South Korea: Pushing 5G Boundaries with Extended Reality, Multi-Access Edge Computing, and Urban Air Mobility Technologies

From the latest financial figures (2Q 2022) published by South Korea’s largest three Communications Service Providers (CSPs)—SK Telecom, KT Corporation, and LG U+—we can see an increase in mobile services revenue and a strong penetration rate and consumer take-up of 5G in South Korea.

Operating revenue was up 3.2% Year-over-Year (YoY) to ~US$2.18 billion (KRW 3,118 billion) for South Korea’s largest CSP, SK Telecom. Revenue for KT Corporation and LG U+ mobile services was also up 2.0% YoY to ~US$1.08 billion (KRW 1,550 billion) and 2.2% YoY to ~US$1.08 billion (KRW 1,541 billion), respectively. Consumer take-up of 5G continues strongly in South Korea, with SK Telecom’s 5G penetration rate at ~50%, KT Corporation at ~54%, and LG U+ at ~47% of their respective total handset subscribers. For all three CSPs, 5G user growth continues its upward trajectory. SK Telecom recorded an increase of ~51.8% YoY of 5G subscribers (11.68 million), KT Corporation increased by ~49.2% (7.48 million) YoY, and LG U+ also saw an increase of ~44.2% in 5G subscribers (5.37 million) YoY. The trajectory for consumer mobile services Average Revenue per User (ARPU), however, differs across the CSPs, despite the consistent growth of 5G subscriptions across the board. SK Telecom recorded an increase of ~1.1% YoY in ARPU and KT Corporation also increased ARPU by ~3.2% YoY. In contrast, LG U+ saw a decrease of ~6.6% in ARPU YoY.

Although ARPU results across the CSPs were mixed, 5G penetration among consumers continued its strong upward momentum. Recognizing this opportunity, CSPs have leveraged 5G’s increased bandwidth capacity and lower latency to deliver Extended Reality (XR)—an overarching term that covers Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR)—experiences for their customers. SK Telecom launched its Ifland metaverse platform in July 2021, which primarily functions as a virtual social networking service using 5G and AR/VR technologies. In addition to the socializing aspect of the service, users are also able to attend virtual meetings, presentations, conferences, and even festivals through Ifland. As of 2Q 2022, SK Telecom reported that the platform has seen a healthy Monthly Active User (MAU) base of 1.63 million and has announced plans to bring Ifland to global markets. LG U+ has also been developing Korean pop (K-pop) XR content for both local and overseas markets through its Idol Plus content platform, which allows users to have access to real-time streaming of K-pop performances and other related XR content. In June 2021, KT Corporation announced that it had formed a collaboration with local VR content and visual effects organizations to develop its own metaverse platform. Termed the Metaverse One Team, this collaboration aims to develop metaverse technology and applications.

CSPs have also focused on forging meaningful partnerships to drive greater enterprise 5G adoption. Multi-Access Edge Computing (MEC) is a form of network architecture that enables ultra-low latency by deploying computing functions near the source of data traffic or end users. Partnering with Amazon Web Services (AWS), SK Telecom launched its first 5G edge cloud service, SKT 5GX Edge, in Daejeon, South Korea, in December 2020. SKT 5GX Edge uses AWS’ Wavelength service, which embeds AWS compute and storage infrastructure within the edge data centers of SK Telecom’s 5G network, while offering seamless access to cloud services running in an AWS Region. As a result, Wavelength reduces latency and network hops required to connect 5G devices to applications hosted by AWS, allowing end users and/or developers to build applications requiring ultra-low latency, such as Machine Learning (ML), the Internet of Things (IoT), autonomous vehicles, AR and VR solutions, etc. As part of this project, SK Telecom and AWS collaborated with Seadronix, a local AI technology-based autonomous navigation solutions company to trial real-time communication between autonomous vehicles and their environment using the 5G cloud service. Testing of other use cases, such as autonomous robots, have also been carried out with Woowa Brothers, the operator of food delivery app Baedal Minjok, and robotics company ROBOTIS using 5G edge cloud service technology. It should be noted that SK Telecom and AWS have since deployed a second 5G edge zone in Seoul in May 2022.

The three CSPs have also shown keen interest in entering the Urban Air Mobility (UAM) industry, which is targeted to launch commercially in 2025. Projected use cases for UAM vehicles include aerial ambulance transport, cargo transportation, and tourism within urban and suburban areas. The CSPs, which will provide 5G airspace communication networks, have partnered with multi-sector organizations to take part in the K-UAM Grand Challenge project, which is a government-organized demonstration program aimed at developing UAM vehicle safety and traffic management functions to support the commercial launch of UAMs. Specifically, SK Telecom has partnered with Korea Airports Corp., Hanwha Systems Co., the Korea Meteorological Institute, LX, and Joby Aviation. KT Corporation has formed a consortium with Hyundai Motor Co., Incheon International Airport Corp., Hyundai Engineering & Construction Co., and Korean Air Lines Co., while LG U+ has also teamed up with Kakao Mobility Corp., GS Caltex Corp., Jeju Air Co., Pablo Air Co., and Vertical Aerospace Ltd.

Being the first country to launch a 5G network in April 2019, South Korea continues to see rapid growth in 5G penetration rates and its 5G subscriber base. According to the Ministry of Science and ICT, the three CSPs have extended 5G coverage to more than 90% of urban areas spanning its 85 cities. Growth of 5G in the country is expected with the CSPs investing heavily to boost their digital capabilities. In January 2022, three SK Group companies, namely SK Telecom, SK Square, and SK hynix, have announced plans to create an investment fund of over ~US$699 million (KRW 1 trillion) to be invested in projects surrounding Artificial Intelligence (AI), the metaverse, blockchain, and semiconductors. KT Corporation also announced, in June 2022, that it will invest ~US$8.4 billion (KRW 12 trillion) in its digital services, which includes its media and content business, AI, robots, and cloud services, by 2026.

There is also an expectation of continued growth of enterprise 5G usage and innovation, particularly surrounding the use of MEC technology. There is strong government support for MEC technology, with the government announcing its intention to invest ~US$83.8 million (KRW 120 billion) in more than 15 projects aimed at introducing MEC solutions to local firms and public sectors. Construction of more collocation data centers in the country will help CSPs expand their MEC capabilities, while increases in the number of hyperscaler company (e.g., AWS, Microsoft Azure, etc.) data centers also provide an opportunity for future collaborations. As covered in the ABI Research market data Next-Generation Data Center Forecast (MD-NGDC-22), next-generation colocation and next-generation hyperscaler company data center sites in Asia-Pacific (excluding China) are forecast to grow by ~61% (reaching a total of ~1,395 data center sites) and ~52% (reaching a total of ~96 data center sites) between 2021 and 2026, respectively. There are, however, concerns that investments in 5G may be reduced amid the global economic slowdown and due to the current lack of 5G mass market enterprise solutions that will justify such investments.

(Note: Conversions from KRW to US$ are based on prevailing currency exchange rates.)