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Table of Contents

Executive Summary Introduction Long Term Evolution: Mobile Broadband Steps Up Korea: At the Leading Edge of the LTE Ecosystem 3 4 5 5 6 8 8 Conclusion 9

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This white paper is an overview of the LTE market in South Korea. The highlights are presented below:

Smartphone penetration and data traffic per user are amongst the worlds highest. The current smartphone revolution and data explosion are driving the quick introduction of LTE solutions.

This represents 28% of subscribers worldwide. By the end of the year, this figure is expected to reach over 16 million.

By July 2012, SK Telecom had moved from position twenty-two to position two in the world ranking of LTE operators. It now has 4 million subscribers. KT, which is renowned for its innovative LTE solution, boasts 1.4 million subscribers. LG U+, with nationwide LTE coverage, now claims 3 million subscribers.

LTEs new standard for delivering voice and messaging services enables operators to conserve limited spectrum whilst benefitting subscribers by delivering the superior voice quality they have come to expect.

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The world is going through a data explosion and this is largely being driven by the smartphone revolution. These days, subscribers expect fast and uninterrupted access to services and data on their mobile devices. An insatiable appetite for file sharing, applications, e-mails, games, music, video and so on is straining operators networks. Unless these operators meet the demands of todays computer-savvy generation head on, their problems are only set to multiply as the internet continues to proliferate and increasingly sophisticated smartphone applications are launched. To meet these new challenges, network operators who are currently using second generation (2G) and third generation (3G) network technologies to deliver services must migrate to LTE (Long Term Evolution), the fourth generation of these technologies. Through a more efficient use of the radio spectrum, LTE provides great benefits to both operators and subscribers such as higher data throughput, lower latency, and lower operating expenditures. Unless network operators using legacy technologies migrate to the new technology quickly, they will inevitably face rising rates of dropped calls, a degrading mobile experience and general dissatisfaction amongst their subscribers who will ultimately switch to LTE-adopting operators. This scenario is already being played out in South Korea. Here, smartphones, tablets and other smart devices are an essential part of daily life and Koreans never seem to let go of them. With the worlds highest penetration of mobile broadband (100.6%1), data traffic has JOSS GILLET, SENIOR ANALYST, grown a hundredfold since the introduction of GSMA WIRELESS INTELLIGENCE smartphones, reaching about 30,000 terabytes (TB) per month in the first quarter of 20122. To tackle the growing challenges, South Koreas three operators (SK Telecom, KT, and LG U+), who were operating 2G and 3G networks and who were each facing their own unique challenges, turned to LTE. The results were staggering; in July 2012 Korea had 28% of the worlds LTE subscribers3 and it is the first country in which all operators offer LTE services for smartphones.

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SK Telecom, KT, LG U+; April 2012. SK Telecom, KT, LG U+; April 2012. Samsung Electronics; July 2012.

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LTE (or 4G LTE) is the latest in the wireless communication standard developed by the 3rd Generation Partnership Project (3GPP) for high-speed data for mobile phones and data terminals. It betters previous generations of the standard (GSM/UMTS) by increasing the capacity and speed of wireless data networks using new digital signaling processing techniques and modulations. It presents a flatter and therefore simpler network architecture. LTE is IP-based and offers reduced transfer latency compared to 3G architecture. For the network operator, these enhancements result in a lower cost per bit and an increased number of active users per cell. In addition, LTE has a high spectrum reuse factor, supporting bands in the 700 MHz to 2.6 GHz range and bandwidths from 1.4 MHz to 20 MHz. It also supports handover with 3GPP2, WLAN, and legacy 3GPP technologies. The benefits for the end user include higher download and upload data rates. With an enhanced spectrum efficiency and an average transfer speed that is 5 times faster than 3G4, LTE is the ideal technology for services such as music and video streaming, mobile TV, and network gaming.

The summer of 2011 witnessed the launch of LTE in Korea amidst much public enthusiasm. The estimated number of LTE subscribers in Korea has since reached 8.4 million (about 28% of global LTE subscribers). Data traffic per LTE user has skyrocketed to an average consumption of 2.94 gigabytes (GB) per user per month5, far exceeding rates achieved by 3G. The number of subscribers has grown at a compounded monthly rate of 43% since September 20116. SK Telecom and LG U+, who both launched their LTE networks in July 2011, had respectively amassed an impressive 4 million and 3 million subscribers7 by

Figure 1: Global LTE subscribers Of all the global LTE subscribers, over 28% are in Korea.

Japan 14%

Other 14% South Korea


28%

30 Million July 12
USA 44%

Source: Samsung Electronics, July 2012

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Samsung Electronics; December 2011. SK Telecom, KT, LG U+; January 2012. SK Telecom, KT, LG U+; September 2011 and July 2012. SK Telecom, LG U+; July 2012.

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July 2012. KT, a later entrant into the market (January 2012), has acquired over 1.4 million subscribers8 and this figure continues to increase. SK Telecom, KT and LG U+ are all providing LTE network coverage in 84 Korean cities as well as on the expressways and KTX9 railroads covering 95+% of the countrys population. With LTE coverage spreading steadily, it is set to equal the level of existing 3G network coverage, which already extends to 99% of the country.
Figure 2: Explosive growth of smartphones in South Korea Since their introduction smartphones have grown a hundredfold, reaching over 28 million in the second quarter of 2012.

Source: Operator Data

Source: Operator Data

By taking the LTE route, the three Korean operators overcame their own unique challenges.

