The Market perspective and

forecast of 3G SMSC and MMSC

For more information,

please contact
ian.yeon@gmail.com

1
Table of Contents

Brief introduction of CDMA system................................................................................ ..............5

1.1. CDMA system............................................................................................ ....................5
2. Forecasts of CDMA Infrastructure Demands.......................................................... ..................8
2.1. Total subscriber forecast ......................................................................... ....................10
2.1.1. Forecast of provincial subscribers............................................. ........................11
2.2. Infrastructure CAPEX(Capital Expenditure).............................................. ...................12
2.2.1. IMT-2000 Infra CAPEX......................................................................... .............12
2.2.2. Forecast of 3G subscribers..................................................... ..........................16
3. Forecast of 3G subsystem demands...................................................................... ................18
3.1. SMSC(Short Message Service Center)....................................................................... .18
3.2. MMSC(Multimedia Message Service Center).......................................... ....................20
4. Conclusion ...................................................................................................................... .......26
5. Reousrce.............................................................................................................. ..................28

2
List of Figures

Figure 2.1 Methodology...................................................................................................... ..........9

Fig 2.2 Roadmap of SK IMT buisness....................................................................... .................13
Fig 2.3 Network buildup plan of SK IMT............................................................... ......................14
Fig 3.4 ARPU according to handset(SKT)............................................................ ......................21
Fig 3.5 ARPU according to handset(KTF)...................................................... ............................22
Fig Fig 3.6 The favorable contents now and in the near future.......................................... .........23
Fig 3.7 The favorable contents in the near future.................................................. .....................24

List of Tables

Table 2.1 Total subscribers forecast............................................................... ............................10

Table 2.2 Market share............................................................................................... ................10
Table 2.3 Subscriber forecast according to province....................................... ...........................11
Table 2.4 Plan of IMT2000 Business...................................................................... ....................12
Table 2.5 Coverage plan of SKT......................................................................................... ........13
Table 2.6 CAPEX plan of SK IMT............................................................................ ...................14
Table 2.7 Business plan of KT ICOM............................................................................... ...........15
Table 2.8 Net adds trends for each carrier (May, 2001 ~ March, 2002)......................................16
Table 2.9 Forecast of IMT-2000 subscribers based on net adds ...............................................17
Table 3.10 Data usage for each carriers(Dec, 2001).............................................. ....................18
Table 3.11 3G SMSC demands........................................................................ ..........................19
Table 3.12 Forecast of monthly SMS and MMS usage..................................................... ..........20
Table 3.13 Monthly wireless internet ARPU of SKT...................................................... ..............20
Table 3.14 Monthly wireless internet ARPU of KTF................................................ ....................21
Table 3.15 Monthly wireless internet ARPU of LGT...................................................... ..............21
Table 3.16 Assumption for monthly MMS usage per subscribers...............................................25
Table 3.17 3G MMSC demands................................................................................................ ..25

3
 Executive Summary
The launch of IMT-2000(CDMA2000 and W-CDMA) commercial service is scheduled to begin in
the 3rd quarter of this year in South Korea. Currently, a couple of companies which produce
Telco S/W products, are preparing to apply to be listed in KOSDAQ.

Discussed in this report, will be first, an estimate of the companies’ potential market size, such
as HLR(Home Location Register), NPDB(Number Portability DataBase) etc. Second, It will be
demonstrated which area the companies should pay attention to, to build a roadmap of
technology development to achieve both the technology and market needs.

The methodology used in this report is as follows

1. Subscribers Forecasting
Since the number of Telco S/W is highly connected to the number of subscribers, a forecast
of the coming five years’ subscribers will be undertaken by province and technology
2. BTS, BSC and MSC
Although there is no mathematically exact relation between the number of BTS(Base
station Transciever Subsystem), BSC(Base transceiver System Controller) and
MSC(Mobile Switching Center), the portion of BTS’s capital expenditure to total
infrastructure capital expenditure is known as about 50%. So it is possible to forecast
how many BTS will be installed from the total capital expenditure announced by the
carriers.
3. Telco S/W adoption
An analysis of the portion of Telco S/W to the total capital expenditure will enable us to
forecast the market size of Telco S/W by linking the two results.

