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Traditional business to stagnate in the wake of 5G

11 Sep 2017

A recent report from GlobalData has uncovered many findings, the most prominent of which being the stagnation of traditional telco business.

According to the business information and analytics provider, the introduction of 5G services will be a boon for the Korean telecom operators as traditional telecommunications revenue declines.

GlobalData asserts 5G subscriptions in South Korea will outnumber 3G by 2020, following the world’s first commercial 5G deployment during the Pyeongchang 2018 Winter Olympics in Korea’s rural Gangwon province.  

Traditional communications services like voice service and mobile voice will see declines in revenue at an annual rate of 8.4 percent and 7 percent respectively between 2016  and 2021.

GlobalData telecoms market analyst, Malcolm Rogers says operators around the globe faced with the same challenge, evolve to something more than a pipe provider or offer services that come with more utility. 

“However, the Korean operators have been among the most proactive in growing business outside the core of communication,” says Rogers.

“Whereas operators in some markets have been slow to react to the digital disruption caused by OTTs and internet giants like Google and Amazon, the players in South Korea have been investing in new digital business for years.”

According to GlobalData, just like in mature telecom markets around the world, competition around basic connectivity services is fierce, pushing the service providers to compete on price that is resulting in a margin squeeze.

Telecom companies are now forced to look for more value added and tertiary services to tap growth. KT, LG U+ and SK Telecom (SKT) are now focusing on diverse range of non-core segments such as industrial IoT, payment platforms, media and commerce to boost their business.

GlobalData uses the example of Korea Telecom (KT), a company that is exploring alternative sources of revenue with a recently launched new artificial intelligence-based home assistant service that also functions as an IPTV set top box.

SK Telecom and LG U+ also now offer cellular-based wireless payment platforms that allow small retailers, traders and vendors to conduct business from anywhere

Furthermore, all the three of the major telecom providers have invested in B2C and B2B e-commerce operations, venturing into an entirely new industry on the eve of 5G networks that will enable operators to provide new services for industry, government and consumers.

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