Rush hour in Seoul. Twenty-nine-year-old Han Jun Hwan climbs in his car and pulls out his cell phone for a gridlock check. Through an SK Telecom (SKM) data service called June, he looks at real-time images of troublesome intersections along his route. This planning usually makes for a quicker drive. Even when a surprise jam bottles up traffic, the handset provides a measure of comfort. Han can click to a video-on-demand service and watch a scene or two of his favorite soap operas on the phone's high-definition screen.
Glitzy new services by mobile carriers are the rage in South Korea, which has emerged as a test bed for the global wireless industry. Cell phones in Korea shuttle data at broadband speeds, up to 2.4 megabits per second. Increasingly, young commuters are shunning newspapers and books in subways and gazing instead into phones for TV, videos, and music downloads. And phone execs are racing to offer services that do everything from trading stocks to finding restaurants. Why? In a country where 75% of the population already talks on cell phones, new data services are the only path to growth. "What's important is who could be more imaginative or creative," says SK Telecom senior manager Park Tae Jin.
At the forefront of the race is SK, with 52% of the wireless market. Some 2.5 million SK customers, including Han, have signed up for its June phones, which cost $350 to $550 and are specially designed for multimedia. These handsets, made by local manufacturers as well as Motorola Inc. (MOT), run processors three times faster than normal phones and have enough memory to download nine hours of music or two hours of video. The payoff? June subscribers spend more than twice the average for data. Han's bill runs an average of $135 a month. Customers like him helped propel SK to No. 23 on the Info Tech 100. The company's revenues are expected to rise 6% this year, to $8.56 billion, as profits increase slightly to $1.69 billion.
Real-time TV access is popular -- but only for those who can afford it. To lower costs, SK is looking to the skies. In March, it launched a satellite that will beam DVD-quality video to a new phone using digital multimedia broadcasting technology. The service, which provides access to 39 channels of movies, news, and information, will go for a fixed monthly fee of $10 to $12.
Phones are doubling as credit cards as well. Here's how they work: Instead of pulling out a wallet, a shopper points the cell phone to a tiny terminal next to the store's cash register or the ticket machine in the subway. An infrared beam sends the user's credit-card information straight to the card company. The phone asks for a personal ID number to close the purchase. "It's great to be able to walk into restaurants and shops without worrying about leaving your wallet behind," says Park Sang Eon, a marketing manager at a logistics company who purchased a credit-card phone last October. "I hope the phone will also work as my driver's license and my ID card in the future."
Farfetched? Maybe. But you never know where the next mobile bonanza will pop up. Consider music. Last year, revenues from music services to mobile phones hit an estimated $157 million in Korea, topping CD sales, according to Korea's Recording Industry Assn. This is the sort of magic high-speed wireless can spin. And it's why the rest of the mobile world is racing to catch up to Korea.
By Moon Ihlwan in Seoul