4
 Brief introduction of CDMA system

1.1.CDMA system

CDMA infrastructure

The CDMA(Code Division Multiple Access) network consists of a transmitting network that
includes call transmitting, call-processing, intelligent network and a managing network.

The subsystems of the transmitting network include MSC(Mobile Switching Center), IGS(Inter-
Gateway Switching System), BTS(Base Station Transciever Subsystem) and Mobile staton(Cell
phone).

The call-processing network consists MSC and STP(Signal Transmitting Processor) which
connects the MSC and the intelligent network through SS7(Signaling No.7). The intelligent
network is a DB(DataBase) system that provides subscribers information and control logics.

The managing network deals with the NMS(Network Management System) and the
CCBS(Consumer Care and Billing System).

5
 지능층
AuC SCP
Management
Layer
HLR

OTAF SMSC
Intelligent
Layer
S
NM
STP

Transmitting
Layer
BS IWF BTS
CS

MSC

BTS IGS

Transmitting network

The transmitting network includes the MSC, IGS, IWF, BTS and MS. The transmitting network
manages call-processing according to the data of the intelligent network.

6
 지능층

MSC

BSC
BTS

IGS

BSC
BTS

IWF

타망

1) MSC (Mobile Switching Center)

A CDMA-based MSC connects different carriers’ network using IS-41 protocol. Usually the
VLR(Visitor Location Register) is integrated within the MSC and the VLR makes phone-calls
possible by informing the subscribers position to the nearest MSC.
The BSC manages the BTS and handles power control, channel allocation, handoff etc. The
BSC(Base Station Controller) is classified as MSC-internal type and external type.

2) IGS (Inter-Gateway Switching system)

IGS connects all carrier networks. Five or six IGSs are needed to cover capacity nationwide but
the number of IGSs can be modified by the carriers cell plan.

3) BTS (Base Station Transciever Subsystem)

In a wired network, cable connects the switching center and telephone but in wireless network ,
the BTS replaces cable over the air and then connects the MSC through a BSC(Base
Subsystem Controller).
Approximately fifteen thousand BTS are needed to build a nation-wide CDMA infrastructure.
The number of BTSs is proportional to the number of subscribers, and is affected by the CDMA

7
network design effiency and service strategy. Generally, the density of BTSs in urban areas is
higher than in rural areas.

4) IWF (Inter-Working Function)

The IWF is a piece of transmission and protocol adaptation equipment that enables the MSC to
connect with other networks. The IWF is needed to provide wireless data communication
service, which connects the RS-232 access point of a cell phone with a notebook PC.

Intelligent Network

1) HLR (Home Location Register)

The HLR is a permanent database which contains each user’s service profile, MIN(Mobile
Identification Number), ESN etc
The VLR is a temporary database for all users. The VLR includes all users currently located in
the coverage. The MSC updates the VLR with with HLR information

2.Forecasts of CDMA Infrastructure Demands

Before going into more detail, the methodology used in this report shall be briefly introduced.
The following diagram is a schematic concept of the methodology and the analysis of CDMA
infrastructure will be described according to this.

8
 Forecast of total
Infra. CAPEX
subs.

Forecast of subs. Forecast of subs.

IS-95A,B Infra.
According to Accroding to
province technology CAPEX

IS-95C(CDMA 1X)
Infra. CAPEX

MSC demands

New MSC Subsystem

deployment market demands

Figure 2.1 Methodology

The capacity of the telecommunication infrastructure system is mainly calculated from the
number of subscribers. As new subscription leads to new infrastructure demands, it is possible
to forecast the demands of a new system by considering the number of subscribers according to
province and technology generations, ie, 2G, 2.5G and 3G(IMT-2000).
The largest portion of capital expenditure for building up new infrastructure is for the transmitting
layer, which consists of the BTS(Base station Transciever Subsystem), BSC(Base Station
Controller), the MSC(Mobile Switching Center).
This considered in conjunction with the capital expenditure for new infrasturcture announced by
the carriers, it is possible to approximately forecast the demands of both the MSC and its
subsystems.

