KOREA: WiBro to put Korea on IT leadership map

With the majority of shares and most of the core technology's patents in Korean hands, hopes rise that Korea might finally benefit from its IT successes

Korea Times
Thursday, August 10, 2006

By Cho Jin-seo

After paying billions of dollars in royalties to Western technology companies such as Qualcomm and Rambus, South Korea is finally going to be a beneficiary of information technology leadership when the WiBro mobile Internet platform spreads around the world.

According to the Telecommunication Technology Association and the Korean Intellectual Property Office, South Korean companies and research institutions possesses a major share in WiBro-related patents. Especially, they have 51 percent of the patents related to a core technology called Orthogonal Frequency Division Modulation.

WiBro is a so-called fourth-generation communication technology, known as mobile WiMax outside of Korea. Samsung Electronics on Wednesday announced it will provide WiBro equipments to U.S. telecommunication company Sprint Nextel, which will build a $3-billion nationwide network in America by 2008.

"About 20 percent of various WiBro standard technologies were developed by Samsung," Lee Ki-tae, chief of Samsung's telecommunication division, said in a press interview in New York, Tuesday. "Samsung's WiBro system is more than a year ahead of those of other companies such as Intel and Motorola. We are proud that Samsung's WiBro has become an international standard," he said.

South Korea has been leading the development of the WiBro platform since 2003, when Samsung Electronics, SK Telecom, KT and Electronics and the Telecommunications Research Institute (ETRI) formed a WiBro consortium.

The government has also helped Korean firms to take the initiative in the technology competition. WiBro was selected as one of eight next-generation services by the Ministry of Information and Communication in its so-called IT 839 project.

Such efforts, however, will take more time to come to fruition. Currently, South Korea is the only country in which WiBro is commercially available. There are only about 500 registered users so far, because the service only covers a small part of Seoul and the surrounding area.

Samsung said that several telecommunication companies in England, France and Italy are paying attention to the technology. It also said companies from Brazil, Venezuela, Croatia and Saudi Arabia have contacted the firm regarding adopting the commercial WiBro service.

Samsung expects the global market for its WiBro platform will expand to 11.6 trillion won by 2010.

WiBro-related stocks surge on KOSDAQ

By Seo Jee-yeon

The green light is on for shares related to WiBro, the nation's homegrown portable Internet standard, after the U.S. adoption of the technology.

The majority of WiBro-related shares on the junior and tech-loaded Kosdaq market Thursday showed steep gains, mostly jumping to their 15 percent daily trading limit for a second straight session. Samsung Electronics, one of the major developers of WiBro, forged an alliance with three firms -- Sprint Nextel, Intel and Motorola -- for the American WiBro launch.

Eight WiBro-related stocks on the Kosdaq market, including Posdata and Ace Technology, C&S Micro and KMW, soared to their daily limit-up gains.

Posdata advanced 14.97 percent to 6,680 won; Ace Technology jumped 14.83 percent to 6,270 won; while C&S Micro rose 14.96 percent to 1,010 won.

Strong gains of those stocks led the Kosdaq market to rise 0.58 percent, or 3.21 points, to close at 555.53, while the main stock market index fell 0.81 percent, or 10.62 points to finish at 1,304.3.

Analysts said for the time being, WiBro-related tech stocks, most of which are parts manufacturers for Internet phones or base stations, will be the biggest beneficiary from the homegrown technology's entry into the world's third-largest mobile carrier market with 44.82 million subscribers.

But some were cautious about investors' rush to those stocks, advising them to keep up with the development of the partnership between Samsung and Sprint Nextel, a U.S. mobile technology provider.

"It is too early to say what kind of companies on the Kosdaq market can be involved in the partnership," No Keun-chang, an analyst of Korea Investment & Securities, said.

He added the benefit of the deal could be limited as majority of WiBro-related tech stocks on the rally have no direct business relations to Samsung.

Chun Sang-Young, an analyst of Meritz Securities, was skeptical about the future of WiBro itself, whether in Korea or in the U.S., pointing out the fact that the Internet phone business requires high costs but produces low profits.

"Some advanced nations prefer Internet TV businesses to Internet phones due to the high cost required."

He also said the continued rally of WiBro-related tech shares is likely to be limited as those stocks have been overvalued.

Date Posted: 8/10/2006