 Mobile communications services in Korea began with the introduction of pagers or beepers, commonly called "pee-pees." Although the devices seemed somewhat unusual to most Koreans when they made their debut in the early 1980s, the beginning of the pager business paved the way for the nation to experience an explosive development in the mobile communications market. Although subscribers of the wireless pager service offered by sole provider SK Telecom numbered only 1.45 million by 1992, the number increased by more than 10-fold during the following four years during which 10 more companies entered the market. The success of the pager service providers spread the notion the telecommunications service business was a highly lucrative one. The result was providers began offering services in major provincial cities such as Pusan, prompting the introduction of new types of communications services like city phones and PCS phones. The popularization of mobile telecommunications services also spurred the rise of a local equipment industry. Domestic makers soon began to outperform foreign companies like Motorola and Phillips which dominated the market in its initial stages. Industry at the Crossroads In particular, small- and mid-size companies have become market leaders in the field of telecommunications terminals, an excellent portent for the future development of the Korean communications industry. The pager industry, however, now stands at a crossroads. The virtual failure of the city phone business and the continued economic downturn have contributed to the deterioration of the business climate for the industry, although some sources foresee the industry soon will achieve stable growth, despite its short-term difficulties. The collapse of the city phone business is mainly due to the rise of PCS services. City phones are already at something of a relative disadvantage since they must be close to a city-located relay box in order to operate. PCS phones do not have these restrictions. City phone makers found themselves in trouble when mobile and PCS communications service providers slashed prices, even though they too had initially employed low-price tactics to get a toe-hold in the market. In addition, their demise was also accelerated by the fact city phones would only work in a limited number of downtown areas because of the blocking effect of high-rise buildings. Ten of 11 city phone companies are now extricating themselves from the business. Nationwide city phone rights holder Korea Telecom has taken a different viewpoint. KT executive director Suh Yong-hee has flatly rejected the allegation the city phone business has a bleak future due to its low quality of service. KT intends to provide continuous service for city phone subscribers by taking over the operations of other companies. City Phone Resurge With a view to enhancing the efficiency of the city phone service, KT is planning a number of measures to broaden the use of city phones, including providing a device to enable them to be used like a 900Mhz-level wireless telephone handset inside the home. For example, home-based systems (HBS) are expected to see steady growth since the demand for 900MHz handsets has increased continuously. Although the PCS and cellular phones services are relatively cheap, they are more expensive compared to city phone services. Given the difficult economic situation faced by the nation occasioned by the International Monetary Fund's (IMF's) rescue program, the prospects for city phone services have brightened to some extent. Another merit attaching to city phone services is providers have begun to develop networks through which they can not only offer an enhanced quality of communication, but they can also offer rates 80 percent below those of their competitors. In addition, they recently developed the technology to boost the coverage area of city phones without the need for further networks. Commercialization of the technology is expected to expand the network service area by two to three-fold. Pager service providers are also struggling to survive the harsher-than-ever business environment by pursuing development of service-related state-of-the-art technology. Operators are aiming to develop the technology to enable them to offer electronic mail and facsimile services. Telson Electronics, to this end, has developed a telephone handset through which a fax can be conveyed via a PCS phone or a pager. Despite remarkable progress in pager services, PCS and cellular phones continue to dominate Korea's communications equipment market. The Switch to Digital Korea is one of few countries where Motorola has failed to take a significant share of the communications market. Under the slogan the "handset suitable for Korean geography," Samsung's "Anycall" has achieved dominance of the Korean market. With the acceleration of technology development in cellular phones, all manufacturers have introduced digital systems, and Motorola, which has stuck with the analogue system has begun to lose ground to Korean companies. Big gainers have been SK Telecom, which entered the business with an analogue system, and leading handset maker Samsung Electronics, both of which have become domestic mobile phone markets leaders. In response to analogue system shortcomings, TDMA (time division multiple access) systems such as GSM and IS-54 were developed in Europe and the U.S.A., respectively. The CDMA system, which has a capacity 10-fold that of the analogue and three-fold that of the TDMA system, was subsequently developed by the American company, Qualcomm. From late the 1980s, Korean centers of research like the Electronics & Telecommunications Research Institute (ETRI) began deliberation on the standardization of digital mobile telephones in Korea. They concluded such standardization should be based on CDMA (code division multiple access). However, a chorus of voices rose in opposition to the introduction of a CDMA system, citing the lack of confirmation about the viability of the technology and the trend toward opting for the TDMA system in Europe and Japan. Against all odds however, Korea launched the world's first commercial digital mobile phone service based on the CDMA system. SK Telecom began service with equipment supplied from LG Information & Communications in January 1996; Shinsegi with Samsung became suppliers in the April of the year. The Cellular/PCS Face-Off Following commercialization of cellular phones based on the CDMA system, the industry began offering PCS phone services in October 1997. Three leading service providers included Hansol Telecom, Korea Telecom Freetel and LG Telecom. The number of PCS subscribers reached 600,000 by December, 1997, two months after the service first began. Cellular phone and PCS service providers regularly exchange barbs. The former claims PCS is nothing but a mobile telephone