9
 2.1.Total subscriber forecast

The forecast of the total subscribers and its technological portion are adopted from the former
research done by KISDI, LGERI and National Statistics Office.

2001 2002E 2003E 2004E 2005E 2006E

Subs. 29,045,596 30,205,000 30,969,000 31,709,941 32,468,595 32,879,413

Population 47,342,828 47,639,618 47,925,318 48,199,227 48,460,590 48,710,241
Penetration 61.4% 63.4% 64.6% 65.8% 67.0% 67.5%
Growth rate(%) 8.3% 4.0% 2.5% 2.4% 2.4% 1.3%
2G + 2.5 G subs. 29,045,596 29,600,900 28,801,170 25,685,052 21,104,587 17,426,089
Portion(%) 100.0% 98.0% 93.0% 81.0% 65.0% 53.0%
YoY growth 8.3% 1.9% -2.7% -10.8% -17.8% -17.4%
rate(%)
3G subs. 604,100 2,167,830 6,024,889 11,364,008 15,453,324
Portion(%) 2.0% 7.0% 19.0% 35.0% 47.0%
YoY growth 258.9% 177.9% 88.6% 36.0%
rate(%)

Table 2.1 Total subscribers forecast

Source – KISDI, National Statistics Office, LGERI, Ian Yeon

Market Share
Classification Dec, 2001 M/S
Total 29,045,596 100
SKT 11,867,289 40.90
Shinsegi 3,311,774 11.41
KTF 9,590,698 32.98
LGT 4,275,835 14.71

Table 2.2 Market share

Source – Ministry of Information and Communication Feb, 2002

10
 2.1.1.Forecast of provincial subscribers
As noted in the methodology, a forecast of subscribers according to province needs to be done
to forecast the new MSC deployment demands
Class. SKT portion KTF portion LGT portion
% % %
Seoul 3,866,264 25.5% 2,149,000 25.5% 1,195,000 27.9%
Incheon 798,800 5.3% 444,000 5.3% 228,000 5.3%
Kyonggi 2,948,724 19.4% 1,639,000 19.4% 952,000 22.3%
Busan 1,298,950 8.6% 722,000 8.6% 286,000 6.7%
Daegu 1,002,098 6.6% 557,000 6.6% 126,000 2.9%
Gwangju 433,583 2.9% 241,000 2.9% 130,000 3.0%
Daejon 537,931 3.5% 299,000 3.5% 124,000 2.9%
Woolsan 347,226 2.3% 193,000 2.3% 91,000 2.1%
Jeonnam 455,172 3.0% 253,000 3.0% 172,000 4.0%
Jeonbuk 485,757 3.2% 270,000 3.2% 140,000 3.3%
Chungna 460,569 3.0% 256,000 3.0% 167,000 3.9%
m
Chungbuk 383,208 2.5% 213,000 2.5% 151,000 3.5%
Kyongnam 800,599 5.3% 445,000 5.3% 208,000 4.9%
Kyongbuk 777,211 5.1% 432,000 5.1% 162,000 3.8%
Kangwon 413,793 2.7% 230,000 2.7% 116,000 2.7%
Cheju 169,115 1.1% 94,000 1.1% 28,000 0.7%
Total 15,179,000 100.0% 8,437,000 100.0% 4,276,000 100.0%

Table 2.3 Subscriber forecast according to province

Source – Mobilecomi Feb, 2002

Note – In case of SKT, the provincial subscriber statistics are not announced, instead, the SKT
announces the subscribers statistics of five local branches. Here the KTF’s provincial portion is
used to approximate that of SKT

11
 2.2.Infrastructure CAPEX(Capital Expenditure)

