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Dr. Jongtae Ihm September 2005 SK Telecom

CONFIDENTIAL. Perspectives of DMB from Korean Cellular Industry - In the View of Convergence -. Dr. Jongtae Ihm September 2005 SK Telecom. Contents. I SKT Overview II Converged Service Status III SKT’s Standpoint IV Perspectives V Conclusion. I. SKT Overview.

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Dr. Jongtae Ihm September 2005 SK Telecom

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  1. CONFIDENTIAL Perspectives of DMB from Korean Cellular Industry - In the View of Convergence - Dr. Jongtae Ihm September 2005 SK Telecom

  2. Contents • I SKT Overview • II Converged Service Status • III SKT’s Standpoint • IV Perspectives • V Conclusion

  3. I. SKT Overview Historical Highlight, Vision and Mission Mar 1984 Korea Mobile Telecom Service Co.,Ltd, established Vision SK Telecom has always been the leader and pioneer of Korean Mobile Telecommunication market for the last twenty years, introducing numerous World’s First Services Jun 1994 SK Group became the major shareholder of Korea Mobile Telecom Most Valuable Company with Innovation Jan 1996 Launched commercial CDMA cellular service* Mission Oct 2000 Launched CDMA 2000 1xRTT (2.5G) service* • Ubiquitous Partnership • Value-Creating Innovation • Customer Oriented Service • Global Leadership Jan 2002 Completed acquisition of Shinsegi Telecom Inc. (STI) Feb 2002 Launched CDMA 1x EV-DO (3G) service * Dec 2003 Launched WCDMA (3G) service Market Status Jul 2004 Launched Satellite for Mobile DMB Service • Market Share : 51.1% • Total ARPU : USD 42.2 • Data ARPU : USD 9.38 Dec 2005 HSDPA(1.8M/384K) Installation - 16 Cities 1Q2005 World’s First*

  4. I. SKT Overview Wireless Data Business Status From “n.TOP”, SK Telecom’s first Wireless Data service launched in Oct. 1999, SK Telecom has been evolving into “NATE” and “June” to offer enhanced multi-media, multi-device services IS-95A/B cdma2000-1x 1x EV-DO n.Top ’99.04. ’00.02. ’00.09. ’01.06. ’01.06. ’01.10. ’02.02. ’02.07. ’02.09. ’02.10. Online SMS Image Dl. Info. Download service Video Streaming VoD/ AoD NATE Air NATE Photo NATE PDA MONETA NATE Drive NATE GPS EV-DO (IMT-2000) MMS DAB 1x EV-DO ’03.05. ’03.09. ’04.06. ’04.11. ’05.01. NATE AdmoA NATE Code Video Telephony Melon: Music portal Satellite DMB VoD : Video-on-demand AoD : Audio-on-demand GPS : Global Positioning System MMS : Multimedia Messaging Service DAB : Digital Audio Broadcasting AdmoA : Mobile advertisement service Melon : Integrated Music Portal DMB : Digital Multimedia Broadcasting

  5. I. SKT Overview Market Saturation & Solution Expansion to New Converged Service Service Area Expansion enables operators to overcome market saturation by creating new market with converging existing service with new items from different service area. Marketing Strategy Service Strategy Well designed Marketing and Promotion Strategy Innovative Converged Service Broadcasting, DMB Mobile Commerce, Location Based Service, Telemetics Telecom Platform Strategy Terminal Strategy Multi-Device Integrated Personal Platform Suitable Terminal designed for Converged Service Mobile Finance Service VOD/MOD, Multimedia Service Home Automation

  6. II. Converged Service Status NATE ON NATE ON (PC) Mobile NATE ON NATE ON is an instant messaging service for the users to enjoy seamless instant messaging regardless of time and location • Mobile instant messaging service with same functionalities and information of PC version; send/receive instant messages, check emails, register/find buddies • Unique services leveraging features of mobile terminal such as WAP buddy, real-time SMS, audible “emoticons”, and background music • Client based instant messaging service • Ability to log on simultaneously with mobile NATE ON

  7. II. Converged Service Status Cyworld “Cyworld” is a popular wired & wireless community & blog service which became the home of ubiquitous and convergence service among Korean youths Evolution to convergence by mobile integration Web-based Community & personal Blog service • Access to the same services and contents of Web environment • Ubiquitous features such as updating Mini-homepage anytime & anywhere • Real-time upload photo from camera phone, send SMS, etc. • Personal Blog : Mini Homepage • Decoration of Mini Homepage with board, diary, avatar, • Upload of photos, music, from PC • Easy to use and navigate friend’s mini-homepage • Very successful for item business 아궁 귀여워 !!!! 메뉴 Mobile Cyworld Main page Access Mini-homepage with mobile phone http://www.cyworld.com & Mini-homepage

  8. II. Converged Service Status AMS Current Issuer-centric Service AMS-based Customer-centric Service AMS is a next generation enabling platform which provides smart card and related applications to be issued through mobile devices Credit Card e-bankbook Chip M-Bank Subscription & Cancellation at Bank Handset Traffic Card M-Bank Subscription & Cancellation by mobile device any-time, any-where Subscription & Cancellation at Sales Agent Subscription & Cancellation at Card Company Satellite Broad-casting Member-ship VDSC Traffic Card Membership Credit Card e-voucher m-voucher Traffic Handset Handset • Can not integrate additional application after smart card is issued • Separate smart card for each service • Can add & modify service according to customer’s needs even after issue • Only one smart card chip for all services

