With the recent release 4G technology, WiBro Advanced, there are high hopes that this will bring about a new age in telecommunications and networking technology. "KT has invested in telephone services so much that their annual amortization is over 3 trillion won, and SKT and SK Broadband over 2.4 trillion won, even LGU+ 1.2 trillion won. With the next generation 4G mobile system, we can start a new telecommunications business with a fraction of the cost" claimed Yang, Seung-taik, the former minister of information and communications of Korea.
According to Dr. Yang, older version of telecommunications technology was extremely expensive because of relative inefficiency in technology itself. This is why investments of the 3 existing telecommunications companies are so high. The 4G mobile system, WiBro Advanced could change all this.
4G WiBro Advanced for Data and Voice Services
"If we start off from scratch with 4G technology, we can cut back expenses by a huge margin. Instead of traditional mobile phone services, can use mobile VOIP technology for phone services. At current system, a bit of phone call cost 5 times more than that of data communications," Yang stated in an interview. "We can lower phone costs by the same factor by using the efficient 4G, WiBro system as an all IP network. We even left out the word "Phone" in our business application form to emphasize this fact."
Even if Yang's planned venture provides monthly 2 gigabytes data services at 10 thousand won, the breakeven point will arrive extremely fast because of reduced investment. With 2 gigabytes of data, if a person wants to use up the data only by phone call, he or she has to spend more 18 days for a nonstop phone call. But for normal phone users, they will have enough data left for viewing two movies after regular phone uses.
Most of cost cutting in establishing infrastructure would come from the cooperation between the new phone company and cable TV companies. "Korea's cable TV systems connect more than 15 million households out of Korea's total 18 million households; we just need to borrow this network. This is one of the reasons why we can save network investment. We are planning to make annual amortization less than 200 billion won, which will make us able to reach the breakeven point in 3 years." Yang commented.
The current estimate for smart phones in use is about 15 million, thus more than 35 million users are still using standard phones. Yang is initially expecting around 10 million subscriptions. The price of a smart phone is expected to drop below US$200 by the end of this year. Buying in bulk would cheapen the costs, and Yang plans to distribute these phones at around 100,000 won each. It does not seem much, but if 10 million people subscribe, that is already 1 trillion won. Initial goal is to gather 10 million subscribers in the shortest possible time. These 10 million subscribers will generate enough revenue to cover all the investment costs and some more.
Once this accomplished, we can provide Internet services to the users, because all terminals are always connected to my network, the company is at an advantage over existing Internet Service Provider, such as Googles, NHN, and Face Book for same number of subscribers. On top of the existing services that others provide, the company is to provide a new concept of UCS.
UCS, user-created services, is a new idea that combines user creation with a business model. Unlike UCCs, UCS allows people to use available resources and platforms to create their own services that they can use for their own telecommunication service business. "Let's say when you have a big IDC and want to create and run a cloud computing service," Yang explained. "You can use the provided bandwidth and users on the network create your own services. Or you can work with the phone company to overcome whatever entry barrier you face."
Yang thinks that even if the company does get not all of the profit, it would become an explosive business. At beginning people might be a bit skeptical about the idea of business by themselves on a virtual network, but when a success story breaks out, there will be thousands of people rushing into the UCS. With thousands of people trying out their creativity on the platform, they will be able to create many successful businesses for the network. Yang calls this "collective intelligence."
Yang finds his inspiration from Apple's Steve Jobs, and the APP store. After Steve Jobs developed the I-phone in 2007, he wanted a closed system so that he could monopolize all software needed for I-phone. But users resisted by break his lock and created their own applications. For one year Apple fought to make user-created software illegal, but they gave in to create the APP store for users. With creation of APP store the I-Phone is no longer a mobile phone, it became a smart phone. This event was important to Dr. Yang, because users as a collective body proved that they are a lot smarter than Steve Jobs. UCS is a bit like the APP store. APP store only deals with the capabilities of a smart phone, but UCS deals with the capabilities of network as well as the smart phones, thus it becomes a network service. Unlike traditional service development, this service allows people to work in a parallel rather than in a serial manner.
"Traditional software development meant that people often fail many times before one breakthrough. And huge investment had to be made to cover the failures. With parallel development of UCS, people will be able to develop successful applications, services for their own business. "Successful ideas and services will become famous over the network while brilliant ideas could shine through exposure as well. A good metaphor for this is the difference between traditional dishes and Western foods. While Western meals come in a series course - which means that the users have to wait until the chef cooks for next meal, so you do not have any choice but taste whatever the chef provide to you. Korean dishes come all at same time, so while eating their meals, Koreans create a new taste for every swallow they take, whether they sense it or not Koreans are forced to be creative from their birth. UCS is trying to utilize this Korean creativity.
Until now the level of the users was not compatible with such an idea. During the first World Wide Web or web 1.0, people were but viewers or bystanders just willing to receive information. Users' ability grew to move into web. 2.0, so that they could contribute to the web and were able to create cooperative works like Wikipedia and blogs.
Now with social networking the web has upgraded yet again. Now people are becoming owner of a virtual network. People have their own friend list, and they themselves are yet again part of a friend group. The whole thing becomes a vast network of users. With the initially planned 10 million users all connected together in a network like this, really exciting stuff can happen.
People using UCS can provide their own service, their own businesses. As Yang stated before, if one person succeeds in their UCS venture, thousands are surely going to follow those footsteps. Everyone is virtual owner of the network, and the network will be made designed by the users themselves.
In the state of affairs in Korea however, this grand scheme will have a hard time to come to life. LTE, or long term evolution, is another 4G innovation that has gained much in the spotlight recently. However, according to Yang, current claimed 4G's are not true 4G, they are either 3.5G or 3.9G. "WiBro Advanced, this is 4G in the true meaning. We can get up to 320 megabits per second with this. The true 4G of LTE will be available in 2 to 3 years."
While I was creating this business plan, I had a moral dilemma," Dr. Yang noted "What government regulation is trying to do is trying to change market structure to provide a good telecommunications services at reasonable price to people. But the regulation did not change the market structure for more than 10 years. But still the regulation is in force.
Creating a fast, efficient and cheap networking solution was Yang's plan. He is currently working hard to gather funding for this venture. Yang expected a degree of funding from the Korean Federation of Small and Medium businesses, but as of yet there has been no answer. Although cheap compared to existing mobile technology, still with over 1 billion won in initial investment, finding funds for this venture would take a lot of effort.
"I'm looking for the best and most efficient solutions. The reason I went to Taiwan the other day was to find companies with the best phone devices for this venture. I contacted a few companies, all leading in this field agreed in setting up an eco-system for WiBro mobile system at an earliest possible time. That is with one company successful in this, I am sure others will follow and try to get a piece of our cake." Yang said with a laugh.
"IST, this is what I'm trying to go for." Dr. Yang explained mirthfully during the conclusion of the interview. "Internet Space Time is the 4 dimension, but I plan to create this on network, an all-in-one data networking service. Also IST looks like 1st doesn't it I would make a good logo.