2.2.1.IMT-2000 Infra CAPEX

Classificatio KT ICOM SK IMT

n
Service 4Q 2002 : trial 2Q 2003 : trial service
Launching
1Q 2003년 : commercial service 3Q 2003 : commercial service
Service Area Metropolitan area and Busan trial : Seoul, Bundang

commercial : Seoul, 6 prvincial

cities, 25 cities
CAPEX 2002 : 739,000 Mn won 2002 : 115,500 Mn won
2003 : N/A 2003 : 649,100 Mn won

Table 2.4 Plan of IMT2000 Business

th
Source :227 Science and technology committee of Assembly

12
SKT imt-2000 Infra CAPEX and status

Trial : 2Q 2003
Commercial service : 3Q 2003
- Adjustable according to 3G demands, vendor, and market

Stage Service area Coverage(w.r.t population)

~ 2003 Seoul, 6 prvincial cities, 25 cities 67.2 %
~2004 81 cities, 주요 군 지역 97.4 %
~2006 Whole country 100 %

Table 2.5 Coverage plan of SKT

Roadmap

Fig 2.2 Roadmap of SK IMT buisness

13
 Fig 2.3 Network buildup plan of SK IMT

Table 2.6 is the capex plan of SK IMT.

Unit: Mn won
Layer 2002 2003 2004 2005 Accumulat
ion
Switching 34,500 49,000 521 171,100 306,700
Access 81,000 544,900 413,700 137,000 1,176,600
Power - 18,100 12,800 4,400 35,300
OAM - 37,100 15,300 5,800 58,200
Total 115,500 649,100 493,900 318,300 1,576,800

Table 2.6 CAPEX plan of SK IMT

14
KTF IMT-2000 Infra CAPEX and business plan

KT ICOM
Service plan 4Q 2002:: trial

1Q 2003 : commercial service

Service area Metropolitan area and Busan
Capex 2002 : 739,000 (Mn won)
2003 : N/A

Table 2.7 Business plan of KT ICOM

Source :227th Science and technology committee of Assembly

15
 2.2.2.Forecast of 3G subscribers

It is expected that the first commercial service of IMT-2000 will be launched by the KT ICOM.
And the LGT is also expected to launch the IMT-2000 service in the first half of year 2003. In
case of the SKT, it is expected that the launch of commercial IMT-2000 service will lag behind
the other carriers at least 6 months, because of shortage of funds by the purchase of KT’s
shares. Therefore, the IMT-2000 subscribers can have only two choicse between the KTF and
LGT in the bdginning. The net addition of subscribers for each carrier should be considered to
forecast the IMT-2000 subscribers to reflect the above situation.

Net adds May-01 Jun-01 Jul-01 Aug-01 Sep-01 Oct-01

SKT -72,475 228,843 11,398 56,168 181,000 267,812
STI -79,977 -28,897 41,287 45,556 61,599 62,582
SKT+STI -152,452 199,946 52,685 101,724 242,599 330,394
SKT+STI % -24.95% 25.31% -59.46% -125.04% 75.60% 56.27%
KTF 506,663 309,026 -95,699 -143,208 49,870 210,635
KTF % 82.93% 39.12% 108.01% 176.04% 15.54% 35.88%
LGT 256,767 281,014 -45,590 -39,867 28,440 46,099
LGT % 42.03% 35.57% 51.45% 49.01% 8.86% 7.85%
Total 610,978 789,986 -88,604 -81,351 320,909 587,128

Net adds Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Average

SKT 247,460 195,517 160,525 238,758 422,735 50,694
STI 54,290 -10,297
SKT+STI 301,750 185,220 160,525 238,758 422,735 2,083,884
SKT+STI % 112.50% -345.68% 84.54% 54.96% 66.21% 57.62%
KTF 49,546 -174,104 19,812 158,399 183,601 1,074,541
KTF % 18.47% 324.93% 10.43% 36.46% 28.76% 29.71%
LGT -83,079 -64,698 9,552 37,242 32,103 457,983
LGT % -30.97% 120.75% 5.03% 8.57% 5.03% 12.66%
Total 268,217 -53,582 189,889 434,399 638,439 3,616,408

Table 2.8 Net adds trends for each carrier (May, 2001 ~ March, 2002)

The following table is the estimated number of IMT-2000 subscribers for each carrier through
the above assumption.

