Broadband Convergence: Evolutionary Dynamics of Market Innovation

Transcription

1 Broadband Convergence: Evolutionary Dynamics of Market Innovation Suk-Gwon Chang Professor, School of Business, Hanyang University President, Digital Convergence Research Seoul UBB Conference, October 9-10, 2008, COEX Conference Center 1

2 Broadband Policies of Korea (April 2008, Paris) 1995 KII (Korea Information Infrastructure) Initiative Three phases extending until Focused on Broadband Internet Backbone Network Stage Competition in Local Access Network and Deregulation in CATV Market Facility-based competition in broadband between KT (Incumbent) and Hanaro (New entrant) Aggressive Deployment of ADSL M&A amongst PP, SO and NO, and MSO allowed 2003 IT-839 Strategy and BcN Plan 8 new services, 3 new infra and 9 new growth engines Includes BcN (Broadband Convergence Network) Stage Regulatory Reform, BCC (Broadcasting and Communications Commission) KBC + KCC + MIC = BCC BCC = Broadband Convergence Commission? 2

3 Broadband Convergence in Korea (Today, Seoul) KII (Korea Information Infrastructure) Initiative Three phases extending until Focused on Broadband Internet Backbone Network Competition in Local Access Network and Deregulation in CATV Market Facility-based competition in broadband between KT (Incumbent) and Hanaro (New entrant) Aggressive Deployment of ADSL M&A amongst PP, SO and NO, and MSO allowed Device Convergence Initiated by Samsung Electronics IT-839 Strategy and BcN Plan Service 8 new Convergence services, 3 new Driven infra and by 9 new Telcos growth engines Includes BcN (Broadband Convergence Network) Infrastructure Convergence Based on BcN Plan Regulatory Reform, BCC (Broadcasting and Communications Commission) A Constant Endeavour to Innovate: Next Evolution Paths KBC + KCC + MIC = BCC BCC = Broadband Convergence Commission? 3

4 Contents 1. Snapshots of Convergence in Korea 2. Evolutionary Dynamics of Convergence 3. Next Evolution Paths 4

5 1. Snapshots of Convergence in Korea Device Convergence by Samsung: 2001~ Service Convergence by Telcos: 2003~ Infrastructure Convergence by BcN: 2005~ Questions to Answer 5

6 Device Convergence by Samsung 2001~ (1) The Origin of Convergence Concept (2002) Source: Samsung Electronics 6

7 Device Convergence by Samsung 2001~ (2) Seamless Digital Network Concept (2002) Source: Samsung Electronics 7

8 Device Convergence by Samsung 2001~ (3) Device Convergence Concept (2002) Source: Samsung Electronics 8

9 Device Convergence by Samsung 2001~ (4) Digital Home Network Concept (2002) Samsung Tower Palace I The First Home Network-Ready Apartments High-end Apt with Established Home Network Equipped with Total Integration Capability Security, Remote Home Appliance Control, Home Theater, etc Source: Samsung Electronics 9

10 1. Snapshots of Convergence in Korea Device Convergence by Samsung: 2001~ Service Convergence by Telcos: 2003~ Infrastructure Convergence by BcN: 2005~ Questions to Answer 10

11 Service Convergence by Telcos 2003~ (1) Convergence driving industry Banking and Finance m-banking (Bank-On: LGT+KB, m-bank: SKT etc) Transportation Industry Telematics (Cheju Island) ITS Construction Industry Home Network (KT, SKT Consortium) TPS: Triple Play Service (Telecom & CATV operators) Public Service Sector e- & m-government (MIC, MOGAHA, etc) IT Sector Wireline Telecom Sector Internet Telephony (KT, Hanaro Telecom, etc) OnePhone (KT) Portable Internet (Planned Service) Wireless Telecom Sector DMB (TU Media) Contents/ Broadcasting Sector Digital TV (KBS, Skylife, etc) Convergence enabling industry 11

