Telecom Industries of Korea and Japan
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Transcript of Telecom Industries of Korea and Japan
1
Telecom Industries ofKorea and Japan
• Brian Toll
• Greg Zelenka
• Aaron Cowen
• Jennifer Barker
2
Outline
• Telecom Overview
• Korean Competitors
• Japanese Competitors
• Regulatory in Korea
• Regulatory in Japan
• Discussion of Korea Telecom
• Questions for Korea Telecom
3
Technology Primer• Land Line
– Dial-up– ISDN
• Broadband– DSL– Cable– LMDS
• Wireless– 1G, 2G, 2.5G, 3G
4
Korean CompetitorsCOMPANY LINES OF
BUSINESS2000
REVENUENOTES
SK Telecom Wireless, ISP, broadband via CATV
$5 Bn (5,760 bn W), up 34% from 1999
Primarily wireless provider with 54% market share.
Korea Telecom (KT)
Wireline, wireless, broadband via DSL
$11 Bn (12,734 bn W), up 8% from 1999
Primary wireline, DSL provider. Leads broadband at 44% market share. KT Freetel, wireless subsidiary, is #2 with 31% market share.
Hanaro Broadband via DSL, LMDS, CATV
$260 MM (300 bn W), up 29% from 1999.
Second broadband market share at 27%.. Pursuing CDMA 2000 license for 3G.
LG Telecom Wireless $ 1.8 Bn (2,058 bn W)
Speculation that loss of 3G license will lead to exit of wireless business via sale to KT. Currently #3 wireless carrier with 15% market share. British Telecom contemplation sale of investment.
5
Japanese CompetitorsCOMPANY LINES OF
BUSINESS2000
REVENUENOTES
NTT Wireline, wireless, broadband via DSL
$108 Bn NTT maintains wireline domestic monopoly.
Wireless division is called Docomo, with 59.1% market share, and is famous for I-mode service. NTT Docomo plans to be first company in world to launch 3G.
KDDI International LD, wireless
$30.2 Bn Original provider of inter-country long distance. Launched wireless venture called “au”.
Japan Telecom
Wireless only $14 Bn Called J-phone. Former AT&T investment, sold to Vodafone.
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Active Regulation - Korea• Multi-ministerial purview (FTC, MOFE,
MIC, KCC)– Potential regulatory conflict– Excessive regulation
• ‘Dominant player’ regulation– Regulators control rates– Caps on wireless handset subsidies
• Other players– File tariffs, but no rate controls– In January 2000, banned handset subsidies
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Ramifications of Regulation• Geographically
– 5 national players in wireless, no regional
• Technologically– CDMA standard nationally
• Competitively– For wireless, price competition is severe (over
33% drop in 3 years). – Similar technology, similar marketing
strategies, no handset subsidies.– 3G postponement announced by SK Telecom.
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Movement to Passive Regulation- Japan
• Ministry of Post and Telecom is single regulatory body in Japan.
• NTT Incumbent maintains wireline monopoly. Still very high new phone installation fees.
• Late 80’s deregulation with advent of wireless• Increased wireless phone use by removing user
deposit system and handset leasing fees (approx $2,700 per user)
• Since 1996, MPT exercises no pricing restrictions, which has increased price competition and caused wireless prices to decline by 56% in last 5 years.
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Ramifications of Regulation
• Geographically– NTT DoCoMo dominates, smaller players compete
regionally
• Technologically– Newer technologies cultivated, or;
– Multiple technological standards compete
• Competitively– Non-price differentiation based on technological
differences and service quality and coverage.
– NTT continues to dominate, but faces serious threats as competitors build infrastructure.
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Korea Telecom• Korean incumbent - $11Bn in revenue.
• Local, domestic and int’l long distance, business & data communication services, DSL, cellular service
• Virtual monopoly in local services, 85%+ share domestic LD and 60%+ share Int’l LD
• Leads broadband at 44% market share.
• KT Freetel, wireless subsidiary, is #2 with 31% market share.
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KT – Responding to Competition• Aggressive Restructuring
• Broadband in 92% Korean Households– KT developing new broadband services
Area of Restructuring Measures Taken
Employee Reduction Reduced by 12,500 to 52,500 employees
Disposal of Non-profitable Businesses
Sold 9 business
Reduction of Branch Offices Reduced to 91 from over 2600
Reduction of Subsidiaries Disposed of 3 subsidiaries and ICO investment
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Questions for Korea Telecom
• What are revenue drivers for 3G in Korea? How much will you spend on 3G and how will you recover this investment?
• What marketing techniques are used to attract customers and reduce churn?
• How will CLEC industry develop in Korea?• What are the three most important challenges
you face in the next 5 years?