2002E 2003E 2004E 2005E 2006E

Subscribers 30,205,000 30,969,000 31,709,941 32,468,595 32,879,413
Population 47,639,618 47,925,318 48,199,227 48,460,590 48,710,241
Penetration 63.4% 64.6% 65.8% 67.0% 67.5%
YoY Growth rate(%) 4.0% 2.5% 2.4% 2.4% 1.3%
2G + 2.5 G Subs. 29,600,900 28,801,170 25,685,052 21,104,587 17,426,089
2G + 2.5 G Subs (%) 98.0% 93.0% 81.0% 65.0% 53.0%

16
3G Subs. 604,100 2,167,830 6,024,889 11,364,008 15,453,324
3G Subs(%) 2.0% 7.0% 19.0% 35.0% 47.0%
SKT IMT-2000 subs % 0.0% 18.0% 57.6% 57.6% 57.6%
SKT IMT-2000 subs 0 390,209 3,471,541 6,547,942 8,904,205
KTF IMT-2000 subs % 70.0% 60.0% 29.7% 29.7% 29.7%
KTF IMT-2000 subs 422,870 1,300,698 1,789,994 3,376,247 4,591,183
LGT IMT-2000 subs % 30.0% 22.0% 12.7% 12.7% 12.7%
LGT IMT-2000 subs 181,230 476,923 762,751 1,438,683 1,956,391

Table 2.9 Forecast of IMT-2000 subscribers based on net adds

17
 3.Forecast of 3G subsystem demands

3.1.SMSC(Short Message Service Center)

Although the price of 3G SMSC are various according to suppliers, it is known that the price of
3G SMSC is approximately 850,000,000 KR won. The capacity of SMSC is described as the
BHSM(Busy Hour Short Message), which means messages per hour.
It is known that the peak capacity of 2G SMSC is anywhere from 60,000 to 90,000 BHSM.
Based on the data of table 2.12, the 3G SMSC demands for each carrier can be calculated.

Circuit system SKT KTF LGT Average

Data Usage SMS(total) 479,112,563/ 455,641,000/ 189,072,573/ 1,123,826,136/
Monthly MSG/user 41.1 47.6 44.2 44.1
Wireless internet 66,774,078/ 72,612,000/ 15,668,992/ 155,055,070/
Monthly MOU(min) 20.6 23.9 17 21.5

Table 3.10 Data usage for each carriers(Dec, 2001)

Basic assumption for forecast of SMSC(Short Message Service Center) demands

- The average BHSM is assumed to be 72,000 per hour to maintain the QoS(Quality
of Service).
- The average BHSM of 72,000 is based on the SKT’s deployed number of SMSC
and QoS.
- The 3G SMSC should provide downward interoperability between 2G SMSC.

The forecasted result of 3G SMSC demands is as follows.

　 2002E 2003E 2004E 2005E 2006E

Subscribers 30,205,000 30,969,000 31,709,941 32,468,595 32,879,413
Population 47,639,618 47,925,318 48,199,227 48,460,590 48,710,241
Penetration 63.4% 64.6% 65.8% 67.0% 67.5%
YoY Growth rate(%) 2.5% 2.4% 2.4% 1.3%
2G + 2.5 G Subs 29,600,900 28,801,170 25,685,052 21,104,587 17,426,089
2G + 2.5 G Subs (%) 98.0% 93.0% 81.0% 65.0% 53.0%
3G Subs. 604,100 2,167,830 6,024,889 11,364,008 15,453,324
3G Subs. (%) 2.0% 7.0% 19.0% 35.0% 47.0%
SKT IMT-2000 subs % 0.0% 18.0% 57.6% 57.6% 57.6%
SKT IMT-2000 subs 0 390,209 3,471,541 6,547,942 8,904,205
SKT 3G SMSC 1 3 5 7
demands

