Conclusions

1
Exploiting the broadband opportunity lessons
from South Korea and Japan
Conclusions
Antony Walker Director, Intellect CEO Broadband
Stakeholder Group
Global Watch is a DTI service managed by Pera
2
Different yes, irrelevant no!

• Much to learn from both countries
• Innovation
• Take-up
• Enablers
• Inhibitors
• Business models
• Value and benefit

3
Innovation

• Content genres similar to the UK
• music, games, video, community services, P2P
  applications, VoIP, e-Learning, e-commerce etc.
• Some services more advanced, incorporating more
  rich media
• Higher levels of take-up
• Could be approaching a tipping point

4
Take up

• Market for digital content is growing rapidly
• Strong demand for personalised, interactive
  on-demand services and applications across a wide
  range of content genres.
• Online and mobile advertising revenues growing
• Continued trend towards user-generated content
  and social networking
• IPTV and mobile TV still in their infancy - not
  clear how consumers will adopt these services,
  but commercial interest is strong.

5
Enablers

• Top down strategies create investor confidence
  about government commitment
• Infrastructure competition - players seeking to
  compete through content
• Vertical integration - encouraged by regulators
  in the interests of sustainable investment
• Collaboration - between manufacturers and
  operators - developed platforms on which content
  developers can innovate.
• High-speed connections with high quality of
  service - essential trigger to the take up of new
  rich media services.

6
Inhibitors

• The accelerated pace of change creating
  disruptive opportunities and threats for all
• Commercial uncertainty about business models,
  timing for market entry, technology choices, and
  the value of assets, delays investment
• Some players seeking to slow the pace of change
  as they reposition themselves
• Uncertainty about the regulatory framework for
  IPTV services has inhibited investment and
  delayed the deployment of services

7
Business models

• Many services have succeeded with traditional
  subscription, advertising, or pay as you go
  business models.
• Games industry been most innovative - Items
  selling, now being developed by other sectors.
• Access to low cost micro-payment systems was a
  critical enabler for these models
• Games companies first to recognise revenue
  potential of communities and to monetize social
  networking services.

8
Business models

• Larger operators focusing on quadruple play
  services and fixed and wireless integration
• Some mobile operators moving to flat rate to
  encourage rich media take-up
• Uncertainty about biz models for mobile and IPTV
  services. Few believe subscription or advertising
  alone will be sufficient.
• Convergence is driving cooperation and alliances
  across the value chain, the acquisition of
  content assets by network operators, portals and
  ISPs and consolidation between operators.

9
Market opportunity

• Despite significant growth, online or mobile
  distribution methods for digital content still
  only represent a very small percentage of total
  content sales by genre, suggesting that there is
  a huge opportunity for growth in these areas in
  the coming years.
• There are early signs in Japan of a growing
  interest in international and niche content,
  which could open up new opportunities for UK
  content companies.

10
Social and economic change

• ICT is being prioritised as a key economic driver
• Recognised implications of broadband enabled ICT
  for their economic and social development.
• Measuring progress in this area and its direct
  and indirect contributions to society and GDP.
• ICT is being recognised as a driver of social
  change
• Broadband and convergence are driving and
  enabling diverse social and societal change.
• Emergence of new community social network
  services and the trend towards user generated
  content is shifting power towards the consumer /
  citizen. E.g. OhmyNews in Korea

11
Visions are user centric

• U-strategies developed in close collaboration
  between government ministries, professional
  think-tanks, trade associations, technology
  suppliers and network operators.
• Although, supplier led, both attempt to be user
  centric - putting user benefit and experience at
  the centre of policy and strategy.
• More forward looking, longer-term and visionary
  than European strategies and i2010

12
Payment, identity and trust

• Critical enablers for innovation and growth and
  will become increasingly critical in a networked
  society.
• This is an area where government can play an
  important role in working with the industry to
  ensure a benign user environment in the
  ubiquitous networked society.

13
NGA leap of faith

• Fibre deployment expensive and ambitious
• No evidence of a clear business case
• Believe demand for bandwidth will grow and that
  new services require guaranteed QoS in the access
  layer
• Unlikely that operators would have come to this
  conclusion without strong government and supplier
  backing
• Policy makers and suppliers focused on export
  potential of international markets

14
China

• Japan and Korea are responding to China
• Korea and Japan feel the heat of competition from
  Chinas burgeoning economy more acutely than we
  do in Europe.
• Aware of Chinas scale impact on the ICT sector
• Prioritised ICT leadership and exploitation as
  part of their strategic response to Chinas
  growing economic and political influence.

15
Exploiting the broadband opportunity lessons
from South Korea and Japan
Recommendations
Global Watch is a DTI service managed by Pera
16
EU Comms Framework Review DTI/ Ofcom

• Strong trends towards vertical integration and
  consolidation in Korea and Japan
• Regulatory approaches being taken in these
  markets should be assessed in more detail
• Determine whether they offer useful lessons that
  could be applied in the current review of the EU
  framework.

17
Establish UK Digital Readiness Index ONS.

• There is a measurement philosophy in Korea and
  Japan what gets measured gets done.
• The UK should establish effective metrics to
  assess the UKs digital readiness.

18
Focus on payment, identity trust DTI

• In an increasingly networked society, the
  challenges of ensuring a safe and trusted user
  environment will increase.
• UK government and industry should be enhancing
  their collaborative efforts now, to address
  issues that will be critical to consumers in five
  years time.

19
Strategic initiatives

• Review options for Next Generation Access (NGA)
  deployment and publish a plan DTI/ BSG.
• The UK will need to develop its own mid- to
  long-term route map for the evolution towards NGA
  in the UK.
• Digital health for patient-centred care DTI/DOH
• Although not the primary focus of this mission,
  there are clearly significant and economic and
  social benefits to be gained from the diffuse
  application of ICT in patient centred-healthcare.
  More could be learned form the Asian experience
  in this area

20
Strategic initiatives

• c. Connected car and connected roads KTN
  DTI/DOT
• Both Japan and Korea are seeking to exploit the
  application of ICT in transport for economic,
  social and environmental benefit. A connected
  cars initiative in the UK could build on the
  recent Intelligent Networks Foresight study.
• d. Digital Olympics challenge DTI/DCMS/ IAPThe
  relevance of the Ubiquitous Networked Society
  Vision should be considered in the context of
  2012 Olympics.

21
Follow-up missions on IPTV Intellect

• Many forms and flavours of IPTV services are
  emerging in Japan and Korea.
• Consumer reaction to these services and the
  evolution of the related business models will be
  instructive for UK players
• Follow-up mission in this area would be valuable
  for UK companies.

22
Review the impact of China DTI/FCO

• The strategies being developed in Japan and Korea
  are, in part, incentivised by a recognition of
  the potential impact that China will have on the
  global ICT market.
• DTI should consider undertaking a review of the
  strategic impact of China on the UK