1. From Editor Korea, your Deja Vu …… whether it is bright or not. One of my close friends, who work in TMT sector and also non Korean, once made an interesting comment on Korean TMT sector. He told me Korean TMT market is either advanced or abnormal. At that point, I started laughing with his interesting metaphor but later realized that his observation to Korean market was more than perfect. Yes, I am living in the heart of Digital Capital of the World, Seoul and whenever I travel outside of Korea for my business I always agree to my friend's comment; Seoul is either advanced or abnormal. If you are in this sector you can some what understand what I want to say. For many years Korea has been portrayed to the World, alongside with Japan, as a weird or different market. Things happening in Seoul were not the things I can easily find out side of Seoul. (I was quite annoyed when I traveled to London where found that my mobile was not working in the Tube.) Mobile TV, Social Networking Services, Ring back Tone, MMORPG (Massive Multiple Online Role Playing Game), MP 3 Players and many more things started in Seoul. Some went smoothly but many of them actually failed (Yes we fail more than you think). And in Korea, still at this moment, there are many more things being experimented and explored. As Eric Schmitt, CEO of Google, mentioned last year that Korea is the Digital Laboratory of the World, here comes the reason why I am starting this News Letter 'Korean Insight ' which will endeavor to reveal the real stories of Korean Digital Landscape bi weekly'. Firstly I want to let the readers to know the major/noticeable developments in Korean TMT market. So far it was really hard for many foreigners to catch up the Korean TMT market as there was lack of sufficient English sources. But what I really want to provide you through this News Letter is to help you make better business decisions by knowing what does work or not. We Koreans are very aggressive and trying to do something very bold. And consequently we make many trials and errors. I do hope you to get some implications from our experiences. For instance, Mobile TV, WIBRO (Mobile WIMAX) and IPTV are some key areas you should definitely watch Korean market carefully. I am always open to your feedback and will work hard to make this News Letter as your Window to Korean TMT sector and more. Feel free to contact me. Yours Yunho Chung Managing Partner, Veyond Partners

2. Topic of the Week WiBro - Will it work as promised? Tuesday, Nov 25th, 2008 WiBro is the Korean version of Mobile WiMax. There are two WiBro carriers, KT and SK Telecom , and their WiBro service brands are KT WiBro and T Login respectively. The WiBro adoption rate in Korea has been vey slow due to the operators’ low motivation and low interest of customer. WiBro subscribers were, by the end of August 2008, 188 thousand for KT and 3 thousand for SK Telecom. The penetration rate at that time was only 0.4% and ARPU was only 10 US dollars. First of all, the operators were not motivated to create the new markets in wireless broadband. Korean operators such as KT and SK Telecom do not regard WiBro as their alternative product to HSDPA and FTTH, but as the complementary goods to them. A complementary good does not make enough profit as a single business unit and the investments are also limited. Consequently, the coverage of WiBro network in Korea is limited to the Metropolitan area including Seoul. As their coverage focus is limited to outdoor, the indoor network quality where Wi-Fi usually covers does not meet customers’ expectation. Additionally, they are not active in their advertising and promotion to allure subscribers. Consequently the adoption rate of WiBro is relatively slow, and it will unlikely be changed for the next two or three years.

3. WiBro - Will it work as promised ? (Continued) Tuesday, Nov 25th, 2008 Secondly, the customers are not in desperate need for WiBro. Basically, they do not value WiBro access to the broadband internet while they are moving. Even the professional segment, which is the most attractive market segment, is not interested in WiBro. Given the fact that they can access the Internet through the stable and excellent wired broadband or Wi-Fi, they cannot find strong reasons to use WiBro, which requires extra money. In addition, the WiBro device, a laptop modem style with limited functions fails to induce customers. Recently, however, PMP (Personal Media Player) and navigation are diversifying their device portfolio in order to expand its target segment and to stimulate the unmet needs of customers. In this regards, they consider including WiBro functions in their products. It would be an alternate solution to enhance the adoption rate that we provide customers with WiBro modem in bundled or built-in manner. However, this slow WiBro adoption in Korea could be changed soon. SK Telecom recently announced that they would focus on WiBro for their wireless internet strategy . SK Telecom will invest 815 billion won in total for WiBro by 2010. Also they are planning to build the WiBro network system with ‘Wave 2′, twice faster than the existing one, by 2009. KT is also planning to invest 1 trillion won in total by 2011. KT made strategic partnership with device manufacturer such as Samsung Electroninc, LG Electronincs, TG Sambo, and Cowon for improving cooperation system related to WiBro. The chart above is WiBro subscriber forecast by 2009 based on the data from June 2006 to June 2008. So far, the blue line is more accurately reflecting the current market situation, WiBro Subscribers are still around 180 thousand . These days both SK Telecom and KT are promoting WiBro a lot. To promote WiBro, both offer free WiBro for 3 to 6 months to their new customers. With such an active promotion, SK Telecom attracted more than one thousand people as their new WiBro subscriber only in 13 days. Currently it is still hard to predict whether WiBro is going to be a success in Korea or not. I assume that most of the present WiBro subscribers are using WiBro thorugh the free promotion, so it is yet difficult to say how the market will look like for the longer term.

