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Is 4G “A Curse”?

The boss of one of South Korea’s biggest telcos warned fellow telcos of “the curse of 4G” at the World Mobile Congress in Barcelona this week.

Suk-Chae Lee, the head of KT Corp, complained his company is not seeing the returns they’d like on their massive investment in 4G LTE networks at the World Mobile Congress in Barcelona this week.

The problem is, after the telco erected these super pricey networks, users are not prepared to pay more to use the faster LTE services.

“Our European colleagues complain that the explosion in data has not fully happened for them, that it did not come to reality.”

 “In Korea, they are data crazy. We have unprecedented demand. We cannot handle it,” Lee admitted.

“But the issue we have is that they are not willing to pay enough.

“So, the fundamental problem is, can we make any money out of it?”

Korea has one of the biggest LTE networks in the world and KT’s 4G service, called ‘LTE WARP’, covers the entire country.

Mike Wright, Telstra’s Networks and Access Technologies Director was not available for comment as he is currently in Barcelona at the World Mobile Congress himself, but we don’t doubt his ears were ringing at the warning.

High Hopes

Telstra did not comment on the warning by South Koreans when contacted by SmartHouse.

Just last week, Telstra unveiled its 4G strategy and said it would begin using 2G spectrum to deal with the “tsunami “of demand for mobile Internet data in OZ even in remote areas, Mike Wright, Executive Director, Networks and Access said.

Telstra’s 4G users are growing at 20% monthly, and outpacing 3G growth and last week announced technologies including LTE Advanced, HetNets to make sure it can meet 4G demand, part of its plan to expand network to 66% coverage across Oz.

The telco which set up the first 4G LTE network here 18 months ago is investing $1bn this year alone and has 1.5 million users on its LTE network the biggest in Australia, with Optus’ network still in its infancy.

But Telstra don’t seem to be doing too badly out of 4G – its mobile revenue grew by 4.6% to $4,5bn in the six months to 31 December 2012.

South Korean telecom’s Chief Technology Officer backed up his rival at WMC saying “the traffic increases but the revenue does not necessarily follow,” but did say average revenue per user rose $13 compared to 3G.

“It is good money, but it may not be enough to justify the huge investment needed in LTE.”

However, Jae W Byun predicts returns would increase as users numbers rose from 30% to 60%.

And with Telstra looking to wean mobile users off 3G and 80% of its smartphones sold will be on 4G networks this year, they are clearly thinking the same.

A Vodafone spokesperson is confident about the future of 4G telling SmartHouse: “Australia is the second highest penetrated smartphone market – an indicator which suggests it’s only a matter of time before 4G really takes off.”

Although the telco hasn’t yet revealed when 4G will go live (its still testing), they’re “very excited about the potential for 4G and is on track to roll out a competitive network in Australia later this year.”

And in fact, although behind rollout compared to Telstra and Optus, Voda’s LTE network could have the fastest speeds of all networks.

“Vodafone will be the only carrier to offer 20mhz contiguous spectrum in the 5 state capitals when we switch on in 2013. For data hungry customers that means faster speeds than they can get today from any other network,” the spokesperson added.

“Our industry is in transition. We’ve only begun to see the digital revolution occur and high speed, specially efficient technology such as LTE will play a key role in the full enablement of this revolution. “