2 © Samsung Electronics

Table of Contents

Executive Summary 3

Introduction 4

Long Term Evolution: Mobile Broadband Steps Up 5

Korea: At the Leading Edge of the LTE Ecosystem 5

6

8

8

Conclusion 9

3 © Samsung Electronics

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 world’s 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.

LTE’s 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.

4 © Samsung Electronics

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 today’s 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 world’s highest penetration of

mobile broadband (100.6%1), data traffic has

grown a hundredfold since the introduction of

smartphones, reaching about 30,000 terabytes

(TB) per month in the first quarter of 20122. To

tackle the growing challenges, South Korea’s 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 world’s LTE subscribers3 and it is the first country in which all operators offer

LTE services for smartphones.

1 SK Telecom, KT, LG U+; April 2012.

2 SK Telecom, KT, LG U+; April 2012.

3 Samsung Electronics; July 2012.

JOSS GILLET, SENIOR ANALYST,

GSMA WIRELESS INTELLIGENCE

5 © Samsung Electronics

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

4 Samsung Electronics; December 2011.

5 SK Telecom, KT, LG U+; January 2012.

6 SK Telecom, KT, LG U+; September 2011 and July 2012.

7 SK Telecom, LG U+; July 2012.

Other

14%

South

Korea

28%USA

44%

Japan

14%

30 Million

July 12

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

Source: Samsung Electronics, July 2012

6 © Samsung Electronics

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

country’s 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.

By taking the LTE route, the three Korean operators overcame

their own unique challenges.

SK Telecom is Korea’s 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),

8 MK Business News; July 2012.

9 Korea Train Express, high speed trains.

10 SK Telecom; May 2012.

SK TELECOM SPOKESMAN,

AFP, NOV 2011

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

7 © Samsung Electronics

Smart LTE Networks is Samsung’s 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.

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 Korea’s 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

video/music streaming and gaming. As

of July 2012, SK Telecom is serving

4 million subscribers12

.

To enhance its LTE offering, SK

Telecom rolled out the world’s first multi-

carrier 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.

11

SK Telecom; May 2012. 12

SK Telecom; January, July 2012.

Figure 3: SK Telecom data traffic forecasts As the number of smartphone users has grown, ST Telecom has had to face the problem of increasing data traffic.

Source: SK Telecom

8 © Samsung Electronics

KT is Korea’s 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

as a ‘plug-in’ to its abundant fiber

optic infrastructure. This has

enabled KT to roll out 10,000 cells

in just one month13

.

What is noteworthy about KT’s

deployment is that the virtual

cloud solution’s 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.

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 Samsung’s 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.

13

KT; April 2012.

Figure 4: KT’s fast LTE infrastructure deployment Samsung’s simple and fast installation system enabled KT to roll out 10,000 radio units in just one month.

Source: KT

9 © Samsung Electronics

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, Samsung’s Smart LTE

Networks have helped Korea pave the way for the 4G revolution.

14

LG U+; July 2012. 15

Korea Investment and Securities; May 10, 2012.

10 © Samsung Electronics

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