4. What Koreans are doing on the Net? November 21st, 2008 On Wednesday I posted that I went to the KNP (Korea Netizen Profile) seminar , and here are some statistics from the 2008 KNP Research. The following chart shows what Koreans use their internet for (To see in detail click the image). According to the KNP research result, “Email” is the most frequently used web service for Koreans and “Search” is following the next. Other interesting result is about Korean internet users’ perspective for online advertisement. Following is the result for the question “Why do you click on online advertisement?” (to see in detail, click the image) Most Koreans click the online advertisements when it looks fun, and also when it contains promotional events. These research results can be a guidance for those who want to publish effective online advertisement on the Korean market.

5. Can "OZ" become the Successful Case of MNOs' Next Killer Application? November 20th, 2008 On April, I posted that LG Telecom realeased the mobile full browsing service called OZ . OZ is a mobile internet service that offers full browsing and it costs 6,000 won (about 5 dollars) per month for 1 GB traffic (2,000~4,000 web page views). On the 28th of October this year LG Telecom announced that the subscribers of OZ were more than 400 thousand, about 6% of their subscribers, since it was launched in April. So does OZ make significant financial results for LG Telecom? Let’s look at the ARPU development of LG Telecom and their competitors and see how they are doing. Here are each MNO’s ARPU Development from 2007 2Q to 2008 3Q. As you can see, MNO’s ARPU have not been increased, they have in fact decreased a little bit overall. In the case of LG Telecom, ARPU of 2008 3Q has been decreased by 2.2% from previous quarter and 3.4% from previous year.

6. Can "OZ" become the Successful Case of MNOs' Next Killer Application ? (Continued) November 20th, 2008 Let’s look at the Data ARPU development which is directly related to OZ. Data ARPU includes SMS, mobile internet, mobile contents and so on. Korean MNOs reduced the SMS prices by 33% from January 2008. SK Telecom’s Data ARPU in 2008 has been decreased mostly due to the SMS price reduction. KTF and LG Telecom’s Data ARPU have instead shown increased figures in 2008. In the case of KTF, the increasing subscriber base for SHOW (3G service of KTF) is the main factor for the improving Data ARPU. LG Telecom’s Data revenue of 2008 3Q was 80.6 billion won, which is an upturn by 0.6% from previous quarter and 7.5% from previous year. As LG Telecom said that OZ subscriber’s Data ARPU is 1.7 times more than other subscribers , the expansion of OZ subscribers would be the main factor to increase LG Telecom’s Data revenue. It seems that OZ made some improvement in revenues for LG Telecom. However offering just full browsing is not enough.

7. Can "OZ" become the Successful Case of MNOs' Next Killer Application ? (Continued) November 20th, 2008 The total number of subscribers for OZ are increasing but the monthly net increase in OZ subscribers are in fact decreasing. I think this points out that LG Telecom needs to provide more than just full browsing, and that would be to focus on the CONTENTS that people want to consume and use. If those are not provided, LG Telecom’s OZ might just be a temporary fad for Koreans.

8. Mobile banking users have increased by 90% over the last 12 months November 10th, 2008 Internet banking is very common in Korea. According to the Bank of Korea, the number of registered user in financial institution for internet banking is currently more than 50 million. Meanwhile, the users of mobile banking are around 7.8 million, which is an increasing by 90% over last 12 months. This popularity is mainly driven by the growth of VM (Virtual Machine) mobile banking users. In Korea, there are two different types of mobile banking, one is IC mobile banking and the other is VM mobile banking. IC mobile banking is using IC chip, inserted in mobile handset, to use mobile banking. Only limited mobile handsets provide IC mobile banking. However VM mobile banking is using application software, installed at mobile handset, to do internet banking. This means that you don’t need a special mobile phone to use mobile banking.

9. Business in Korea EA found the Perfect Business Partner in Korea November 14th, 2008 I am not a huge fan of game though, Korea is famous for its advanced game market, especially in online game. Pearl Research, American consulting firm, forecasts the online games market in Korea will exceed $1.7 billion by 2009, driven by new releases and a fervent gaming culture. Following chart is Top online game in Korea on October 2008. Most of games are developed and published by Korean game company,except World of Warcraft which is developed and published by Blizzard. Among these online games, FIFA online 2, ranked as number 3, is developed by both EA( www.ea.com ) and Neowiz( www.neowiz.com ) EA traditionally have made package games such as Sims, Need for speed, Battlefield, NBA, and FIFA series. To get into the online game business EA invested the Korean online game company Neowiz, currently EA is the second shareholder of Neowiz. Neowiz is Korean game company, operating online game portal Pmang( www.pmang.net ), top 3 game portal in Korea. Together with Neowiz, EA focused on getting the FIFA series into its online version. FIFA online 1 was launched in 2006 in Korea and the year after the second version of the game, FIFA online 2, was established. FIFA online 2 is currently reaping its success in Korea with revenue of around 2 million dollars per month. I think FIFA online has pretty successed to enter not even Korean online game market also global online game market. EA is trying to make FIFA online successfull at other countries too. FIFA online 2 was launched in Japan to the public on October 2008. Also FIFA online 2 is preparing to get launched in China and other markets. On November 28, FIFA online 2 will start open beta test globally (If you want to see more about FIFA online 2 open beta test, visit here )