Europe warned of 4G "curse"

Warc, 28 February 2013

BARCELONA: Mobile operators in Europe have been warned they may face problems with 4G networks by their peers in South Korea, where this technology is popular with consumers but yields low revenues.

Speaking to Reuters at the Mobile World Congress, two South Korean telecoms executives explained the issues they faced following the roll-out of 4G some 18 months ago.

"It is a blessing to customers but it is a curse on the operators," said Suk-Chae Lee, head of KT Corp.

On the plus side, he observed that they were facing unprecedented demand. "But the issue we have is that they [consumers] are not willing to pay enough," Lee continued. "So, the fundamental problem is: Can we make any money out of it?"

His views were echoed by Jae W Byun, chief technology officer at SK Telecom. "The traffic increases but the revenue does not necessarily follow," he said.

He admitted that average revenue per customer had increased by around $13, but added "it may not be enough to justify the huge investment needed."

But take-up is increasing rapidly: some 30% of South Korea's 50m mobile users currently use superfast networks, and Byun expects this figure to double by the end of this year, which should improve profitability.

An indication of the higher levels of data traffic encouraged by 4G can be seen in the fact that an average smartphone user on a slower 3G network consumes around 342 megabytes of data a month, but South Korean 4G users consume 1.8 gigabytes.

Byun noted that rolling out a faster network could catapult a lower ranked mobile operator into a market-leading position, but that having done so others would quickly follow.

"If you want to change the game, then take a risk and invest," he said.

Data sourced from Reuters; additional content by Warc staff