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SKT Gets Deeper Into IoT Game

Robert Clark
News Analysis
Robert Clark
8/31/2016

SK Telecom may have been pipped on the rollout of the world's first nationwide IoT network, but it hasn't checked its broad IoT ambitions.

The South Korean telco last month unveiled its LoRaWAN network, covering 99% of the population, just four days after Dutch telco KPN Telecom NV (NYSE: KPN) unveiled its own nationwide rollout. LoRaWAN, backed by the global LoRa Alliance, is optimized for low bandwidth and long-life devices.

SK Telecom (Nasdaq: SKM) is spending 100 billion Korean won ($89 million) on the network, platform and apps development between now and the end of 2017, setting a target of more than 4 million connected devices.

It has announced prices starting at KRW0.35 per month, encompassing data consumption of 100KB to 100MB. The LoRa prices are around a tenth of those on its national LTE-M network, completed in March. (See SK Telecom Sees LTE-M, LoRa as Its 'Two Main IoT Pillars'.)

New business lines like IoT certainly matter in South Korea's heated mobile market. In its last quarter, SKT recorded flat revenue and EBITDA.

SKT has also developed a oneM2M-based platform, ThingPlug, and is working on utility metering, location tracking and monitoring services. None have hit the market yet, but it says it will target the auto, retail and construction sectors.

It has begun rolling out smart home services, though. It has signed up Samsung Electronics Co. Ltd. (Korea: SEC), LG Electronics Inc. (London: LGLD; Korea: 6657.KS) and other partners and expects to have launched 50 smart home-capable products -- such as air-conditioners and robotic vacuum cleaners -- by the end of this year.

Godfrey Chua, principal analyst at Machina Research, notes the difference between SKT's approach and that of some big Western telcos, such as Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NYSE: VOD), which have been pushing into IoT through M&A activity (See Verizon Buys Big Into IoT With $2.4B Fleetmatics Deal.)

He says it's hard to overstate the benefits of a nationwide network, offering scale as well as coverage.

"They now have a network and connectivity that delivers a different level of economics than before," he says.


Want to know more about the Internet of Things? Check out our dedicated IoT content channel here on Light Reading.


For example, a developer or enterprise looking for machine connectivity might get pitched prices of around $3 a month. "But I need something that costs not $3 but $3 per six months to enable the number of potential connections that broaden the use cases," he explains. "As an enterprise, the way I'm going to meaningfully expand my business is through the volume, which is what the IoT business promises: scale."

But as well as networks and platforms, telcos are going to have to bring in new business and marketing skills.

"Don't underestimate the sales process," cautions Chua. Telcos have strong account teams but their strength is selling minutes and data, not solutions.

"How to start the IoT conversation with the client? It wouldn't be with the networks guy. It would involve many other disciplines across the company. It's a much more complicated process," he says.

— Robert Clark, contributing editor, special to Light Reading

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TV Monitor
TV Monitor
9/1/2016 | 2:08:01 PM
Re: Cell phones, SK vs US, 2000 vs. now
Joe Stanganelli

"I have been misinformed entirely."

Yes you were. The fact of Korea being the very first nation with a nationwide ADSL service proves that almost all Korean houses were wired for landline phones back in the late 90s for this to happen.

What you describe is what happend in India and in Africa. But not in Korea.
Joe Stanganelli
Joe Stanganelli
9/1/2016 | 1:20:58 PM
Re: Cell phones, SK vs US, 2000 vs. now
@Mitch: Yes, in my neck of the woods back then (which spanned Massachusetts, New Hampshire, and Maine), cell-phone adoption was virtually nil.  Pretty much the only person I knew with a cell phone at the time was my dad (who fell into BOTH market segments of "businessperson who needs a cell phone for work" and "has disposable income and likes tech toys").

> And the world would be a better place if we all had Hello Kitty phones.

I know several people who would disagree with you on that point.  I'm not sure I disagree, though.  ;)
Joe Stanganelli
Joe Stanganelli
9/1/2016 | 1:16:54 PM
Re: Cell phones, SK vs US, 2000 vs. now
Sorry, to clarify, I meant "had used to be" -- not "was" (as in, "was so poor at the time").  Which, presumably, made a bevy of options attractive as they became increasingly available.

