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Strategies & Market Trends : Korea

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From: Sam Citron4/13/2009 2:21:08 PM
   of 214
Will Mobile Web Become More Affordable?
Mobile-phone carriers are looking to make data services more affordable.
/ Korea Times File

By Kim Tong-hyung
Staff Reporter

The mobile Web is here, but the paucity of excitement is evident among wireless users who are reluctant to pay premiums for services they rate as dull and patchy.

Maybe it's time to give the unused hotkeys another look, however, as mobile telephony operators, desperate to hit the data goldmine, are finally showing real commitment in making portable Web browsing more affordable.

In a news conference last week, SK Telecom, which controls more than half of the country's wireless market, said it will be announcing new flat-rate plans for its mobile Internet services sometime around June.

This will allow SK Telecom customers to pay a single monthly charge for all their data transfers, with no separate counting of minutes, content or megabytes of downloads.

In rolling out its new data rates, the company is trying to steal the thunder of its industry archrival, KTF, which is looking to expand the package of content available to users of its flat-rate plan, which charges 10,000 won (about $7.5) per month.

Although SK Telecom has yet to decide on the specifics, the new flat-rate program, which promises unlimited data usage, will charge users between 20,000 and 30,000 won per month.

LG Telecom, the smallest of the three mobile carriers, which has a 6,000-won flat-rate plan for its ``Oz'' data services, is also planning to introduce new rate plans as early as next month.

Consumers have been lukewarm about the previous flat-rate plans provided by the companies, with their monthly data allowances drying up after posting a few blog posts or trotting around a few Web pages. And the flat rates only cover browsing activities; subscribers still have to pay separately for downloaded content.

SK Telecom currently provides a monthly plan that allows users to use about 33 megabytes for 10,000 won, while KTF provides 8.4 megabytes at the same rate.

SK Telecom's new flat rate will quash such cynicism, according to Oh Se-hyun, who heads the company's convergence and Internet business division.

``The problem now is that consumers signed to our 10,000-won flat-rate plans are dumbfounded when they learn they are paying separately for the programs they downloaded, and we intend to eliminate this confusion,'' Oh said.

``Our new flat rates will make things simple, allowing users to access an unlimited amount of content on a fixed charge. Currently, more than 2 million of our subscribers are signed to data flat-rate plans, and we plan to expand this number substantially through the new rates,'' he said.

However, with it simplifying costs and refusing to charge separately for content downloads, it remains to be seen how data revenue and content providers will be affected.

With increasing numbers of wireless users switching to data-enabled handsets, mobile carriers have been hoping for data to have a bigger role in the growth of average revenue per user (ARPU), with voice sales beginning to stall here, a country that has more mobile phones than heads.

However, despite the latest improvement in technology, data services in general remain slow and awkward and have no chance at competing with conventional computer-based services in terms of content, which has critics questioning whether the mobile Web will ever be fully embraced by consumers.

However, price continues to be the biggest problem. Wireless users won't touch the data services with a 10-foot pole when complicated rate plans have them paying separately for content use and data traffic.

Many of those who actually click the track-wheels on their handsets have sworn never to do so again.

During last month's World Baseball Classic (WBC), an international baseball tournament held in the United States in which South Korea finished second, online message boards were smoking with complaints from mobile users who were hitting the roof after receiving bloated bills.

Mobile-phone carriers charge about 2 to 3.5 won per kilobyte, so it takes about 5,000 won (about $3.7) to download a pop song (about 3 megabytes) and about 10,000 won for five minutes of television streamed through data networks.

So many hardcore baseball fans who couldn't resist the urge to watch the games later found themselves paying over 100,000 won in data charges.

The new flat rates introduced by the wireless carriers would make it easier for wireless users to avoid such ``data-bomb'' bills.

Despite the vast improvement in technology, wireless carriers are seeing stunted growth in mobile data revenue, which combined to account for less than 18 percent of their total revenue last year.

SK Telecom's average data revenue per user hovers around 9,000 won (about $6.7) per month, after reaching over 11,000 won in December 2007. KTF is getting about 7,000 won, while the number is around 3,000 won for LG Telecom.
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