South Korea’s SK Telecom Is Building an ICT Ecosystem with Mapping and 5G

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2Q 2019 | IN-5497

SK Telecom has struck a partnership with Incheon Free Economic Zone (IFEZ) for the development of 5G-based autonomous driving infrastructure. IFEZ is a self-contained residential and business district that consists of three regions: Songdo, Cheongna, and Yeongjong. It has a total land area of 132.9 square km and is positioned as an international business hub, offering tax reductions and subsidies for businesses. The partnership will see SK Telecom developing a High-Definition (HD) map of IFEZ for autonomous vehicles. This map will be machine readable and will provide centimeter-level precise map readings. It will also be built with Dynamic Data Platform, a 5G-based real-time map update solution. Dynamic Data Platform will use 5G for Wide Area Network (WAN) deployment that collects road data from car sensors and updates the IFEZ HD map with any road changes.

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SK Telecom Diversifies Its Portfolio

NEWS


SK Telecom has struck a partnership with Incheon Free Economic Zone (IFEZ) for the development of 5G-based autonomous driving infrastructure. IFEZ is a self-contained residential and business district that consists of three regions: Songdo, Cheongna, and Yeongjong. It has a total land area of 132.9 square km and is positioned as an international business hub, offering tax reductions and subsidies for businesses. The partnership will see SK Telecom developing a High-Definition (HD) map of IFEZ for autonomous vehicles. This map will be machine readable and will provide centimeter-level precise map readings. It will also be built with Dynamic Data Platform, a 5G-based real-time map update solution. Dynamic Data Platform will use 5G for Wide Area Network (WAN) deployment that collects road data from car sensors and updates the IFEZ HD map with any road changes.

SK Telecom’s partnership with IFEZ is just the latest in a string of initiatives by the company to become a leader in a collaborative ICT ecosystem. Seeking to diversify beyond the wireless telecommunication market, SK Telecom has been laying the foundation for the commercialized deployment of 5G. In March 2019, SK Telecom struck a deal with Ericsson to collaborate on using cloud-native microservices to optimize 5G Standalone (SA) core network technology. The development of full 5G SA networks will give SK Telecom the competitive edge in 5G deployment, allowing it to introduce new services faster while improving operational efficiency. The company also intends to penetrate global markets. At CES 2019, it signed a memorandum of understanding with the Sinclair Broadcast Group to build an advanced automotive platform based on Advanced Television Systems Committee (ATSC) 3.0. ATSC 3.0 is a next-generation broadcasting technology standard that provides in-car infotainment services such as HD television and HD map and software updates as well as vehicle-to-everything security credential management by Sinclair Broadcast Group. This partnership positions SK Telecom to gain market share in the 5G-enabled automotive market in the United States. The advanced automotive platform will also be deployed in other markets when the broadcast facilities in those markets become available.

Creating Synergy via Partnerships

IMPACT


South Korea’s telecommunications market is dominated by three major players: SK Telecom, Korea Telecom (KT), and LG Uplus. South Korea’s Ministry of Science and Information and Communication Technologies (ICT) data reveal that SK Telecom’s incumbent market share has been declining since late 2012, reaching 41.9% in July 2018. Competition is intense in the telecommunications market, and SK Telecom must remain competitive by leveraging and enabling technology such as 5G. ABI Research forecasts global 5G Internet of Things (IoT) connection revenue to reach over US$3 billion by 2026, with South Korea contributing to 16% of that figure with a compound annual growth rate of 265% between 2021 and 2026 (see MD-IOTM5G-105). South Korea’s government views the Fourth Industrial Revolution as a key component of its economy and has established the Presidential Committee on the Fourth Industrial Revolution (PCFIR) to guide businesses and society in achieving digital transformation and creating a conducive environment for the industry to adopt 5G. SK Telecom’s recent partnerships with IFEZ, Ericsson, and the Sinclair Broadcast Group are valuable strategic alliances that puts the company in a competitive position for IoT industries by opening new revenue streams as well as improving current ones.