12 Service Convergence by Telcos 2003~ (1) Convergence Service Trials Broadcast-Telecom 통신 방송융합 Convergence Broadcast & Cable WebTV VOD Telephones Telephony Wireline Media 미디어 Convergence 융합 Internet Broadcasting Digital TV DMB WiFi/WiMax Telematics Portable Internet Home network OnePhone Fixed-Mobile 유 무선 Convergence 통합 Information Technology PDA Phone m-computing Satellite & Terrestrial Wireless Voice 음성 and 데이터통합 Data Integration 12

13 Service Convergence by Telcos 2003~ (3) Convergence Industry Landscapes Contents Service operation Delivery User interface IT service Telecom service Proprietary sites e-commerce Contents, On-line game Community Web Portals Daum Naver Yahoo Nate Paran etc Internet Connect ISPs Megapass Hanafos xpeed Nespot etc Leased lines (KT, Dacom, SKN,.. ) Broadband Internet (KT, Hanaro, SOs,..) Fixed phone (KT, Hanaro, etc) Cellular phone (SKT, KTF, LGT, etc) Routers and switches PC, Digital TV, Media center PC,.. Ahn/One phone, VoIP phone, etc Multi-function convergence phones PPs for CATV (178 PPs with 9 large MPPs) CATV SO, RO (Relay Operator) and MSO (119 SOs, 188 ROs and 7 large MSOs) TV, HDTV, Media center PC Broadcast service PPs for s-dmb (9 video, 25 audio channels) PPs for t-dmb Satellite-DMB (TU-media) Terrestrial DMB (KBS, MBC, SBS, YTN, Korea DMB, KMMB) TV, DMB phone, PDA, Notebook, Telematics terminal, Web pad, etc Terrestrial Broadcasting (KBS, MBC, SBS, EBS, etc) TV, Digital TV 13

14 Service Convergence by Telcos 2003~ (3) Convergence Industry Landscapes Contents Service operation Delivery User interface IT service Telecom service Proprietary pandoratv sites diodeo e-commerce afreeca Contents, On-line ipop.com game Community Web Internet Leased lines Portals Connect (KT, Dacom, SKN,.. ) DaumTV.netISPs Broadband Internet Daum (KT, Hanaro, SOs,..) Naver Megapass KT HomeN Yahoo Hanafos Fixed phone Nate xpeed (KT, HanaTVby Hanaro, etc) Paran Nespot Hanaro etc etc Cellular phone SkyLife: Sky Touch (2003. (SKT, 5), KTF, Sky LGT, Plus etc) ( ) Routers and switches Gomplayer PC, Digital TV, Media adrenalin center PC,.. Ahn/One phone, sasami VoIP phone, etc Multi-function convergence phones CATV SO, RO (Relay Operator) PPs for CATV TV, HDTV, Data and MSO (119 SOs, 188 ROs (178 Broadcasting PPs Channel CJ CableNet: Hello D with 9 large MPPs) Media center PC for CJ/GS Homeshopping and 7 large MSOs) Digital CableTV: CJ CableNet, HCN, Dreamcity, PPs for s-dmb C&M Communication, Satellite-DMB Qrix Broadcast Data Broadcasting Channel TV, DMB phone, (9 video, 25 audio channels) (TU-media) PDA, Notebook, service for TV Home Services TU-media: s-dmb MiniMBC Telematics terminal, Terrestrial DMB (KBS, MBC, PPs for t-dmb Web pad, etc Data Broadcasting Channel SBS, YTN, Korea DMB, KMMB) SBS gorealra for Contents Delivery Terrestrial-DMB Terrestrial Broadcasting (KBS, MBC, SBS, EBS, etc) KBS kong TV, Digital EBS TVbandi 14

15 1. Snapshots of Convergence in Korea Device Convergence by Samsung: 2001~ Service Convergence by Telcos: 2003~ Infrastructure Convergence by BcN: 2005~ Questions to Answer 15

16 Infrastructure Convergence 2005~ (1) Implementing BcN-based IT-839 Strategies (2005~) 16

17 Infrastructure Convergence 2005~ (2) Basic Concept of BcN (2005~) BcN (Broadband Convergence Network) Access speed of 50~100 Mbps with QoS, enhanced security and IPv6 support by 2010 Telecom Network PSTN/PLMN Broadcasting Network Terrestrial/Satellite/CATV Broadband Internet xdsl/ftth/hfc 17