  9. II. Converged Service Status Mobile Phone MP3 Player PC Ubiquitous Music Service – Melon MelOn goes even further than iTunes and lets subscribers to download & play unlimited number of DRM-coated music files in mobile handset, PC, and MP3 player, with monthly flat rate. Multimedia Music Service “Rental-based” Flat Rate Launched in Nov. 2004 Music Video, Photo Album Monthly Flat Rate for unlimited services 600,000 paid subscribers (Mar. 2005)

  10. II. Converged Service Status Ku-band (13.824~13.883 GHz) Ku-band (12.214~12.239 GHz) Contents S-band (2.630~ 2.655 GHz) Gap Filler S-band VoD, MoD m-Commerce 1x EV-DO Combined with the existing mobile Internet Hybrid Terminal Vehicle-mounted Terminal Dedicated Terminal Wireless Data/S-DMB Converged Service With the emergence of technical innovation, boundary of mobile network and broadcasting becomes more ambiguous. Satellite DMB, a convergence mobile broadcasting service from satellite is a good example of such trend.

  11. III. SKT’s Standpoint Business Model with S-DMB Win-Win business model between SK Telecom and TU Media, S-DMB Business Model with S-DMB Benefit to SK Telecom TU Media SK Telecom 1. Revenue Increase by Consignment Contract SK Telecom TU Media ServiceCharge Service Charge Except Commission • Broadcasting • Contents Sourcing& Development • Network & Platform Mgt. • Getting Subscribers in Mobile H/S Market • Terminal Sales • Distribution Channel Mgt. 2. Revenue Increase by WAP Service SK Telecom i WAP Service Broadcasting Service Using VOD/MOD 3. Entrance to Broadcasting/Media Industry Voice + Data (M-Finance, M-Commerce) DistributionService BroadcastService + Seeds Business forCP, PP, SO SK Telecom SK Telecom : Gain Additional Revenue & Value from S-DMB TU Media : Gain Marketing Power from SK Telecom

  12. III. SKT’s Standpoint Revenue Impact & Synergy ■ Revenue Impact • Revenue Share 25% of TU Media’s S-DMB product sales • $25 Million yearly income for the next 12 years on Satellite rental fee • Distribution commission on SKT sales network (25% of Initial subscription charge & Monthly basement fee) • Network management, BTS rental, and administration fee ($13M in 2005) ■ Synergy • Increase customer satisfaction and royalty with hybrid handsets sales • Synergy through integration with Mobile Internet and contents sharing • Cost saving in Cellular Network throughput investment with new medium • Diversifying contents distribution channel

  13. III. SKT’s Standpoint Cannibalization 최소화 ■ Cannibalization • Exact extents of cannibalization on existing Mobile Internet is unclear due to the early stage of service. • Partial cannibalization is expected to happen. • Overcoming the limitation of DMB as one-way broadcasting by integrating it with Mobile Internet to achieve two-way communication, and increasing data sales. • Existing VoD Service (June) will focus on the On Demand feature to position itself against DMB service. ■ Marketing Cost • Promotion is only done by SKT at the moment, but the market is expected to expand when the competitors start attracting subscribers

  14. III. SKT’s Standpoint Contents 강화 ■ Contents • With the emergence of Multimedia and Entertainment in Mobile Internet contents, importance of contents acquisition and distribution will increase. • Digital Content Market is expanding and enhancing, possibility of creating New Business in C-P-N-T value chain will increase. • Controlling strategic contents will enable higher usage of S-DMB, as well as next generation service such as WCDMA and Wi-Bro. • Enlarging markets through diverse investment such as movie and music funds to increase contents quality and set up win-win relation with CPs. • Currently searching for the next strategic contents after movie and music with various possible scenarios

  15. IV. Perspectives For successful launch of telecommunication-broadcasting integrated service, market-proven and easy-to-use data contents will converge with broadcasting mediums. Telecommunication-Broadcasting Integration Convergence Service Priorities • Provide information related to on-air programs through Mobile Internet. • Revenue Model : Info. Usage Fee, Traffic Broadcasting Service Information • Sell Data Contents related to programs (Ringtone, RBT, Music Video, Shopping) • Revenue Model : Content Sales, Traffic Commerce • Replay old programs through Data Streaming on demand • Revenue Model : Info. Usage Fee, Traffic On Demand • Provide information and guide about programs through Mobile Internet • Revenue 모델 : Advertisement, Traffic EPG Wireless Data Service  : Available Immediately  : Expected in the future ※ EPG: Electronic Program Guide

  16. IV. Perspectives Convergence Broadcasting is expected to develop into a more complex and enhanced service. To support such development, SKT is working on issues such as integrated platform, data broadcasting support, and device diversification. Time Phase Ⅰ Phase Ⅱ Phase Ⅲ 2005 2006 2007 • Communication/Broadcasting Platform Integration • (Contents, Authentication, Billing,) • Commercialization of Contents Object Technology • Contents distribution and protection technology development • Communication service technology expansion • Data Broadcasting Tech’ Service Entertainment Contents Integration • Integration of Game Channel and Mobile Game • Integration of Sports Channel and Information Service • Integration of Audio Channel and Music Contents (Ringtone, RBT) • Service switch with Hot Key Commerce, Communication Integration • Integration of Broadcasting programs and Data service • (Home Shopping, Lottery Sales) • Integration of On-air IM (Communication), and LBS service

  17. Thank You

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