SK Telecom has stake in the digital map market with T Map—its mobile navigation service launched in 2002. The partnership with IFEZ will boost its digital map market revenue through additional services in the value chain, such as maintenance of the HD map, enhancement and software integration of the map, and sales to smartphone or vehicle original equipment manufacturers. More importantly, SK Telecom can leverage on its first-mover advantage and implement its HD map for autonomous vehicles in IFEZ, securing businesses opportunities with Advanced Driver-Assistance Systems (ADAS) vendors early. The partnership also signals the company’s foray into digital mapping for driverless cars that not only benefits its current business partnerships but also opens new business opportunities. Current partnerships with Hyundai MnSOFT and Korea Transportation Safety Corporation for the development of autonomous driving stand to gain as the company develops HD maps with real-time updates using 5G. It also opens new market opportunities such as providing maps for ride-hailing vehicles in IFEZ, utilizing its current T Map taxi-hailing application. When advanced levels of ADAS (SAE 4 and 5) are commercially deployed, the HD map can serve a potential autonomous ride-hailing market.

The partnership with Ericsson to develop 5G SA core technologies will cement SK Telecom’s position in various 5G-enabled industries. 5G SA will offer a full range of benefits from enhanced mobile broadband, Ultra-Reliable Low-Latency Communications (URLLC), and massive machine-type communications. SK Telecom can expand business to Autonomous Guided Vehicle (AGV) manufacturers, who claim that the 3GPP URLLC feature of 5G can give them remote control of AGVs (see IN-5467). Utilizing 5G as a catalyst for ad tech is an opportunity for SK Telecom to expand their T Map nonautomotive revenue. While hyperlocalization and low latency for ad tech has not yet generated much discussion and planning (see AN-5047), 5G could enable Location-Based Applications (LBAs) such as streaming high quality video advertisements based on the user’s location. The development of an advanced automotive platform with Sinclair also allows for synergy with its voice-activated virtual assistant, NUGU.

Toward a 5G Future and Beyond

RECOMMENDATIONS


The South Korea telecommunications market is reaching maturity. ABI Research forecasts the fixed broadband penetration rate in South Korea to reach 93.3% by 2020. In an industry where its main revenue stream will stagnate or grow at a slower rate in the next few years, telecommunication companies such as SK Telecom will stand to gain through product diversification and leadership in new market spaces such as 5G. Consumer demand for mobile telecommunications is plateauing, and so entry into new businesses is a key priority for long-term profitability. The second step is to successfully develop an integrated ecosystem through strategic alliances. Within this ecosystem, SK Telecom can profit the most by maximizing its end-to-end services delivered in each vertical.

For example, its recent partnerships position the company at each point of the LBA value chain. At the start of the value chain, it is responsible for geographic information collection. Alongside 5G deployment, car sensors can map out roads and register changing conditions, quickly feeding the information through low-latency 5G transmission. Moving along the value chain, SK Telecom can then provide enhanced map services through the HD IFEZ map that can be incorporated into its existing T Map or as an SA service. With the development of an advanced automotive platform, the company can potentially service the final portion of the value chain and provide aftermarket telematry services. SK Telecom’s approach is beneficial as it moves away from transactional business models and looks toward value-added partnerships that aims to create a holistic IoT ecosystem leveraging on 5G core.

The value-added partnership approach taken by SK Telecom also brings about benefits such as opportunities for synergies among partners or with the company’s existing offerings. For example, the company’s smart city developments recognize the synergy of 5G deployments and their AI platform, NUGU. The deployment of 5G by SK Telecom into Yonsei University Health System creates a 5G-powered digital hospital. Supported by NUGU, patients can use voice-activated commands to control their lighting and television and call for medical assistance. Partnership with Ericsson for development of 5G SA core ensures that a stable and secure core network can be established, increasing SK Telecom’s 5G competitiveness and making its core network more attractive for IoT businesses.