SK Telecom is Koreas largest mobile operator in terms of number of subscribers and has 50.3% share of the mobile market. It has been seen as a pioneer in telecommunications since introducing mobile technologies such as CDMA and WCDMA (HSPA). Its extensive 3G network, a result of a collaboration with Samsung, was top of its class in Korea with its 26.7 million subscribers representing over 50% of the Korean market10. Despite all this, the operator was soon facing the unexpected and rapidly growing demands of smartphone subscribers. Despite significantly expanding the capacity of its 3G network (up to 6 carriers and 9 sectors per NodeB),
SK TELECOM SPOKESMAN, AFP, NOV 2011

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MK Business News; July 2012. Korea Train Express, high speed trains. 10 SK Telecom; May 2012.

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SK Telecom entered the 4G realm by deploying Samsung Smart LTE Networks. The new venture entailed 6 months of pilot deployments and culminated in the launch of South Koreas first commercial scale LTE service in Seoul in July 2011. Samsung Smart LTE Networks empowered SK Telecom to meet its subscriber demands through the provision of significantly higher data rates and a cell edge throughput performance11. Within the first 7 months of the launch, the number of LTE subscribers to SK Telecom reached the 1 million mark, a clear indication that subscribers were now consuming high capacity mobile services such as Figure 3: SK Telecom data traffic forecasts video/music streaming and gaming. As As the number of smartphone users has grown, ST Telecom has had to face the problem of of July 2012, SK Telecom is serving 12 increasing data traffic. 4 million subscribers . To enhance its LTE offering, SK Telecom rolled out the worlds first multicarrier solution in July of 2012 and Voice over LTE (VoLTE) on August 8th of 2012. This complemented its current Circuit-Switched Fallback (CSFB) voice service. VoLTE allows operators to deliver both voice and messaging services over IP, which conserves spectrum whilst delivering the superior sound quality consumers have come to expect.

Source: SK Telecom

Smart LTE Networks is Samsungs innovative network solution for maximising the coverage and capacity of LTE networks deployed in environments where inter-cell interference limits coverage and capacity. It uses an advanced air resource allocation technology for managing a group of communications cells efficiently. The group of cells is controlled by a Smart Scheduler via optic fiber or other media (such as Ethernet). Cell-edge capacity is increased by 80% and cell-edge speed is doubled. As such, Smart LTE Networks enable network operators to handle more data traffic at a lower total cost of ownership.

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SK Telecom; May 2012. SK Telecom; January, July 2012.

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KT is Koreas largest communications provider with 87% share of the fixed-line market and 31.1% share of the mobile market. Its 3G network has been serving nationwide subscribers for many years. Although late to enter the Korean LTE market in January 2012, KT illustrates how fast LTE deployment and cutting-edge technology can help an operator to catch up with its competitors. The company has launched a Samsung Smart LTE Network, which uses a simple and fast installation system Figure 4: KTs fast LTE infrastructure deployment as a plug-in to its abundant fiber Samsungs simple and fast installation system enabled optic infrastructure. This has KT to roll out 10,000 radio units in just one month. enabled KT to roll out 10,000 cells in just one month13. What is noteworthy about KTs deployment is that the virtual cloud solutions Smart Scheduler optimizes radio resources across hundreds of cells simultaneously. This not only reduces CAPEX, but also OPEX, as energy, maintenance, and site rental costs are minimized.

Source: KT

LG U+ is the third mobile operator in South Korea with around 18% share of the mobile market. Unlike its competitors, LG U+ did not operate a 3G HSPA network and offered slower transfer speeds and lower quality mobile services, resulting in diminishing numbers of subscribers. It therefore decided to make the leap to LTE in a fast and effective manner. By using Samsungs multimode base stations, LG U+ was able to install LTE circuit boards into its existing CDMA cabinets thus saving considerably on time and deployment costs. LG U+ launched its LTE service in July 2011 and achieved nationwide coverage in March 2012.

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KT; April 2012.

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Unlike KT and SK Telecom, which use WCDMA-based CSFB, LG U+ currently uses SVLTE (Simultaneous Voice and LTE) for its voice transfer. Once VoLTE is developed and ready for deployment, LG U+ will switch to LTE exclusively. LG U+ continues its growth in the Korean market. In less than a year, its number of LTE subscribers has risen to over 3 million, which is over 35% of all LTE subscribers in Korea14. Its service now reaches small rural villages and the company has secured an 18.6% share of the total Korean mobile market. The fast deployment and effective LTE positioning strategy has resulted in a 6.8% annual ARPU growth15 and LG U+ expects to have a total of 5 million subscribers by the end of 2012. LG U+ is now well positioned to secure its place as a leading LTE technology provider in Korea.

The current smartphone revolution and data explosion have been the driving force behind the rapid deployment of LTE solutions in Korea. The three Korean network operators have successfully migrated their legacy networks to LTE and are seeing huge increases in subscriber numbers. Throughout this process, Samsungs Smart LTE Networks have helped Korea pave the way for the 4G revolution.

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LG U+; July 2012. Korea Investment and Securities; May 10, 2012.

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About Samsung Electronics Co. Ltd.


Samsung Electronics Co., Ltd. is a global leader in semiconductor, telecommunication, digital media and digital convergence technologies with 2011 consolidated sales of US$143.1 billion. Employing approximately 222,000 people in 205 offices across 71 countries, the company operates two separate organizations to coordinate its nine independent business units: Digital Media & Communications, comprising Visual Display, Mobile Communications, Telecommunication Systems, Digital Appliances, IT Solutions, and Digital Imaging; and Device Solutions, consisting of Memory, System LSI and LCD. Recognized for its industry-leading performance across a range of economic, environmental and social criteria, Samsung Electronics was named the worlds most sustainable technology company in the 2011 Dow Jones Sustainability Index. For more information, please visit www.samsung.com.

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