VOIP services

Korea Leads the Charge on Mobile VoIP

South Korea's mobile operators have been given the go-ahead by the country's regulator to effectively charge for the use of over-the-top (OTT) VoIP apps or block them altogether.

The decision by the Korea Communications Commission, which followed intense lobbying by the operators, appears to be targeted primarily at the services offered by local messaging firm Kakao, which launched KakaoTalk, a free OTT mobile VoIP service, on June 20.

Kakao, which launched the first of its popular multi-platform smartphone messaging apps in 2010, claims to have 46 million registered users, of which about two-thirds are in Korea. Of those users, Kakao claims about 22 million use its services every day.

SK Telecom (Nasdaq: SKM), the market leader, said in an email to Light Reading that the growth of mobile VoIP would have a "direct negative impact on mobile carriers' voice revenues ... and leave [us] with no choice but to decrease or stop investment for network maintenance and upgrade."

Now SKT only allows mobile VoIP for those customers paying 54,000 South Korean Won (US$47.41) or above for a data plan. KT Corp. (Korea Telecom), the second-largest mobile operator, has adopted a similar approach.

However, LG Telecom (LG U+), the newest and smallest carrier, won't be taking advantage of the new rule. It changed tack following the consumer backlash and is now allowing customers to use OTT mobile VoIP services as part of their standard data package.

Consumer advocates in Korea have accused the KCC of violating its net neutrality principles set down in 2011.

Daniel Yu, Hong Kong-based senior analyst at Pyramid Research , said the big question was whether operators would now "begin to charge for other OTT content that is typically free."

He said the move in South Korea was clearly designed to protect operators' voice revenues, yet he doubted the actual impact would cause any great concern. "You can see these third party apps are everywhere but no operators have actually reported the damage they have caused to their own operation," he noted.

The KCC did not respond to questions from Light Reading. However, an un-named senior official is reported as saying the new rule would help protect local operators against the impact of foreign giants such as Google (Nasdaq: GOOG) and Microsoft Corp. (Nasdaq: MSFT).

The irony is that South Korea is the world’s biggest LTE market, with around 7 million customers on the three networks. Despite the benefits of the fastest and lowest-cost networks available, the operators are feeling most vulnerable over the most basic service.

The approach of the Korean operators is in sharp contrast to that of Telefónica SA (NYSE: TEF), which has developed its own OTT app (including VoIP) called Tu Me. (See Telefónica Digital Gets Smart.)

— Robert Clark, contributing editor, special to Light Reading

sarahthomas1011 12/5/2012 | 5:28:19 PM
re: Korea Leads the Charge on Mobile VoIP

That is quite ironic and just seems like a completely backwards mindset. Moves like this are how operators get bad names in the mobile ecosystem. 

AESerm 12/5/2012 | 5:28:16 PM
re: Korea Leads the Charge on Mobile VoIP

Seoul has a long tradition of directing the economy, allied with the chaebol, or the country's large conglomerates. But the LG Telecom example of not implementing (yet?) this new rule is instructive: The smaller younger operator taking side of consumers wanting mobile VoIP. Economics in the end are hard to contradict: software wins over hardware.

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