(accumulated)

18
KTF IMT-2000 subs % 70.0% 60.0% 29.7% 29.7% 29.7%
KTF IMT-2000 subs 422,870 1,300,698 1,789,994 3,376,247 4,591,183
KTF 3G SMSC 1 1 2 3 4
demands

(accumulated)
LGT IMT-2000 subs % 30.0% 22.0% 12.7% 12.7% 12.7%
LGT IMT-2000 subs 181,230 476,923 762,751 1,438,683 1,956,391
LGT 3G SMSC 1 1 1 1 2
demands

(accumulated)

Table 3.11 3G SMSC demands

19
 3.2.MMSC(Multimedia Message Service Center)

The price of MMSC is known as 1.3 billion KR won or so. In case of MMSC, there is no example
of deployment, therefore Japanese case is considered as follows.

J-Phone 1999E 2000E 2001E 2002E 2003E 2004E

Avg SMS Msg per Month per 45.0 130.0 260.0 351.0 421.2 505.4
Sub
YoY Growth(%) 　 189% 100% 35% 20% 20%
Avg MMS Msg per Month per 　 　 　 25.0 35.0 45.0
Sub
YoY Growth(%) 　 　 　 　 40.0% 28.6%

KDDI 1999E 2000E 2001E 2002E 2003E 2004E

Avg SMS Msg per Month per 3.1 6.3 9.0 10.6 11.4
Sub
YoY Growth(%) 　 　 103% 43% 18% 8%
Avg MMS Msg per Month per 　 　 　 15.0 18.0 25.0
Sub
YoY Growth(%) 　 　 　 　 20.0% 38.9%

NTT-Docomo 1999E 2000E 2001E 2002E 2003E 2004E

Avg SMS Msg per Month per 25.0 35.0 40.0
Sub
YoY Growth(%) 　 　 　 　 40% 14%
Avg MMS Msg per Month per 　 　 10.0 25.0 35.0 40.0
Sub
YoY Growth(%) 　 　 　 150.0% 40.0% 14.3%

Table 3.12 Forecast of monthly SMS and MMS usage

Source - Morgan Stanley Dean Witter Feb 14, 2002 'Future of Messaging'
In addition to usage trends, It should be considered for the ARPU of 2.5G subscribers and color
displayed handset subscribers, since the reason of SMS’ popularity is cheap fee per message
compared to voice call, and MMS fee per message will be higher than that of SMS.

　 2001 2001 May 2001 Jul 2001 2001 2002 Jan 2002
Mar Sep Nov Mar
Wireless Internet monthly 1,556 1,710 1,904 2,140 2,550 2,680 3,061
ARPU
Wireless Internet ARPU 3.50% 3.60% 4.10% 4.40% 5.20% 6.30% 7.00%
portion

Table 3.13 Monthly wireless internet ARPU of SKT

Source – SKT IR (March, 2002)

20
 　 2001 2001 Jun 2001 2001 Dec 2002
Mar Sep Mar
Wireless Internet monthly 1,628 1,922 2,005 2,391 2,555
ARPU
Wireless Internet ARPU 5.80% 6.50% 6.70% 7.70% 8.20%
portion

Table 3.14 Monthly wireless internet ARPU of KTF

Source – KTF IR (March, 2002)

2001 2001 May 2001 Jul 2001 Sep 2001 2002 Jan 2002
Mar Nov Mar
Monthly ARPU (\) 35,034 38,626 35,106 34,929 34,743 32,437 32,725
Wireless internet 1,831 2,189 2,034 2,142 2,251 2,156 2,086
ARPU(\)
Portion 5.23% 5.67% 5.79% 6.13% 6.48% 6.65% 6.37%

Table 3.15 Monthly wireless internet ARPU of LGT

Source – LGT IR (March, 2002)

The portion of wireless internet ARPU for 2.5G and color handset subscribers is higher than that
of normal 2G handset subscribers as follows.