system with different frequency. Meanwhile the latter retorts the PCS system is a mobile telephone system but a highly advanced version. Cellular phone service providers are fighting to keep their market share by recruiting new subscribers. SK Telecom, which initially provided a service based on the analogue system, is now offering incentives to tempt analogue users to swap their handsets for digital models. Shinsegi is offering new digital handsets for old analogue ones. PCS has grown in popularity due to various services it offers including data conveyance, personal computer communication, and access to the Internet. The strategic alliance between PCS providers Korea Telecom Freetel and Hansol Telecom for mutual use of each other's network has proved to a be turnaround by boosting their competitiveness, although they are disadvantaged by a lack of relay towers compared to cellular phone service providers. Mobile phone service providers are also responding positively to calls to consumer demands they improve their service regarding international calls. SK and Shinsegi Telecom are forming agreements with 70 and 50 governments around the world, respectively, to facilitate mutual roaming services, i.e., the ability of either company's subscribers to use each other's antennae. Korea Telecom Freetel, Hansol PCS, and LG Telecom have each signed contracts with 70 countries in this respect. Competition between providers is closely related to competition between makers of handsets. Popular models on the market include "Anycall" by Samsung, "Cion" by LG Information & Communications, and "Gulliver" by Hyundai Electronics. In addition, Maxon, Pantec and Telson Electronics are also planning to market PCS handsets sometime this year, under license from CDMA technology-holder, Qualcomm. Focus on Exports With domestic markets continuously shrinking as a result of the economic slowdown and the demands of the IMF rescue package, the industry has begun to turn eyes toward overseas markets where strong growth is anticipated. A Japanese economic institute has predicted world mobile telephone markets will growth by more than 10 percent annually. Analogue mobile phones have been replaced by digital models in most developed countries and consumers in developing nations are following suit. Korean companies are faring well in international markets, benefitting from the technology they have accumulated since introducing the world's first CDMA-based mobile telephone system.
 They now compete with leading international handset makers like Motorola of the United States, Nokia of Finland, Ericsson of Sweden and Sony of Japan. They are also making efforts to develop new products and technology, by, for example, setting up research institutes in developed countries. Samsung Electronics is the national flag-bearer in terms of exports of mobile telephone sets. It is aiming to make the product its second-largest export item after semiconductors. It plans to sell three million units worth one billion dollars this year, representing about 50 percent of its total exports in the information and communications sector. The company began shipment of 1.7 million handsets to Sprint of the United States last year and this year is planning to increase shipments to the European Union and Asia, and to China in particular, this year. Although its sales efforts have been focused on the U.S. market so far, Samsung is seeking to diversify its overseas markets to include 15 countries over three continents. LG Information and Communication, for its part, is aiming to sell 600,000 to two million CDMA phone sets worth a total of 700 million won. The company which sold CDMA cellular handsets to GTE of the United States under its own brand name is also negotiating contracts with Air Touch and Bell Atlantic of the United States to supply CDMA cellular handsets. In a bid to diversify its export market, the company is also negotiating with companies in Peru, Israel, and Hong Kong for the sale of its products. It is also attempting to supply PCS handsets to two American companies. LG is also poised to conclude an agreement with a research institute in San Diego to develop key chips for PCS phones this year. Although it joined the market belatedly, Hyundai Electronics is planning to export 500,000 CDMA handsets worth $200 million to the United States and Asia this year. Armed with new services, the company is aiming to take the initiative in these markets. The CDMA Question The firm is planning to set up lines to produce more than 1.5 million handsets this year, of which it plans to export 500,000 to the United States and China, 300,000 for cellular and 200,000 for PCS phones. Small- and mid-sized enterprises are also throwing their hats into the ring in a bid to win export markets for their CDMA handsets. Maxon Electronics is gearing up to increase exports of digital handsets mainly to Southeast Asia and China. To this end, the company has bolstered the role its CDMA-GSM exports department. Maxon recently received orders for 4.5 million 900MHz handsets worth $100 million from Thomson CE of the United States and has already begun shipments. It is also pursuing negotiations to export CDMA-type cellular handsets. In a move to respond positively to the drastically-changed domestic market situation, the company is developing eight new models aimed at the U.S. market. Telson Electronics is planning to introduce its own line of PCS phones from March, and cellular phones from June, of this year, with a view to increasing sales in the United States, the European Union and Southeast Asia. It also anticipates its exports of pagers and 900MHz wireless phone sets will increase steadily. As the world's wired communications systems have developed from Public Switched Telephone Networks (PSTN) to Broad-Integrated Service Digital Networks (B-ISDN), wireless services have also developed from analogue cellular phones to digital handsets and are likely to continue to develop to the International Mobile Telecommunication (IMT2000) level through which voice and vision are provided simultaneously. In the midst of the enormous changes in world wireless communications markets, Korean companies have apparently succeeded in taking the initiative by being the first to commercialize CDMA communication. However, they still face many barriers. Their most pressing need is a domestic supply of related components. They must also rise to the challenge of the prevalent use of TDMA-type handsets throughout the European Union. Whether Korea will be able to successfully promote CDMA handsets on world markets in order for them to succeed semiconductors as the contry's most important export item will determine the validity of the country's bid to increase exports as a means to overcome the current economic slowdown and respond effectively to the strictures of the IMF-imposed regimen.
