Tuesday 26 February 2013

South Korean networks warn European counterparts about the costs of 4G!

   South Korea may hold the title for the world's most connected country and it might be idolised by many governments and networks in the Western world, but with 30 percent of the country's 50 million residents using the LTE networks the Korean operators have a warning for those in Europe who are about to roll out their LTE offerings!

   SK Telecom are South Korea's biggest mobile carrier with more than half of the country using their radio waves, but the guys went on record with Reuters and said that, "although the rollout of faster networks had been good for consumers, they were still struggling to make money on the technology 18 months after launch."

   SK Telecom's head, Suk-Cahe Lee, warned that, "Our European colleagues complain that the explosion in data has not fully happened for them, that it did not come to reality... But in Korea, they are data crazy. We have unprecedented demand. We cannot handle it. But the issue we have is that they are not willing to pay enough. So, the fundamental problem is, can we make any money out of it?"

   So while the increased speed of 4G is great for consumers, businesses and most other people, it has left the three operators in the country scrapping for every last subscriber and the combined cost of marketing, handset subsidies and keeping tariffs as low has possible has meant that, "The traffic increases but the revenue does not necessarily follow."

   Jae W Byun, SK's Chief Technology Office said that they, "have seen about a $13 increase in average revenue per user compared with 3G," which sounds good on paper, but it supposedly isn't enough to cover the costs of the LTE rollout! So if we put that in a European context then we have a tonne of networks all about to offer 4G data, but there's already been a lot of red-tape, especially with Britain's 4G spectrum auction, so the cost in Europe could also be especially high, this will be most notable on operators like Vodafone who are now obliged to offer good indoor coverage to 96% of the population by 2016!, weighed down by regulation, competition and economic woes, are betting that the billions of dollars investment needed for 4G networks will eventually be offset by an increase in customer prices.

   We already know the impact that 4G has on data consumption, faster speeds always mean we use more! EE may disagree on that one, but then they don't offer unlimited tariffs and the sheer cost of their plans mean people can't afford to utilise the tariffs with higher data allowances! EE customers have been average 1.4GBs of data used per month, whereas South Korean firms use between 1.8 and 1.9 GB per month, so the average here will probably be similar to that! Just for the sake of comparison that is compared to the average use of 3G networks which comes in around 342 megabytes according to research from Cisco.

   So will LTE prove to be "a blessing to customers but it is a curse on the operators" like KT have suggested or will everything work out alright?

Via PCPro and Reuters.


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