hankyoreh

WiBro, an wireless Internet service that Samsung Electronics Co. has touted as a next-generation cash cow, is getting off to a creaky start, so far failing to attract customers and facing tough competition from other emerging technologies.

WiBro is a homegrown technology jointly developed by Samsung Electronics and other companies, which enables individuals to log on to broadband Internet service on the go. Samsung Electronics has invested around 300 billion won (US$309 million) since 2003 for the rights to the technology, and recently signed a contract with U.S. telecom operator Sprint Nextel Corp. to launch the service in U.S., one of the world’s largest internet markets.

Many market researchers have painted a rosy outlook for WiBro, forecasting that the new market will lead to 33 trillion won in production figures by 2012.

However, the reality so far is not as bright as was hoped, as the WiBro service has failed to lure as many customers as expected from their in-home servers, and competition is mounting from two alternative technologies, CDMA2000 EV-DO rA, and high-speed downlink packet access, or HSDPA.

KT Corp. and SK Telecom Co, the nation’s two telecom giants, launched WiBro this June in South Korea for the first time. As of the end of August, however KT had attracted only 479 customers to the service, while SK Telecom had lured a mere 15. The slower-than-expected growth in customer base is mainly due to a limited service coverage of WiBro, in service so far only in some parts of the Seoul metropolitan area. In addition, no WiBro handsets are currently on the market; subscribers must use the service from their laptop computers.

WiBro handsets will not hit the market until late this year as Samsung Electronics, the world’s third-largest mobile handset maker, is reportedly having difficulty in developing less power-consuming and heat-emitting batteries. "We will soon roll out WiBro handsets that will compete with EV-DO handsets in terms of battery quality," a Samsung official said.

Another challenge confronting the potential success of WiBro is a growing attention to HSDPA, another three-generation communications platform.

Recently, SK Telecom announced it will increase HSDPA investment to 810 billion won from the previously-assigned 570 billion won this year. The aggressive investment plan might be based on the belief that HSDPA would be more viable than WiBro in the future. Unlike WiBro, there have been three HSDPA handsets that have hit the market, with two more models soon to be released. A total of 31,000 HSDPA phones have been sold.

Samsung Electronics admits that interest has not been as high as it had expected. A Samsung official said, "Network operators still remain reluctant to make an investment [in the WiBro technology]."

Sprint Nextel, which signed a deal last month with Samsung to launch WiBro in the U.S. market, is showing interest in the CDMA2000 EV-DO rA technology. According to a recent Financial Times report, the U.S.’s third-largest mobile carrier plans to pour in as much as 6.3 billion won by the end of this year to provide the rA service to its 190 million customers. The rA service has some merits over WiBro in that it can be transmitted through existing networks, saving investment costs. Though rA is slower than WiBro, it is not a large enough gap to cause inconvenience to customers. Just as SK Telecom is pursuing rA as well as WiBro, Sprint Nextel is very likely to show more interest in the rA service down the road.

In addition, global telecom companies such as Vodafone of Britain and Verizon of the U.S. are also showing interest in HSDPA. An industry source said, "It is everyone’s wish that Samsung succeeds with WiBro. However, we still need to be cool headed in trying to figure out the reality of the situation, as the technology is still too premature to have taken off."