Fig 3.4 ARPU according to handset(SKT)

Source – SKT IR(March, 2002)

21
 Fig 3.5 ARPU according to handset(KTF)
Source – KTF IR (March, 2002)
The prospects for MMS contents is high according to the survey result. The following chart is
the result of “2002 wireless internet usage survey”.

22
 Character/Melody 24.7
40.5
Game 12.9
19.4
E-mail 16.2
14.8
Securities/Finance/Reinvestment. 5.8
4.5
Location/Transportation/Travel 7.5
4.2
Chatting/Community 5
3.7
Broadcast/Entertainment/Sports 4.6
3.1
Shopping/Reservation 7.1
2.3
News 3.7
2.2
Lottery/coupon 3.9
1.9
Internet portal 3.2
1.5
Adult entertainment 1.9
0.9
2.8 Service wanted in future
E-book for study
0.6
Service wanted immediately
Others 0.1
0.3

0 50

Fig Fig 3.6 The favorable contents now and in the near future
Source - KRNIC, May 2002, 2002 Wireless internet usage survey

23
 Reduction of service
35.9
fee

Improvement of
17.7
transmission speed

Stability of
17.0
connecting status

Contents/Information
11.0
diversity
Ease of
usage/Increased 10.2
convenience of
Extension of
4.1
service area
Simplification of
Wireless Internet 3.0
application for
Possibility of usage
other service 1.0
provider 'contents

Others 0.2

0 50

Fig 3.7 The favorable contents in the near future

Source - KRNIC, May 2002, 2002 Wireless internet usage survey

The prospect of MMSC deployment is forecasted through the methodology used in the SMSC
deployment forecas in conjunction with the above survey results.
Basic assumption for forecast of MMSC(Multimedia Message Service Center) demands
- The average BHSM is assumed to be 72,000 per hour to maintain the QoS(Quality
of Service).
The forecasted result of MMSC demands is as follows.
Classification 2002E 2003E 2004E 2005E 2006E
Monthly MSGs per Sub 15 18 25 35 45

YoY Growth(%) 20.0% 38.9% 40.0% 28.6%

24
 Table 3.16 Assumption for monthly MMS usage per subscribers
2002E 2003E 2004E 2005E 2006E
Subscribers 30,205,000 30,969,000 31,709,941 32,468,595 32,879,413
Population 47,639,618 47,925,318 48,199,227 48,460,590 48,710,241
Penetration 63.4% 64.6% 65.8% 67.0% 67.5%
YoY Growth rate(%) 2.5% 2.4% 2.4% 1.3%
2G + 2.5 G Subs. 29,600,900 28,801,170 25,685,052 21,104,587 17,426,089
2G + 2.5 G Subs. (%) 98.0% 93.0% 81.0% 65.0% 53.0%
3G Subs. 604,100 2,167,830 6,024,889 11,364,008 15,453,324
3G Subs. (%) 2.0% 7.0% 19.0% 35.0% 47.0%
SKT IMT-2000 subs % 0.0% 18.0% 57.6% 57.6% 57.6%
SKT IMT-2000 subs 0 390,209 3,471,541 6,547,942 8,904,205
SKT 1 2 5 8
MMSC(accumulated)
KTF IMT-2000 subs % 70.0% 60.0% 29.7% 29.7% 29.7%
KTF IMT-2000 subs 422,870 1,300,698 1,789,994 3,376,247 4,591,183
KTF 1 1 1 2 4
MMSC(accumulated)
LGT IMT-2000 subs % 30.0% 22.0% 12.7% 12.7% 12.7%
LGT IMT-2000 subs 181,230 476,923 762,751 1,438,683 1,956,391
LGT 1 1 1 1 2
MMSC(accumulated)

Table 3.17 3G MMSC demands

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 4.Conclusion

The domestic market size of SMSC and MMSC has been examined. And, unfortunately, it
seems to be small compared to the suppliers’ expectations.
In addition, the difficulties surrounding the nation-wide commercial launch of 3G services still
remain. Such as the merge between KTF and KT ICOM, and SKT’s acquisition of KT’s shares,
both of which, might delay the roll-out of the IMT-2000 service.

