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Dr. Jongtae IhmDr. Jongtae IhmSeptember 2005September 2005

SK TelecomSK Telecom

Perspectives of DMB from Korean Cellular IndustryPerspectives of DMB from Korean Cellular Industry - In the View of Convergence -- In the View of Convergence -

CONFIDENTIAL

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Contents

I SKT Overview

II Converged Service Status

III SKT’s Standpoint

IV Perspectives

V Conclusion

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I. SKT Overview

SK Telecom has always been the leader and pioneer of Korean Mobile Telecommunication market for the last twenty years, introducing numerous World’s First Services

Launched WCDMA (3G) serviceDec 2003Dec 2003

Launched CDMA 1x EV-DO (3G) service *Feb 2002Feb 2002

Completed acquisition of Shinsegi Telecom Inc. (STI)Jan 2002Jan 2002

Launched CDMA 2000 1xRTT (2.5G) service* Oct 2000Oct 2000

Launched commercial CDMA cellular service*Jan 1996Jan 1996

SK Group became the major shareholder of Korea Mobile TelecomJun 1994Jun 1994

Korea Mobile Telecom Service Co.,Ltd, establishedMar 1984Mar 1984 VisionVision

MissionMission

Most Valuable Company with Innovation

Ubiquitous Partnership Value-Creating Innovation Customer Oriented Service Global Leadership

World’s First*

Launched Satellite for Mobile DMB ServiceJul 2004Jul 2004

HSDPA(1.8M/384K) Installation - 16 CitiesDec 2005Dec 2005

Market StatusMarket Status

Market Share : 51.1% Total ARPU : USD 42.2 Data ARPU : USD 9.38

Historical Highlight, Vision and Mission

1Q2005

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I. SKT Overview Wireless Data Business Status

From “n.TOP”, SK Telecom’s first Wireless Data service launched in Oct. 1999, SK Telecom has been evolving into “NATE” and “June” to offer enhanced multi-media, multi-device services

’99.04.

Online SMS

’00.02.

Image Dl. Info.

n.Top

’00.09.

Download service

’01.06.

Video Streaming

’01.06.

VoD/ AoD

’01.10.NATE Air

NATE PhotoNATE PDA

’02.02.

MONETANATE Drive

’02.07.

NATE GPS

’02.09.

EV-DO(IMT-2000)

’02.10.

MMSDAB

’03.05.

NATE AdmoA

’03.09.

NATE Code

’04.06.

Video Telephony

’04.11.

Melon:Music portal

IS-95A/B cdma2000-1x 1x EV-DO

1x EV-DO

VoD : Video-on-demandAoD : Audio-on-demandGPS : Global Positioning SystemMMS : Multimedia Messaging ServiceDAB : Digital Audio BroadcastingAdmoA : Mobile advertisement serviceMelon : Integrated Music PortalDMB : Digital Multimedia Broadcasting

’05.01.

Satellite DMB

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I. SKT Overview Market Saturation & Solution

Service Area Expansion enables operators to overcome market saturation by creating new market with converging existing service with new items from different service area.

Well designed Marketing and

Promotion Strategy

Multi-Device Integrated

Personal Platform

Innovative Converged Service

Suitable Terminal designed for

Converged Service

Telecom

Broadcasting, DMB

Mobile Finance Service

VOD/MOD, Multimedia

Service

Expansion to New Converged Service

Marketing Strategy

Platform Strategy

Service Strategy

Terminal Strategy

Location Based Service, Tel

emetics

Mobile Commerce,

Home Automation

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II. Converged Service Status NATE ON

NATE ON is an instant messaging service for the users to enjoy seamless instant messaging regardless of time and location

NATE ON (PC) Mobile NATE ON

Client based instant messaging service Ability to log on simultaneously with mobile

NATE ON

Mobile instant messaging service with same

functionalities and information of PC version;

send/receive instant messages, check emails,

register/find buddies Unique services leveraging features of mobile

terminal such as WAP buddy, real-time SMS,

audible “emoticons”, and background music

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II. Converged Service Status Cyworld