But perhaps I have been misinformed entirely.  I'm going by my recollection of what people in the know told me 16 years ago when I knew zero about the industry.
R Clark
R Clark
9/1/2016 | 8:24:37 AM
Re: Business not technology
Yes, the nuts of bolts of selling these new services will challenge the telcos. Different solution set, different pricing, different customer departments and a whole different business langauge.

 

 
TV Monitor
TV Monitor
8/31/2016 | 6:40:02 PM
Re: Cell phones, SK vs US, 2000 vs. now
Joe Stanganelli

"largely because their landline infrastructure was so poor "

Absolutely not. Korea was the very first nation in the world to have a nationwide availability of ADSL by early 2000s, which as you know depend on phone landline. Of course Korea switched to nationwide 1 gbits/s fiber network since.

Rather, it is the government planning that is driving in this "first to XXX" race in Korea. This "first to XXX' race stalled when President Lee Myung Bak, who was a Hyundai Construction Corp CEO and a construction man all his life, came to power and dismantled the information  ministry to focus on construction projects and this is why Korea fell into dark age in information race and why the Mobile WiMax, a standard developed in Korea and not by Intel(WiMax and Mobile WiMax are completely different things sharing name only) failed. The information ministry was restored when the current President Park, who was an electrical engineer by training, came to power and she understood the importance of grand national "moonshot" engineering projects due to her background, and it is this restored information ministry that is in a race to have its own version of 28 Ghz 5G as the global 5G standard.

The other critical project that survived the dark age of construction man president cutting R&D budget was the fusion reactor project, for which Korea is the world leader like the mmwave 5G and is expected to have the first working fusion power plant by 2030s.
Mitch Wagner
Mitch Wagner
8/31/2016 | 4:14:11 PM
Business not technology
The point about selling solutions rather than technology is a great one, and it effects all companies in the technology industry, not just SPs. 
Mitch Wagner
Mitch Wagner
8/31/2016 | 4:13:31 PM
Re: Cell phones, SK vs US, 2000 vs. now
I was in Silicon Valley in the late 90s and it seemed most people had cell phones then. Indeed, I got my first cell phone in 1997 and I felt like a late adopter. But of course tht was Silicon Valley, and mobile had nowhere near the universal penetration it had in South Korea, or all over the US today. 

And the world would be a better place if we all had Hello Kitty phones. 
Joe Stanganelli
Joe Stanganelli
8/31/2016 | 2:17:02 PM
Cell phones, SK vs US, 2000 vs. now
South Korea's telco infrastructure is just so fundamentally different from that of the developed West.  In the late '90s and early 2000s, the country was *extremely* quick and enthusiastic in adopting cell phones -- largely because their landline infrastructure was so poor (particularly in rural areas).

In 2000, in the US, *maybe* you had a cell phone.  If you really needed it for work.  Or if you had the disposable income and really wanted a toy.  But probably not.  It would be a couple of years before you started seeing cell phones more frequently.  (If I recall correctly -- and I could be mistaken (I welcome correction if so) -- circa 2001 cell-phone adoption in the US was well below 20%.)

I mention all of that to say this: When I visited South Korea in 2000, EVERYONE had at least one cell phone.

I am not being hyperbolic.  EVERYONE...had AT LEAST one cell phone.

The elderly.  Little kids.  Babies -- actual babies, still unable to walk or properly crawl -- had actual teeny cell phones (not the toy kind; the actual kind) on a lanyard around their necks.

And when I say at least one, I mean that most people we saw seemed to have at least two or three.  Some had as many as five or six (or more!).  Typically in different colors.  Often with stickers or Hello Kitty imprints.  (Adults had these.  Not just kids.)

Walking around in downtown Seoul one evening, my friends and I came across a lost little girl separated from her mom.  She knew no English, and my friends and I barely knew how to say "Hello" and "Thank you" in Korean.  But we were doing our best to help her.

Finally, the day was saved when the little girl received a call on her cell phone from her mother, and her mother was able to come and get her accordingly.

To us, back then, this was a completely different world.

But the US had strong landline infrastructure thanks to (in part) once all-powerful Ma Bell.  So we didn't need or particularly care to adopt cell phones so quickly.

My friends and I smirked and joked about our hosts with their five cell phones each.  How fun!  How magical!  How whimsical!  How fabulously strange!  To carry around these frivolous toys!

Now?  We're all glued to our 3-inch screens.
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