Apple’s new smartphone both boon and bane for telecom operators


Tech watchers and Apple fans are anxiously awaiting the U.S. company’s grand introduction of its next smartphone model, the iPhone 5, on Sept. 12.

Since the announcement of Apple’s media event which showed the numbers “12” and “5” silhouetted on its press invitations, market analysts are already forecasting that its new phone will be a hit even before the iPhone 5 is revealed to the public.

Rumors and speculations are growing globally. Some say that this smartphone will have a slightly bigger display than its previous model, while others say it will be thinner with an improved user interface and different design features.

In Korea, the main questions are: Will Apple again release iPhone 5 much later than in other markets such as Singapore and China, and will it be a Long Term Evolution smartphone?

In fact, no one has seen this phone yet. Apple has not given any details of iPhone 5, and industry sources said it is too early to jump to conclusions.

However, considering Apple’s early moves and views on Korea, they said it is highly likely that the U.S. tech giant will not immediately introduce the new phone here. Korea, the home turf of Samsung Electronics whom Apple is battling at courts worldwide over patents, is not among Apple’s top-priority markets. There are reports that iPhone 5 is expected to hit Korea toward the end of this year.

Telecom companies in Korea have been silent over the matter. Sources in the telecom industry, however, claim and hope that Apple will come out with an LTE phone since that is the only way to compete and grab consumers’ attention in Korea, where LTE has become the new standard.

Korea is the world’s second-earliest LTE adopter after the U.S. One in five Koreans uses an LTE phone, according to ROA Consulting.

An industry source noted that this depends on what kind of modem chipsets Apple used for iPhone 5, along with radio frequency modules. It is likely that its communication chips will be compatible with LTE networks of Verizon Wireless, which is the biggest LTE provider in the U.S.

LTE technologies in the U.S. and Korea are similar. Therefore, it comes down to RF modules, which are not very difficult to change according to telecom companies’ frequencies. The only difficulty in this is the manufacturing process, so Apple would have to order changes in production for particular countries such as Korea. This may not be worth the effort should the company forecast low market demand or other variables not favorable to foreign firms, analysts said.

Telecom operators such as SK Telecom and KT could benefit should Apple releases an LTE-backed iPhone 5 as the number of LTE users is bound to increase going forward, analysts said.

However, competition among telecom operators will further intensify as they will boost marketing spending to attract more users of their network services.

Moody’s has given credit negative ratings to SK Telecom and KT following recent data by the Korea Telecommunications Operators Association, as they showed a sharp increase in the number of customers switching away from their telecom service providers.

“Such a rating is credit negative … because it means that intense competition will push up marketing expenses, thereby further reducing these companies’ margins,” the credit rating agency said.

The number of users changing their telecom service providers reached 1.13 million in August, up 8.5 percent from 1.04 million in July.

By Park Hyong-ki (hkp@heraldcorp.com)