Video calls in out-of-way areas? High quality wireless Internet content downloadable from anywhere in the country?

At SK Telcom’s Board of Directors’ meeting on August 31, a decision was made to expand investment to develop the WCDMA business, a 3.5G asynchronous mobile phone service, and to deploy a nationwide. HSDPA network.

Through the Board of Directors’ meeting, SK Telecom has decided to add an additional KRW 240 billion in 2006 investments in HSDPA, and complete the expansion of the nationwide network by the first half of 2007. Consequently, SK Telecom’s total investment in HSDPA this year increases from KRW 570 billion to KRW 810. However, the Company revealed that since the additional investment of KRW 240 billion is to be procured through investment cost savings resulting from limiting existing CDMA network investments to essential areas and adjusting investment priorities, there would be no change in the total capital expenditure for 2006 of KRW 1.6 trillion.

Such a decision by SK Telecom is one step forward from the existing strategy of deploying the HSDPA networks in 84 cities by the end of October this year and expanding the market through DBDM (dual-band dual-mode; uses both 800MHz and 2GHz frequencies) handsets.

SK Telecom remarked that the DBDM handsets supporting HSDPA lacked competitiveness compared to the existing 2G handsets in terms of width, design and price, resulting in higher marketing costs, and that there were limitations in promoting the 3.5G mobile phone market. The strategy is to release SBSM (single-band single-mode; 2GHz frequency exclusive) during the first half of next year when the nationwide network is deployed in order to continue acquiring market leadership in the WCDMA market.

Also, the Company plans to expand global synergy with prominent overseas businesses such as overseas roaming, global content and solutions, and concentrate its competency so that HSDPA may acquire differentiation as a next-generation mobile communications service.

Also, with the nationwide deployment of the HSDPA network, SK Telecom plans to maximize synergy through an appropriate portfolio strategy among networks including the existing 1X, EV-DO networks. Competitive advantage will be continuously maintained in the synchronous CDMA network (800 MHz) for voice and medium / low speed data, while the SBSM handset, which is cheaper than the DBDM handset, will be used to position the asynchronous HSDPA network (2 GHz) to provide advanced data and communications services to customers.

Going forward, SK Telecom plans to establish HSDPA, a 3.5G mobile phone, into a service based on four concepts to pursue sophistication of services:
1) “Visual concept”, focusing on high quality video calls, customer-participating content and mobile game upgrade;
2) “Internet concept”, by expanding Internet direct access services and linking with fixed line content;
3) “Global concept”, centered around automatic roaming services;
4) “Convenience concept”, focused on transportation cards, mobile banking, credit card settlements.

Bang-Hyung Lee, executive vice-president and head of SK Telecom’s Business Group, remarked “In order to cope with the rapid evolution of technology and diverse convergence services, it is necessary to provide diverse services that adhere to consumer needs and product purposes, through on optimum combination of several network technologies. SK Telecom is leading the development of the 3.5G market, being the first in the world to launch HSDPA handsets, one step forward from WCDMA, in mid-May, and by completing the deployment of the nationwide network by the first half of next year, we will provide HSDPA services with no inconveniences or disconnections to satisfy our customers.”

NEC , Matsushita Electric and Panasonic Mobile announced the signing of a memorandum of understanding on the establishment of a development company for mobile handsets. The new company will contract development of mobile handsets and a common software and hardware platform.

Through this joint venture, the three companies intend to reinforce existing collaboration between NEC and Panasonic Mobile. The development of common middleware, applications, and hardware platform will enable the companies to avoid duplication of development efforts, leading to greater efficiency and enhanced development capabilities, and a reduction in both fixed and variable costs. This will equip NEC and Panasonic Mobile with a solid technology platform to stay at the top of innovation in functionality and communication speed as the industry moves to 3.5G and 3.9G technologies towards 2010, while simultaneously focusing resources on differentiation.

The three companies intend to establish this joint venture early October, 2006. The company will be capitalized at 100 million yen with an equal ownership between NEC and Panasonic Mobile.

