fixed" arena (again, the other day, at the CeBIT, a Vodafone DSL revival). If I were DoCoMo, I would at least consider reviewing my 10 year old vision. And why not, seize the opportunity : escape the risk of NTT dragging down the company and demand a formal and final split-up. I want my liberty back, I want to deal with any fixed player I want or why not, build my own.



* More about eMobile : in "J:COM's quadruple play - within the fence" (20060210) and in "3Greenfield Japan" (20051113)

Bells ringing - Vivendeals ahead

Baby Bells grew up since Ma Bell died. AT&T Jr and Verizon should snatch BellSouth and Qwest, and three years from now max, they somehow will have built an international stronghold in the wireless area.
Vodafone will sell (Verizon, Vodafone KK), but also buy. As rumors revived, the French government released a report on potential targets from France's CAC40 companies. Among them, Vivendi Universal are enjoying their own headline news : the "Universal" part is dropped, and SFR's lifetime ad agency, Publicis, just snatched the France Telecom - Orange budget. Maurice Levy can split his teams but not his own self. The new budget can definitely mean bigger money, but the risk should be taken only if Levy is sure of getting the whole Orange (especially after a Wanadoo rebranding), and not so sure of keeping the SFR business away from Vodafone adcos.
Vivendi could sell their cash cow but if they want to fight as a European leader in broadcasting an increasing competition, the timing looks perfect.

Free WIMAX and quadruple play

Iliad remains a great wonder in the ever consolidating telecom world. When the minitel specialist launched its disruptive None Networks in the late 90s, I must confess I didn't think they could last very long. Freesbee (now the triple-and-soon-quadruple player Free) looked like the kind of free ISPs the founders would sell right before the bubble burst.
But they're damn good at what they do and since they're actually free, they don't have to cope with international partners and don't care about standardization* : they can go straight to the point with the solution they need, even if they have to develop it for themselves. The Freebox was the ultimate proof of their ability to deliver the goods - even technically tricky ones - with a very aggressive TTM. From an ADSL2+ basis, they recently reached 174 / 18 Mbit rates with a home made "F-ADSL". "Asynchronous" ? You bet, from a competitor's point of view. And it shows in the "Digital Subscriber Lines" : two thirds of Free's 1.5M ADSL customers (France Telecom's main challenger) can enjoy TV over DSL (Europe's leader). Following the deal with Altitude Telecom, Free enjoys a nationwide Wimax license and announces disruptive quadruple play offers... nothing seems to stop them. Hell, thanks to Michaël Boukobza's well deserved aura, Iliad even survived a nasty scandal involving its founder Xavier Niel.
2006 looks like another make or break year and could turn out to be both the best and the worst year to confront France's big guys : the 3 MNOs have just been heavily fined for anti-competitive behaviors and the broadcasting landscape is being totally reshuffled after the CanalSat - TPS deal.
Guess what ? All could face yet another disruptive new entrant.

Telefonica's Northern Exposure

£17.7bn. Again, a lot of dough. But this time and even if this is Halloween, Telefonica is not going for spectrum or spectre with a greenfield operation in Germany : O2* are a full grown operator with positions in both the UK and Germany, not to mention other remains of the British Empire.
If Telefonica Moviles manages to be swift and efficient, Vodafone and T-Mobile should start worrying. This could also prove to be a clue for the future of T-Mobile USA within the pink team.
Whatever. Europe is catching up with America and the wave of concentration ain't over yet. Expect more Air France - KAL - style operations as well as a few low cost airlines crashes.

* about O2 : "Superfast me, O2" (20051023), "Brand new KPN - Brand new USA - Same old standards" (20050901), "One month oxygen supply" (20050827), "Over the air" (20050409)