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Mobile and Internet convergence - driving innovation

Written by  Shin Bae Kim
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Author's PictureIssue:Asia-Pacific I 2009
Article no.:4
Topic:Mobile and Internet convergence - driving innovation
Author:Shin Bae Kim
Title:President & CEO
Organisation:SK Telecom
PDF size:265KB

About author

Shin Bae Kim is the President and CEO of SK Telecom, and has a wide-range of experience in both technology and management. Mr Kim began his career at SK Telecom as Head of the Business Strategy Office where he was responsible for the launch and commercialization of CDMA in Korea and a long list of other ‘firsts’ including CDMA EV-DO, Satellite DMB and the world’s first commercial HSDPA service. Mr Kim also serves as the Chairman of the Korea Association for RFID/USN, the Chairman of Korea e-Sports Association and the Chairman of the International e-Sports Federation. Business Week selected Mr Kim as one of the Best Leaders of 2005 and he received an Order of National Service Merit in 2006, as recognition of his social contributions. Shin Bae Kim holds a Bachelor of Science degree in Industrial Engineering from Seoul National University, and a Master of Science degree in the same field from the Korea Advanced Institute of Science and Technology. He also completed an MBA degree at the Wharton School of Business at the University of Pennsylvania.

 

Article abstract

Consumer mobile Internet services are growing rapidly; the next big challenge for mobile Internet will be providing customised solutions for businesses. With the new open platforms, companies like Apple, Nokia, Google, Yahoo, and Microsoft make the market more challenging; ‘value chain squeeze’ will reduce the added value of new products and features and foster hyper-competition. Rapid, expensive technology shifts prevent returns on network investment and stifle further investments, so mobile industry stakeholders need to find win-win solutions for sustainable industry growth.

 

Full Article

Convergence is the root, the source, of innovation. Since the 1990s, we have seen the great potential of mobile and Internet convergence and its impact not just on the telecom industry but upon other industries as well. Mobile and Internet technologies also merged rapidly with consumer and business sectors. This has truly transformed the world. A great percentage of Korea’s subscribers already use mobile Internet services. Worldwide, industry data from the GSM Association indicated that there are 50 million mobile broadband subscribers globally, half of them from Asia Pacific. Foundations of innovation Success in mobile Internet services comes from building a high-speed data network, providing diverse and innovative services, and pursuing creative, customer-oriented marketing. Innovative services are rapidly adopted by the mainstream market. Major examples included music portal services, social networking services, telematics (a blend of computers and wireless telecommunications) services, mobile financial services and mobile broadcasting services. To elaborate on the impact of convergence, let me focus on two very successful examples. Mobile services now enable customers to access social networking websites used by half of the Korean population from their mobile devices. As a result, 21 per cent of registered users now access the site through their mobile phones. Another example is a music portal service supporting both fixed line and wireless devices. Users can access and download from a database of 1.3 million music files through their mobile phones, PC or MP3 without restrictions. This service has become the biggest music portal in Korea; it now has 11 million users. New consumer services In order to drive more demand, operators are developing unique customer-oriented marketing packages. Depending on customer segments, they provide appropriate devices, branding, customized tariff plans and loyalty programs. For example, fixed-rate data plans encourage more customers to experience mobile Internet services, and as a result they help to increase the subscriber base. Operators strive to provide differentiated mobile services to customers. Location-based and personalized services are rapidly growing in popularity. To illustrate this, users with some navigation services not only obtain real-time road and traffic information, but also provide such useful services as searching for friends or stores in the immediate area. There are also personalized services that enable customers to conveniently configure their mobile screen so that they can swiftly access all mobile Internet services with ease. To receive even better services over fixed line and wireless networks, users will demand many kinds of service environments like 3-screen play - switching seamlessly between mobile handset, PC and TV screens. The business market The consumer market has truly embraced convergence and there is still strong potential as new users enter the market and current users demand more and new services. However, the next big challenge for mobile Internet will be the enterprise market. Companies have specific business objectives, such as management efficiency and productivity growth, and convergence can provide solutions to a great many corporate needs. BlackBerry provides a very good example of technology convergence; their services have helped businesses and enterprises become more efficient by providing access to information so workers can make better, faster decisions on the go. The next big innovation will be the ability to provide customized total solutions that enhance businesses’ competitiveness by integrating fixed and mobile Internet access into a single converged solution. In other words, what is needed is a one-stop total solution service for the enterprise market. By integrating and customising total solutions like mobile email or mobile groupware for business customer needs, enterprise customers will definitely use more mobile Internet services. To this end, telecom operators need to maintain close partnership with many parties such as IT and application partners, device developers, and business consulting firms to develop business solution services. Sustainable innovation The move towards further convergence will provide customers with more value and this will intensify competition in the market. At the moment, there are concerns that as new open platforms come to the forefront, technology companies like Apple, Nokia, Google, Yahoo, and Microsoft will make innovation and competition more challenging. By crossing traditional industry boundaries and launching new mobile Internet services, they have effectively increased the level of rivalry in the telecommunication industry, ultimately leading to hyper-competition. This, in turn, leads to a phenomenon for network service providers that could be qualified as a ‘value chain squeeze’. As its name implies, value chain squeeze causes the added value of new products and features to become smaller as pressure from hyper-competition increases. In addition, as mobile broadband is expanded and improved, telecom operators become more exposed to disruptive business models like mobile voice-over-IP. Technology shifts are becoming more expensive and occurring more rapidly, preventing returns on heavy network investment and stifling further investments. On top of that, most telecom operators are under mounting pressure to lower their tariffs. All of these factors lead to increased business risk for the telecom operators that provide essential network infrastructures. If these telecom operators’ efforts to expand and upgrade their networks do not lead to financial rewards for them and their investors, it will inevitably lead to disruptions in the advancement of network infrastructures. Progress in mobile Internet would, thus, be compromised and everyone would lose. Therefore, it is imperative that all stakeholders in the mobile industry, including government regulators, investors, businesses and partners, work together in ways to achieve convergence, devising win-win situations for sustainable industry growth rather than wasting capital and resources through hyper-competition. Only when we have this win-win situation can we sustain the mobile Internet industry for the long-term. Cooperation has become even more imperative as the economies across the world face difficult challenges ahead. We believe that the continuing mobile and Internet convergence will play a critical role in driving innovation that will not only bring more benefits to users but give a much-needed boost to the economies of the world.

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