The following are its main business.
– Planning and development of a common software platform
– Planning and development of a common hardware platform
- Design and evaluation of a common application CPU and integrated
system LSI
- Sourcing, design and evaluation of key devices
- Design and manufacturing of an evaluation board
– Joint development of mobile handsets (based on the above platform)
Through this joint venture, NEC and Panasonic Mobile expect to create synergies by combining NEC’s expertise in communications and computer technologies and Panasonic Group’s strength in consumer electronics and audio visual products.

NEC and Panasonic Mobile will respectively handle product planning, product development, procurement and manufacturing, as well as sales of handsets bearing their respective brand names “NEC” and “Panasonic”.

NEC, Matsushita and Panasonic Mobile started collaboration on the development of mobile phones in August 2001. This effort has led to the successful shipment of NTT Docomo’s FOMA(R) mobile phones in November 2004, which incorporates a Linux(TM) based middleware platform jointly developed by NTT Docomo, NEC, and Panasonic Mobile.

Outline of the New Company (Tentative)

Company name: To be decided
Headquarters: Tsuzuki ku, Yokohama City, Kanagawa Prefecture
Date of establishment: Early October, 2006
Main Business: Development of a common hardware and a software
platform for mobile handsets and joint development
of mobile handsets
Capital: 100.0 million yen
Ownership: NEC Corporation (50%)
Panasonic Mobile Communications Co., Ltd. (50%)
Employees: Approximately 140
Management structure: To be decided (President, Vice president, and 2
board members)
At the time of establishment, the president will be
appointed from NEC and the vice president from
Panasonic Mobile.

The number of 3.5G mobile broadband subscribers worldwide will boom more than ten-fold from 2.5 million in 2006 to more than 300 million in 2011, but market growth in 2006-07 will be restrained by a lack of compelling devices, according to Future Mobile Broadband: HSPA, EV-DO, WiMAX & LTE, a new Strategic Report from Informa Telecoms & Media.

“A lack of compelling devices and content led to delayed launches and slow take-up of WCDMA and EV-DO services, and early HSDPA and EV-DO Revision A services are expected to suffer from the very same problems,” says Malik Saadi, principal analyst at Informa Telecoms & Media and co-author of the Future Mobile Broadband Strategic Report.

Saadi notes that most HSDPA services are launching with only PC cards and notebooks, although a number of early handsets are also arriving. “However it is striking that as of June no major vendor has unveiled plans for EV-DO Rev. A handsets, although data cards are on the way.”

A lack of a wide range of compelling handsets will slow mass-market takeup of 3.5G mobile broadband services in 2006-07,but handsets will start to mature in 2008, leading to a sharp increase in 3.5G handset sales and subscribers in 2008-09. By 2011 85% of 3.5G devices sold will be handsets, and the remaining 15% will be notebooks and PC cards.

3.5G mobile broadband subscribers are defined as subscribersusing services based on HSDPA, HSUPA, EV-DO Revision A or EV-DO Revision B.

Mobile WiMAX will compete with HSPA and EV-DO Rev A/B in the mobile broadband market, but will suffer even more than those technologies from the slow arrival of compelling notebooks and handsets. “Mobile WiMAX will play a relatively minor role in the mobile broadband market through 2011, largely because Mobile WiMAX notebooks and tablets will not arrive in volume until 2008-09, and compelling Mobile WiMAX handsets won’t arrive until 2010,” says Mike Roberts, principal analyst at Informa Telecoms & Media and co-author of the Future Mobile Broadband report. “By comparison HSDPA notebooks and handsets are already shipping, which means that the HSDPA device market is one to two years ahead of the Mobile WiMAX device market,” Roberts says.

However that should not obscure the fact that WiMAX will gain significant momentum in the fixed, nomadic and portable broadband segments in 2006-11, although many WiMAX subscribers will be using fixed indoor modems rather than mobile devices, Roberts adds.