Firms Have Big Expectations on 3G Video Phones

Cho Young-chu is a staunch supporter of “Show” _ the third-generation (3G) mobile phone service of KTF. He says the phone’s video call function comes in handy when he wants to maintain a good relationship with someone he doesn’t see very often _ a brother-in-law, for example.

“You may not want to make a video call to a total stranger. There is little need to use it with to your family, either, because you see them every morning at home,” Cho, the KTF chief executive officer, told The Korea Times last week. “So in my case, I have used it several times to call my brother-in-law and he liked it very much.”

The voice call function can make users feel like a TV news reporter. The voice is heard from a meter away even in a crowded cafe, and the image quality is reasonably good unless one moves the camera around too quickly.

Thanks to mobile firms’ aggressive marketing, the 3G video phones have become a hot item this year. KTF said it has sold more than 1.5 million Show phones between March and August. Most of the users have tried the see-each-other video calls at least once. And 36.5 percent of them use it on a regular basis _ mostly young men and women, Cho said.

SK Telecom, which also sells similar 3G phones named “3G Plus,” says that it has about 750,000 subscribers. In total, there are about 2.25 million Koreans who have bought 3G phones since March.

3G phones offer faster data transmission (which means faster Internet use and clearer images on video calls) than 2G phones, which are still used by the majority of people. It is also capable of showing real-time broadcasting of major TV channels _ KBS, MBC and SBS _ without using TV receivers at fixed rates of between 10,000 won and 30,000 won. KTF and SK Telecom launched their respective nationwide 3G services in March.

Technology Evolution

The term 3G is widely used for the easier understanding of ordinary users. But drawing the boundary between the 2G (second generation) and 3G (third generation) is somewhat vague and often confusing.

First generation (1G) refers to the analogue cell phone standards that were introduced in the 1980s. The 1G phones used analogue signals to transport voice signals between radio towers. It was gradually replaced by the 2G systems.

Under the 2G systems, voice is encoded in digital signals so it is less susceptible to eavesdropping. Short messaging service (SMS) and mobile Internet were introduced on 2G systems.

The most popular 2G systems are GSM (global system for mobile communications) and CDMA (code division multiple access system). South Korea was first to commercialize the CDMA system, while many other countries opted for the GSM standard. The two platforms were incompatible with each other so travelers had to rent handsets when traveling to other zones.

For the next step, numerous technologies and platforms have surfaced claiming to be third generation. That is where the alphabet soup starts.

The most widely used 2G system in the world is WCDMA (wideband code division multiple access). It is an improved version of the GSM system but can work on both GSM and CDMA networks. Meanwhile, Korean firms adopted a new technology called EV-DO years ago, which is an upgrade to the CDMA system. Some refer to it as 2.5G.

The most recent deployment is the HSDPA (high-speed downlink protocol access) on which SK Telecom’s 3G Plus and KTF’s Show are built. The industry sometimes calls it 3.5G to stress that it is faster and more advanced than other 3G systems,

In fact, video calls have been available for years on previous EV-DO phones. But they were shunned because of its ridiculous price (around 100 won per 10 seconds) and poor picture quality.

The 3G video phone services offered by “KTF Show” and “SK Telecom 3G Plus” are less expensive _ they are priced at around 30 won per second. But still, they can become a big source of cash income for the telecom firms, KTF said that its 3G phone users pay $46.7 a month on average, which is $14 more than the average revenue from its 2G users.

In addition to voice calls, mobile firms hope that music, video, games and news services using the faster data transmission will bring in more cash. “WCDMA is important from the point of the mobile entertainment business,” said Cho, the KTF chief. “They should be user-friendly and fun to use.”

Impressive but Shaky

Despite such rosy predictions, not everybody is happy with the 3G services. First of all, the voice-video call price is still considered too high to replace voice-only calls because they cost two to three times more.

Stability is another critical issue. On August 10, about 10,000 KTF users reported service interruption for a few hours. KTF said this was incurred by data overflow while engineers were upgrading relay systems at Yongin, Gyeonggi Province. It repaid 3,000 won to each affected customer.

Two weeks later, SK Telecom users in the western Seoul region also suffered a similar problem. Apparently to better its rival, SK Telecom pledged to pay 4,000 won each to the victims of the incident, 1,000 won more than KTF.

A limited choice of mobile phones is another setback as there are not as many 3G handsets on the market as 2G models. For such various reasons, there has been a reverse flow of users from 3G to 2G. The two firms acknowledge that a total of 8,000 users have abandoned their newly purchased 3G phones and gone back to their good old 2G phones.

Oh Young-ho, the firm’s spokesman, says such a figure is natural attrition as many mobile users end their contracts after the completion of the six-month mandatory period for receiving handset subsidies. KTF chief Cho also said that system failures were minor problems that won’t happen again once the network is stabilized.

In the long term, the shift from 2G to 3G can benefit handset manufacturers, too. As the 3G phones are compatible with both GSM and CDMA standards, phone makers can save costs by mass-producing 3G phones, instead of developing two separate platforms.


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