During July-October 2013, Korea Telecom will double the data allowance for subscribers that are on its 4G LTE tariff plans that offer ‘unlimited’ voice. (Please refer to our sector report from 11 April 2013 for more details on ‘unlimited’ voice tariff plans.) Korean consumers already enjoy real speeds of 10-30Mbps on 4G LTE networks, and operators are increasing speeds further through 4G LTE-Advanced. As such, we may be reaching a level where mobile data speed difference is not noticeable for most users.
SKT has announced that it will be offering higher data speeds through 4G LTE-Advanced technology. We think this may have caused concerns for KT about falling behind in competition until KT is also able to offer similar speeds. So KT may have launched this promotion in the meanwhile. If this promotion by KT is indeed temporary, we think it could have positive impact of nudging subscribers to use tariff plans with higher monthly fee. This is because (1) the ‘unlimited’ voice tariff plans, which are subject to this promotion, have higher monthly fee compared to other plans and (2) subscribers could get used to using more data during the promotion period and could continue to use more even after the promotion ends.
4G Spectrum Auction in Korea
Given the nature of the competitive bid, there have been no comments from the companies on their bidding strategies. Our best estimate is that SK Telecom (SKT) will take a 35MHz block in the 1.8GHz band, KT will take a 15MHz block in the 1.8GHz band, and LG Uplus (LGU) will take a 40MHz block in the 2.6GHz band. None of the operators are currently short of spectrum, and there are enough blocks in the upcoming auction for each operator to take one. While KT would be able to offer higher mobile data speeds if it takes a 15MHz block in the 1.8GHz band as we expect, we do not expect this to impact competitive dynamics significantly.