Web-based Community & personal Blog service

Personal Blog : Mini Homepage Decoration of Mini Homepage with

board, diary, avatar, Upload of photos, music, from PC Easy to use and navigate friend’s

mini-homepage Very successful for item business

Evolution to convergenceby mobile integration

Access to the same services and contents of Web environment

Ubiquitous features such as updating Mini-homepage anytime & anywhere

Real-time upload photo from camera phone, send SMS, etc.

http://www.cyworld.com & Mini-homepage Mobile Cyworld

Main pageAccess Mini-homepage

with mobile phone

“Cyworld” is a popular wired & wireless community & blog service which became the home of ubiquitous and convergence service among Korean youths

아궁 귀여워 !!!!

메뉴

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II. Converged Service Status AMS

AMS is a next generation enabling platform which provides smart card and related applications to be issued through mobile devices

Can not integrate additional application after smart card is issued

Separate smart card for each service

Can not integrate additional application after smart card is issued

Separate smart card for each service

Current Issuer-centric ServiceCurrent Issuer-centric Service

AMS-based Customer-centric ServiceAMS-based Customer-centric Service

M-BankM-BankChi

pC

hip

e-bankbook

e-bankbook

HandsetHandset

TrafficTraffic CreditCard

CreditCard

Mem

bers

hip

Mem

bers

hip Traffic

Traffic

HandsetHandset

Car

dC

ard

VDSC

VDSCHandsetHandset

Subscription &Cancellation at Bank

Subscription &Cancellation at Sales Agent

Subscription &Cancellation at Card Company

CreditCard

e-voucherm-voucher

M-BankTrafficCard

Member-ship

SatelliteBroad-casting

Subscription &Cancellation

by mobile deviceany-time, any-where

Can add & modify service according to customer’s needs even after issue

Only one smart card chip for all services

Can add & modify service according to customer’s needs even after issue

Only one smart card chip for all services

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II. Converged Service Status Ubiquitous Music Service – Melon

MelOn goes even further than iTunes and lets subscribers to download & play unlimited number of DRM-coated music files in mobile handset, PC, and MP3 player, with monthly flat rate.

MP3 PlayerMobile Phone

PC

Music Video, Photo Album

Multimedia Music Service

Monthly Flat Rate for unlimited services

“Rental-based” Flat Rate

600,000 paid subscribers (Mar. 2005)

Launched in Nov. 2004

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II. Converged Service Status

With the emergence of technical innovation, boundary of mobile network and broadcasting becomes more ambiguous. Satellite DMB, a convergence mobile broadcasting service from satellite is a good example of such trend.

Wireless Data/S-DMB Converged Service

VoD, MoDm-Commerce

VoD, MoDm-Commerce

Ku-band(13.824~13.883 GHz)

Ku-band(12.214~12.239 GHz) S-band

(2.630~ 2.655 GHz)

Contents

S-band

DedicatedTerminal

Vehicle-mountedTerminal

Hybrid Terminal Combined with theexisting mobile Internet

Gap Filler

1x EV-DO

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III. SKT’s Standpoint Business Model with S-DMB

Win-Win business model between SK Telecom and TU Media, S-DMB

Business Model with S-DMB Benefit to SK Telecom

SK Telecom : Gain Additional Revenue & Value from S-DMBTU Media : Gain Marketing Power from SK Telecom

SK Telecom TU Media

• Broadcasting• Contents Sourcing

& Development• Network &

Platform Mgt.

• Getting

Subscribers in

Mobile H/S Market • Terminal Sales• Distribution

Channel Mgt.