There are two possibilities to breakthrough and maneuver through this adversity. First, the
suppliers need to concentrate on finding other foreign sales channels, including global
infrastructure suppliers, such as Nortel, Nokia, Ericsson, Lucent etc. Second, South-east Asian
operators are still rolling out SMSCs because the penetration rate of WAP-enabled cell phones
is not high. In these regions, SMS-based services such as banking, information services and
booking are still gaining popularity.
The deployment schedule of 3G SMSC and MMSC in this region lags behind one or two years.
Thus, it’s time to boost it up.

Add all these things up, and the coming year will be a hard time for messaging solution
providers.

Mobile Operators Mull over Deep Cuts in IMT2000 Investment

IMT2000 Investment is on the brink of suspension. The industry said on July 22 that KT and
KTICOM are considering delaying or scaling down investment in asynchronous IMT2000
services, a step back from their earlier plan to committee some 740 billion won. They are citing
as the reason the delay in equipment development with supplier LG Electronics and
postponement of network setup.

SK Telecom, another leading mobile service operator, also said that it will nail down an IMT2000
investment plan after closely watching its competitors. Then the industry's spending on IMT2000

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services, initially expected to surge this year, will inevitably decline, sending ripple effects to
equipment and handset makers upping ante for the much-expected asynchronous services.

"A wide cut in investment is most likely given lackluster market demand, delay in equipment
development and postponement of network setup," said an official from KTICOM.

"Mother company KT is weighing three options, which are making the smallest commitment with
200 billion won, launching services in limited area with 400 billion won, and pressing for the
earlier plan of 740 billion won," he continued. "We might decide to freeze spending until the
second half of next year, depending on how things are unfolded."

The company recently pushed back the commercial launch schedule from the end of this year to
between April and June next year as it hopes to avoid redundant investments while adapting
itself to KT privatization and the new head. The commercial service coverage is also expected
to be limited to Seoul from earlier Seoul, Busan and the central metropolitan area.

"KTF is pushing for its third-generation services such as cdma2000 1x and EVDO," said a
source close to KTICOM. "Partly it is because development of dual-mode dual-band handsets
are being delayed, but they are worrying any spending before the KTF-KTICOM merger could
result in redundant investment."

SK Telecom plans to unveil its IMT2000 service in the third quarter of next year after selecting
equipment providers in April and May at earliest. In particular, the mobile carrier, finding itself
financially less affordable following its acquisition of KT stake, apparently welcomes the
KTICOM's decision to delay investment.

SK Telecom named 7 equipment vendors in November last year and has been jointly
developing equipment.

"If investment is put on hold, it will deal a blow to related industries," said a source from the
telecoms equipment industry. "Not to mention a sharp decline in sales revenue in LG
Electronics, equipment and handset markets will also contract," he emphasized. "If necessary
the government needs to intervene so that the investment plan will be implemented as
scheduled."

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5.Reousrce

1. Shinyoung securities, Analyst Keun-chang Rho, Industry report of RF componet and

Repeater 2000.11
2. Monthly Mobilecomi http://www.mobilecomi.com
3. The CDMA Activities in Korea http://www.bkbae.pe.kr/report-kr.htm
4. ETRI, Mobile Number Portability
5. 제227회 국회(임시회) 과학기술정보통신위원회, IMT-2000 추진현황 및 향후계획
6. LGT 기술원 책임연구원 이덕규, PCS 기술개발동향과 서비스과제
7. CDMA기지국 경제성분석을 위한 투자비산정에 관한 연구
http://kgsmweb.kaist.ac.kr/executive/itsp/paper_1997/g6-4.doc
8. Samsung securities, Analyst Sung-soo Lee, Wireless communication Infrastructure
market 2000.11
9. ZDNet Korea http://www.zdnet.co.kr
10. ETRI

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