Seoul Park Jung-ho is a pioneer in the world of new fast mobile 5G data networks. In April, the head of South Korea's leading mobile network provider SK Telecom, together with two local rivals KT and LG Uplus, tricked his country into the history books of the telecommunications industry. The trio unceremoniously delayed the planned launch of the 5G end customer network for two days to beat US provider Verizon for a few hours.
But the marketing gag had a high price, Park remembers in an exclusive video for the Handelsblatt conference “5Germany”: “Even though we celebrated the launch of the first 5G network, the reality was terrible.” The data flowed on the mobile network the so-called fifth generation slower through the ether than with the previous LTE standard. In the process, 5G networks theoretically promise up to a hundred times faster transfer of bits and bytes. And the cover was miserable, admits Park.
“Even I could not receive a 5G signal for a long time.” To cap it all, this was not a short-lived phenomenon. As late as July, the Financial Times wrote about the breakdown: “The South Koreans complain about the poor quality of the 5G networks.” But now South Korea meets the claim of government and business to be the field laboratory for 5G networks.
The SK Telecom had spoken openly with customers, compensated here and there and the network improved, explains Park for the participants of the Handelsblatt Congress. “And the market calmed down, the customers became more patient.” And willing to change: The number of customers now grow twice as fast as the last jump to LTE, so Park.
That's why there are already three million 5G customers nationwide, of which around half are SK Telecom. By the end of the year, the company expects to have five million subscribers for all three providers and 14 million subscribers to the new service by the end of 2020. And after this fast start, South Korea is delivering its first lessons on the future of mobile telephony.
Lesson 1: The Koreans are willing to pay
The economy and the customers seem equally excited about 5G. In the lobby of its 33-story headquarters, SK Telecom introduces the future to patrols: from autonomous driving to coffee from robotic Barrista to virtual gaming worlds. Samsung's new 5G smartphones, including the foldable Fold, also flutter over the TV screens again and again to whet the appetite of the South Koreans. With success. Not only the data hunger of the users increases, but also their willingness to pay.
The 5G users consume an average of 40 gigabytes of data, four times as much as before, reveals Park. And they are ready to pay 50 percent more. The average revenue per user (ARPU) has increased from 35 to 40 to 55 to 60 dollars per month, Park adds.
However, it is still unclear whether this will become a global trend or an East Asian one. Because the Koreans as well as the Japanese generally love new technology and can also taste this preference a bit. Around 50 percent of customers use the top models of manufacturers, say industry insiders. Other nations are often more price conscious.
Lesson 2: Creative solutions needed for the start
In order to captivate these discerning customers in the start-up phase, creative solutions are needed, as SK Telecom found out. According to the company, it will take three to four years for the 5G network to cover the country as broadly as LTE today. SK Telecom has therefore set after the first problems on a cluster concept, says Park.
By this he means inner-city zones that deliver “perfect performance”. And SK Vice-President Ryu Young-Sang, as head of network business, explains what that means. Free of ties and well prepared with a small stack of keywords, he appears for an interview in Seoul. After all, it is the first time that corporate management has received a foreign journalist.
The company has set up 70 of these high-speed islands; by 2020, it will be 200. The speed of the data stream is also being increased from the current 1.1 to 1.6 gigabits per second. “It's not just about increasing coverage, it's also about focusing new services like upgraded and virtual reality in those clusters,” explains Ryu. And to lure even more people into the zones and infect the 5G fever, the telecom giant also offers a membership program with discounts on shops and restaurants in the 5G Islands.
What the services look like is presented by the programmers in the research center of SK Telecom. In a showroom, for example, customers are allowed to play with augmented reality (AR), showing digital animals in real time on the display. A pinnacle of virtual reality (VR) is a virtual living room where customers can meet virtually with their real friends and watch a real football game, for example.
And if the own team awards a scoring opportunity, the audience can throw digital stuffed animals or drinks on the screen, without the Real is going to break something. In addition, the company is developing a wildlife-free zoo with the World Wildlife Fund (WWF), a well-known global animal welfare organization. The product is technically not very demanding, says Chef Park. “But customers like it.”
Teaching 3: The interaction between state and economy is crucial
South Korea's early start is no coincidence. “The government has played a huge role,” says Ryu. Because, as in the past, it sees infrastructure as the basis for the global competitiveness of the country and especially the global electronics companies LG and Samsung. The government pushed the three companies to start their 5G networks at the same time to avoid high advertising costs and to have more money for network expansion.
And this joint early start pays off again, says the expert. Samsung and LG already have 5G smartphone in the market, Apple not yet. He also has high hopes that Samsung's network business can compete with global giants like Nokia and Huawei. “So far, Samsung has had no more than five percent market share in network business globally,” said Ryu. “Now the group is one of the first providers of 5G network technology.”
Lesson 4: Cloud games and the industrial Internet become a hit
But technology is only the basis, the use decides. And still puzzling the telecom companies, which could be the next killer application in mobile Internet videos. In Korea, the industry claims to have found an answer. In addition to AR and VR services, Ryu is now betting on electronic games in the cloud that push Google, Microsoft and Sony. “I think they will be a highlight of the 5G era.”
The reason: The 5G network reduces the time delays that have so far clouded the gaming experience of complex cloud-based games to a few milliseconds. And suddenly, even large groups can play together in real time, fight together or play music together over the Internet. Ryu expects completely new services, even though there are new products such as data glasses.
A new business area will be the full networking of companies, their machines and factories. Unlike the German government, South Korea's government has not reserved its own frequencies for corporate networks. But the telecom companies are now building it up. “They become the key,” says network expert Ryu. Business services would become a very important part of the business in the 5G era. In the next step, autonomous cars will follow.
Lesson 5: Telecom companies attack Google & Co.
The new services create a new opportunity. “With 5G, we can turn a mobile operator into a service provider,” says Ryu. What's more, “we may be able to win back the initiative from platform providers like Google or Facebook.” In part, this has already happened, such as with music downloads in Korea. But now SK Telecom is also developing high-speed games, AR and VR services, and virtual spaces for enterprise customers because third-party vendors have not got much to offer yet.
But especially with corporate customers, Ryu suspects home and global potential. On the one hand, the Koreans are already cooperating with Deutsche Telekom and SingTel, the Singaporean market leader. On the other hand, the classic platform providers in the corporate business are not very strong and would therefore want to work together with the network providers. “These collaborations would bring our services to a global level,” Ryu hopes.
The company has already selected some services for global expansion. And that is no longer just theory. Already in 2018, SK Telecom has entered into an alliance with the largest Southeast Asian passenger service Grab. Since then, the grave drivers no longer navigate with Google Maps through the Asian urban jungle, but with the navigation system of SK Telecom, T Map. And CEO Park already has more customers in mind. “We import many German cars,” he says. “I hope you will use our T-Map service.”
More: How can the new mobile communications standard 5G be expanded faster? Deutsche Telekom wants to conclude an alliance with industry for the expansion.
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