18 Infrastructure Convergence 2005~ (3) Four BcN Consortia for Service Trials Octave Consortium: KT, KTF, Bridgetec, Directmedia, etc Test-bed: 600 subscribers across 3 cities Focused services: Fixed Mobile Convergence (FMC) services, W-CDMA-based video, Mega-TV (IP-TV), and u-work services UbiNet Consortium: SKT, Hanaro, etc Test-bed: 600 subscribers across 3 cities Focused services: HSDPA/WiBro-based FMC services, Hana-TV (IP-TV), QPS, USN applications (RFID, WPAN), etc Kwanggaeto Consortium: LG Dacom, etc Test-bed: 350 subscribers in 5 areas Focused services: mylg070 (VoIP service), WiFi-CDMA interoperable service to FMC services, TV portal & HD-VoD, etc Cable BcN Consortium: Suwon Cable, etc Test-bed: 700 subscribers across 7 areas Focused services: HD T-Commerce, T-Entertainment, T-Banking 200Mbps Cable Internet, TPS over HFC, etc 18

19 Infrastructure Convergence 2005~ (4) BcN-based Services Developed Over 25 categories of new service models including Internet TV, Video Phone, u-work, TV-learning - 14 Commercialized Services: Hana TV, Mega TV, MyLG070, C&M DV Interoperable video phone between fixed and mobile networks 19

20 1. Snapshots of Convergence in Korea Device Convergence by Samsung: 2001~ Service Convergence by Telcos: 2003~ Infrastructure Convergence by BcN: 2005~ Questions to Answer 20

21 Questions on Convergence Phenomena Why does convergence occur? What is the message we could obtain from the theory? Is it Evolving? What are the dynamic forces and inhibitors behind? Do we need a theory to explain the dynamics? 21

22 Contents 1. Snapshots of Convergence in Korea 2. Evolutionary Dynamics of Convergence 3. Next Evolution Paths 22

23 2. Evolutionary Dynamics of Convergence Hyper-competition View of Convergence Change Management View of Convergence Stage Model View of Convergence Dynamic Market Interactions 23

24 Hyper-competition View of Convergence Convergence is a Kind of Hyper-competition. Hyper-competition = Dynamic Strategic Interaction A Dynamic View to Hyper-competition.* Profit Exploitation Profit Move on to another innovation Attack Counter Attack Implications time time Every advantage is eroded Sustaining advantage can be a deadly distraction The goal is disruption, not sustaining advantage Seizing the initiative with a series of small steps * R. A. D Aveni, Hypercompetition: Managing the Dynamics of Strategic Maneuvering, The Free Press,

25 2. Evolutionary Dynamics of Convergence Hyper-competition View of Convergence Change Management View of Convergence Stage Model View of Convergence Dynamic Market Interactions 25

26 Change Management View of Convergence Convergence is a Kind of Change Process. Fairness Optimal direction for change Driver FR (Functional Risk) Targeted change Inhibitor Old PR (Political Risk) A Real change Efficiency Inhibitor Conditions for a successful change Small functional risk Small political risk Small friction Driver 26

27 2. Evolutionary Dynamics of Convergence Hyper-competition View of Convergence Change Management View of Convergence Stage Model View of Convergence Dynamic Market Interactions 27

28 Stage Model View of Convergence Convergence Is Evolving Stage by Stage! Stage 4: What s Next? (2008~ ) Driven by whom? What kind of services and applications? Increasing Complexity Stage 3: Infrastructure Convergence (2005~ ) Driven by BcN consortia like Octave, UbiNet, etc FMC services, W-CDMA video, IP-TV, u-work, TPS/QPS, USN applications, T-Commerce/Banking, T-Entertainment Stage 2: Service Convergence (2003~ ) Driven by large telcos like KT, SKT, KTF, LGT, MSOs,... OnePhone, DMB, telematics, m-banking, ITS, web-tv, media player, data broadcasting, etc Stage 1: Device Convergence (2001~ ) Initiated by device manufacturer/system vendors like Samsung, LGE, etc DVD/VCR combo, multifunction terminals, digital home appliances and networks Time 28

