1. ITS 15 th Biennial Conference Filling the Gaps in Fixed-Mobile Convergence: The Role of the Portable Internet Services (PIS) 2004.09.06 Hyeongjik Lee, Changi Nam, Seongcheol Kim Information and Communications University (ICU) 9.8 Management Issues in Mobile Communications

2. 2 Contents Introduction Overview of PIS The Emerging Roles of PIS Empirical Analysis Implications Conclusion

3. 39.8 Management Issues in Mobile Communications Introduction Development of Emerging Technologies (3G, WLAN, PIS ) Korea As new momentum for growth of IT Analyze PIS technology by focusing on its role in filing the gaps in FMC Purpose of the paper Background : Development of Telecom Market Internet Mobile telephone Convergence Discuss some implications for business players and policy makers

4. 49.8 Management Issues in Mobile Communications Overview of PIS 3G(CDMA 1X EVDO)PISWLAN Frequency used800 and 1,700MHz2.3GHz2.4GHz Service coverageUp to 20kmUp to 3km50-100m Transmission speed300kbps1Mbps300k-5Mbps MobilityNationwideQuasi-mobileSite-specific >>> <<< PIS enables users to access the Internet at an average speed of 1Mbps while they are moving Market Trials: A large-scale commercial PIS has not yet been launched Korea: establish technology standards, allocate frequency bands, and issue business licenses during 2004 Industrial Standards: There has been progress toward standardization Korea: domestic technology (WiBro) will be a single standard of PIS Current Status Concepts and Characteristics

5. 59.8 Management Issues in Mobile Communications The Emerging Roles of PIS (1) To offer a temporary value-added service Classification N generation Technology Bridging Technology (N+1) generation Technology Voice-based wirelessCDMA 1x / GSM1x EVDO / EDGEW-CDMA Low-speed wireless dataWLLPIS100MHz hot spots High-speed wireless data2.4GHz WLAN802.11x WLAN5GHz WLAN Fixed-line dataADSLVDSLFTTH Bridging Role Market Size Time However, most telecom operators and policy makers recognize PIS as an opportunity for mobile market expansion Therefore, PIS has another role beyond bridging

6. 69.8 Management Issues in Mobile Communications The Emerging Roles of PIS (2) As “a gap-filling technology” Overcome the limitations of existing communications technologies Help to fill consumers’ unmet requirements PIS is expected to fill the gap in current telecom services by offering a ubiquitous and convenient high-speed Internet services with relatively low prices Gap-filling Role

7. 79.8 Management Issues in Mobile Communications Empirical Analysis (1) If PIS provides high-speed wireless Internet services with a smartphone in the national area it will complement other existing technologies If the price level is sufficiently low, PIS market may grow quickly because of its gap-filling role Relative Role of PIS Technology Preference for PIS in terms of its technical characteristics Transmission speed (60%) > Service coverage (24%) > Device types (16%) > Voice telephony services Provide the highest utility to consumers when PIS offers “high-speed” wireless Internet services with a “smartphone” in the “national area” Preference for wireless Internet technologies including PIS, 3G and WLAN Price (82%) > Technology (14%) > Provider (2%) > Voice telephony services (2%) If PIS is provided at a moderate price, most consumers will use PIS Method: Conjoint analysis using two surveys

8. 89.8 Management Issues in Mobile Communications Empirical Analysis (2) Method: Modified Bass diffusion model Examining three different scenarios for PIS demand PIS market will grow quickly as a gap-filling technology WLAN may make inroads into the PIS market but the encroachment will be relatively small Existing mobile communication technology does not affect the demand diffusion of PIS Market Contribution of PIS Technology

9. 99.8 Management Issues in Mobile Communications Implications Help to experience a real portfolio of ubiquitous telecom services WLAN (indoors) – PIS (in metropolitan areas) – 3G (in remote areas) Help to fill consumers’ unmet requirements A vehicle for increased revenue but not a “bonanza” Number of PIS subscribers is relatively small compared with other technologies such as broadband Internet and existing mobile services PIS has some difficulties in substituting for existing technologies Need to establish and implement appropriate policies to encourage PIS Korean government: need to allow bundling of services For Consumers For Business Players Manage PIS as an additional service fulfilling consumers’ requirements A bundle of technologies For Policy Makers

10. 109.8 Management Issues in Mobile Communications Conclusion 1.PIS technology: not a substitute but a complement to existing communication technologies (gap-filling technology) 2.Not only help consumers to enjoy a more complete portfolio of telecom services, but also enable service operators to generate more revenue 3.Because PIS is not a “bonanza”, service providers should manage PIS as an additional service fulfilling consumers’ unmet requirements not as an independent service 4.Policy makers should establish and implement appropriate and timely policies to encourage the role of PIS Other technologies such as satellite DMB could be considered as a related technology to PIS in FMC Method for demand forecasting cannot reflect all factors Suggestions for Business Players and Policy Makers Limitations