SK Telecom Spends Big on Mobile Broadband

South Korea’s largest mobile operator, SK Telecom (Nasdaq: SKM), has raised its capital expenditure budget for 2011 by 15 percent to cope with the surge in data traffic on its networks from smartphone and tablet subscribers. (See SK Telecom Increases Capex Spend in 2011.)

The operator said it will spend an additional 300 billion South Korean won (US$280 million) this year, bringing its total capex to a record annual high of 2.3 trillion South Korean won (US$2.1 billion).

SK Telecom, which has more than 25.7 million subscribers, said the increased capex spend for 2011 will be the highest ever for the company, representing a record 17.3 percent of the company's estimated revenues for the year.

The extra network investment will be spent on expanding capacity in its 3G network as well as accelerating the migration to next-generation networks, including Long Term Evolution (LTE), according to a press statement.

SK Telecom plans to launch LTE services in July, and the operator has developed an innovative strategy for the introduction of its new IP-based mobile network.

Specifically, the operator's LTE network deployment plans include a cloud-based architecture for the radio access network (RAN), which it calls "Smart Cloud Access Network" (SCAN). This could be one of the first such implementations of a cloud-based RAN, where the antennas and remote radio heads are separated and deployed apart from the traditional elements of the base station. (See MWC 2011: The End of the RAN as We Know It? )

In addition, the operator has said that it plans to develop femtocells early for its LTE rollout to ensure good coverage underground and inside buildings, an approach not adopted by many other mobile operators. (See SK Telekom Preps Femto Service .)

Why this matters
An increased capital budget is good news for SK Telecom’s vendors, particularly its LTE network equipment suppliers LG-Ericsson Co. Ltd. , Nokia Networks and Samsung Electronics Co. Ltd. (Korea: SEC). (See SK Telecom Picks LTE Vendors.)

It should also mean that the operator's infrastructure will be better able to manage the increasing volumes of data traffic being generated by smartphone users.

And for other mobile operators, the increase in SK Telecom's capex should mean an earlier introduction of the operator's SCAN architecture, a radical deployment that should provide clues as to whether RAN element separation can help ease operational and management issues.

For more
SK Telecom is an operator to watch:

— Michelle Donegan, European Editor, Light Reading Mobile

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