LG achieved a world first in January 1996 in commercializing CDMA. This breakthrough enabled LG to enter the cellular phone market with a fighting edge to its competitive ability, manifested in short order by its capture of a significant share of the market. LG subsequently developed a outstanding subminiature 152-gram jog-dial cellular phone, followed by a voice-dialing 135-gram CDMA phone in 1997. In July of 1997 the company released the "LG Cion" LGP-1000F model, a 126-gram lightweight CDMA PCS handset. To cap off this spate of innovation, in September of the same year LG developed the lightest and smallest CDMA PCS phone on the market, its LGP-5000F, weighing in at only 109 grams. The product features 50-hour stand-by or 110 minute continuous operation, when powered by a one-cell type high-performance lithium-ion battery, and 80-hour stand-by, or 170-minute continuous operation when powered by a large volume battery. It too is small, measuring only 117x43x23.8mm. The additional feature of a combined earphone and microphone allows hands-free use of unit.
LG Information & Communications
Pager specialist Telson Electronics is planning to produce CDMA terminals, 900MHz wireless phones, and pagers as major exports during 1998.
Telson Electronics Co., Ltd.
Telson Bldg, 874-4,
Pantech Co., Ltd.
Established in 1974, Maxon Electronics specializes in communication equipment, turning out over 100,000 products annually.
The company also produces terminals and accessories for the AMPS, ETACS, NMT450, NMT900, CDMA, GSM, and DCS1800/1900 systems which are used worldwide.
Maxon Electronics Co.
Hyundai Electronics has been a player in mobile phone business since the inauguration its mobile phone division in August 1997. Its target items are CDMA cellular phones and PCS handsets.
Equipped with a 13K Vocoder, the newly-released HGP-1200 clears away echoed vibrations during conversation, and a power-saving function prolongs operational time. The HGP-1200 uses the latest one-cell battery and features 58-hour stand-by or 240-minute continuous operation when powered by a large-volume battery. The user can be alerted to incoming calls by a variety of tones available through the unit's memory including a ringing sound.
Hyundai Electronics Co., Ltd.
The company has recently developed its super-light SPH-3000 series of PCS handset, which represents a sharp reduction in size and weight from its previous models. Measuring 114x50x22mm and weighing only 75 grams, Samsung achieved this feat of miniaturization by reducing the number of parts by 12.5 percent through the integration of core elements. Additionally, the unit's low-energy consumption design makes it possible to be in continuous communication for 60 minutes or remain in standby mode for 16 to 20 hours with a small battery; a large battery permits 240 minutes of continuous operation or 75 hours of standby. Its audio circuit is operates at an optimal frequency band within which it possible to hear conversation clearly and comfortably. It features voice-dialing and a recording function which may be activated during conversation. Samsung plans to sell a total of 6.5 million handsets including the SPH-3000, aiming at gaining a five percent share in the mobile phone market.
Samsung Electronics
by Yung - Tak Oh
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The company currently produces a CT-2 (call-exclusive mobile phone) with a built-in multi-channel access pager. On the basis of its confidence in Telson's accumulated technology, company management plans to export mobile phones and wireless phones with a view to doubling overseas sales to some $40 million.
Pantech was the first company in Korea to produce high-speed multi-channel access pagers. To expand their field of operations, Pantech signed an agreement in August 1997 with CDMA proprietor Qualcomm to introduce the technology to its new generation of products. A subsequent agreement was signed with TDMA terminal technology rights-holder ComCast to the same end. The company plans to launch a line of CDMA cellular phones, PCS handsets, and DCS-1800 handsets in the first half of 1998. Pantech also produces two-way type POCSAG, FLEX pagers which rank among the company's major exports.
Maxon guarantees clear communication with their CDMA MAX-1004 cellular phone, even in mountainous areas and in high-rise filled downtown cores by virtue of the unit's mounted Mobile Station Modem 2.0. In addition, the MAX-1004 features a power- saving function, measures just 145x50x23.4mm and weighs only 170 grams. The unit can be operated continuously for 150 minutes or be kept on stand-by for 55 hours.
Because of its late entry into the market behind two leading companies, Hyundai's products don't match up to its competitors' in terms of size and weight. Instead, they have chartered a strategy of capturing market share through elegance of design and imagination in the use of color in its PCSs.
Samsung Electronics, which has been steadily expanding its share of the cellular phone market since its introduction of analogue models, now plans to rank first in sales of CDMA cellular phones and PCS handsets.