BroadcastService

DistributionService

1. Revenue Increase by Consignment Contract

2. Revenue Increase by WAP Service

3. Entrance to Broadcasting/Media Industry

TUMedia

TUMediaService

ChargeService Charge

Except Commission

WAPServiceWAP

Service

SK Telecom

BroadcastingService

UsingVOD/MOD

SK Telecomi

SK Telecom

Voice + Data (M-Finance, M-Commerce)

+ Seeds Business forCP, PP, SO

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III. SKT’s Standpoint

■ Revenue Impact

Revenue Share 25% of TU Media’s S-DMB product sales

$25 Million yearly income for the next 12 years on Satellite rental fee

Distribution commission on SKT sales network

(25% of Initial subscription charge & Monthly basement fee)

Network management, BTS rental, and administration fee ($13M in 2005)

■ Synergy

Increase customer satisfaction and royalty with hybrid handsets sales

Synergy through integration with Mobile Internet and contents sharing

Cost saving in Cellular Network throughput investment with new medium

Diversifying contents distribution channel

Revenue Impact & Synergy

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III. SKT’s Standpoint

■ Cannibalization

Exact extents of cannibalization on existing Mobile Internet is unclear

due to the early stage of service.

Partial cannibalization is expected to happen.

Overcoming the limitation of DMB as one-way broadcasting by integrating it w

ith Mobile Internet to achieve two-way communication, and increasing data sa

les.

Existing VoD Service (June) will focus on the On Demand feature to position it

self against DMB service.

■ Marketing Cost

Promotion is only done by SKT at the moment, but the market is expected to e

xpand when the competitors start attracting subscribers

Cannibalization 최소화

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III. SKT’s Standpoint

■ Contents

With the emergence of Multimedia and Entertainment in Mobile Internet co

ntents, importance of contents acquisition and distribution will increase.

Digital Content Market is expanding and enhancing, possibility of creating

New Business in C-P-N-T value chain will increase.

Controlling strategic contents will enable higher usage of S-DMB, as well a

s next generation service such as WCDMA and Wi-Bro.

Enlarging markets through diverse investment such as movie and music fu

nds to increase contents quality and set up win-win relation with CPs.

Currently searching for the next strategic contents after movie and music

with various possible scenarios

Contents 강화

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IV. Perspectives

Telecommunication-Broadcasting Integration

: Available Immediately : Expected in the future

Provide information related to on-air programs through Mobile Internet.

Revenue Model : Info. Usage Fee, Traffic

Provide information and guide about programs through Mobile Internet

Revenue 모델 : Advertisement, Traffic

Information

EPG

For successful launch of telecommunication-broadcasting integrated service, market-proven and easy-to-use data contents will converge with broadcasting mediums.

DataCasting

Ad. Education

News Sports Movie Music Video

Music Commerce Information Streaming LBS IM/SMS Telematics

Wireless Data Service

Convergence Service Priorities

Sell Data Contents related to programs

(Ringtone, RBT, Music Video, Shopping)

Revenue Model : Content Sales, Traffic

Commerce

Bro

ad

ca

stin

g

Se

rvic

e

※ EPG: Electronic Program Guide

Replay old programs through Data Streaming on demand

Revenue Model : Info. Usage Fee, Traffic

On Demand

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IV. Perspectives

• Integration of Broadcasting programs and Data service (Home Shopping, Lottery Sales)• Integration of On-air IM (Communication), and LBS service

Integration of Audio Channel and Music Contents (Ringtone, RBT)

Service switch with Hot Key

• Integration of Game Channel and Mobile Game

• Integration of Sports Channel and Information Service

Convergence Broadcasting is expected to develop into a more complex and enhanced service. To support such development, SKT is working on issues such as integrated platform, data broadcasting support, and device diversification.

Phase ⅢPhase Ⅱ

2006 2007

Phase Ⅰ2005

Commerce, Communication Integration

Time

Service

Entertainment Contents Integration

• Communication/Broadcasting

Platform Integration

(Contents, Authentication, Billing,)

• Commercialization of Contents

Object Technology • Contents distribution and protection

technology development

• Communication service technology

expansion• Data Broadcasting

Tech’

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Thank You