South Korean MNO’s Targeting the Consumer IoT

In July 2018, SK Telecom launched a consumer Internet of Things (IoT) device aimed at providing users with an increased sense of security. The protection kit is shaped like lipstick and is able to alert the police in emergencies by sounding an alarm, sending a text to the police, recording audio, and sending location data to preselected friends. In 2017, SK Telecom launched an IoT-based Smart Tracker system, which helped users track their smartphones by notifying them of the loss of personal items and linking to SK Telecom’s smart home platform. SK Telecom is not the only South Korean network operator to have its sights set on increasing consumer use of IoT devices. LGU+ has partnered extensively with construction companies in order to establish its IoT platform in new homes and apartments for more than 800,000 IoT subscribers. Not to be outdone, Korea Telecom has partnered with LG and launched its GiGA IoT home manager, a home IoT service that enables remote operations of up to six LG home appliances. The consumer IoT market is helping South Korea’s Mobile Network Operators (MNOs) to create new consumer revenue streams, as traditional mobile revenue streams have stagnated.

In South Korea, there is more of an emphasis on consumer IoT device use than in other markets. South Korea’s network operators routinely partner with construction companies in order to set up home IoT platforms in new apartments and work to deploy smart devices and services for individual consumers. South Korea’s Ministry of Science and Technology breaks Machine-to-Machine (M2M) connections down into the following categories: remote monitoring, vehicle communications, wireless payments, and wearables. The largest reported category is remote monitoring, which mainly consists of consumer home IoT devices.

Each of the major operators has invested heavily in pursuing the consumer IoT market. Korea Telecom announced in 2016 that it was investing US$130 million into the Internet of Small Things by building out a Narrowband-IoT (NB-IoT) market for the target applications of smart home services and manufacturing. LGU+ has partnered with Korea Telecom in its NB-IoT endeavor in an effort to increase its own IoT home service subscribers. SK Telecom, which has thrown its support behind the LoRaWAN platform instead, reports that its biggest vertical segment in terms of application category is remote monitoring. While for many other operators and markets, there is a distinct focus on the Industrial IoT (IIoT) market, South Korea’s operators have differentiated themselves by placing a substantial amount of their resources on building out South Korea’s consumer IoT market.

Within South Korea, the major telco companies (KT, LGU+, and SK Telecom) have developed and commercialized Business-to-Business (B2B) and Business-to-Business-to-Customer (B2B2C) M2M and IoT services in order to create new revenue streams, as existing revenue streams from traditional mobile services have stagnated. By focusing on the South Korea’s smart home market, South Korean operators are turning their sights on expanding consumer revenue streams beyond existing landline, broadband, and smartphone voice and data plans. In South Korea, apartments are the most common housing option, and by introducing smart home services from the construction stage, operators are able to provide smart home services sooner and not have to worry about complication brownfield IoT applications. Additionally, as apartments that have pre-installed smart home systems begin selling, operators expect the demand for smart home-connected products to increase.

South Korea’s MNOs have come to the same realization that operators around the world seem to be reaching in unison: when it comes to IoT, connectivity is the lowest common denominator. Connectivity is not even the bare minimum that end users will accept, and those operators that have identified their own core competencies and target vertical markets to provide value-added solutions will maximize the value that their M2M solutions generate. Working with construction companies to install smart home systems changes consumer expectations and increases demand for similar products and systems. By going beyond connectivity to provide specialized, value-added solutions, operators can not only increase their existing domestic market share, but also create new domestic markets. Operators can succeed in the long term by optimizing efficiencies and by adding value through distinct differentiation.