29 2. Evolutionary Dynamics of Convergence Hyper-competition View of Convergence Change Management View of Convergence Stage Model View of Convergence Dynamic Market Interactions 29

30 Dynamic Market Interactions Stage 1: Device Convergence 2: Service Convergence 3: Infrastructure Convergence Focus Cost/Quality Timing/Knowhow Strongholds Target Cost reduction Premium price Novelty Synergy Oligopoly Entry barrier Attack Creative combination Becoming First Service creation Strategic alliance Merger & Acquisitions Exploitation Cost leadership Differentiation Focus First mover advantage Customer lock-in Monopolistic rent Market power Challenges High quality/low priced goods abound Imitation Retaliation Coalition of followers Market saturation Decreasing profitability Mannerism 30

31 Contents 1. Snapshots of Convergence in Korea 2. Evolutionary Dynamics of Convergence 3. Next Evolution Paths 31

32 3. Next Evolution Paths Convergence as an Innovation Innovation Path 1: Regulatory Reform Innovation Path 2: Open Service Platform Innovation Path 3: Ecosystem Restructuring Which Way to Go 32

33 Convergence vs. Innovation Convergence Is a Consecutive Process of Innovations! Mode of Attack Type of Innovation Strategies Examples Stage 1 Combination Device Innovation Product Extension Combo Past Stage 2 Creation Service Innovation Business Extension DMB Today Stage 3 Stage 4 Cooperation Political Risk Reduction Infrastructure Innovation Market Innovation Co-opetition Strategic Alliances Regulatory Reform BcN KCC Future Stage 4 Functional Risk Reduction Platform Innovation Open Service Platform with Diverse Interfaces Sensor BINT Stage 4 Architectural Risk Reduction Industry Innovation Ecosystem Restructuring IT-Non IT 33

34 3. Next Evolution Paths Convergence as an Innovation Innovation Path 1: Regulatory Reform Innovation Path 2: Open Service Platform Innovation Path 3: Ecosystem Restructuring Which Way to Go 34

35 Alternative Innovation 1: Regulatory Reform Telecom and Broadcasting are Merged into Communications. Korean Communications Commission (KCC) TV Portal, IP-TV, T-Commerce and Beyond 2Way 서비스 Interactive AD TV-Commerce Enhanced Program 35

36 Policy Directions of KCC Convergence of Broadcasting and Communications Facilitation of IP-TV Services: Three IT-TV service providers admitted: KT, SK Broadband (former, Hanaro), LG Dacom Development of Contents: Deregulations Establishment of Effective System for Policy Implementation including Broadcasting and Communications Development Fund Advancement of Broadcasting Service Markets Accelerating transition to Digital Broadcasting (Digital transition rate is below 50% as of 2008) Restructuring the Broadcasting Advertisement Market Boost Investments in Communications Services Voice over WiBro and VoIP Number Portability Spectrum Retrieval and Reallocation Promoting Green IT BcN and Giga-Internet Applications to ITS u-work and telecommuting 36

37 3. Next Evolution Paths Convergence as an Innovation Innovation Path 1: Regulatory Reform Innovation Path 2: Open Service Platform Innovation Path 3: Ecosystem Restructuring Which Way to Go 37

38 Alternative Innovation 2: Open Service Platform Open Service Platform is Pursued to Resolve the Lack of Compatibility among Convergence Services and to Accelerate the Deployment of Convergence Applications. An Image of OSP for Tele-medicine Expert content, data-based evidence and artificial intelligence algorithms can drive better decision making for patients, clinicians, health managers and purchasers. Expert- Generated Decision Content Support & Search If open about their analytical approaches, public Public & private groups Reporting can credibly report comparative pricing and performance Pricing/Performance information. Transparency A Broad Vision of Health 2.0 Reformulating Data for Transparency, Decision Support & Revitalized Health Care Markets PHR EMR Health Mgmt Tools Vendor Mgmt User-Generated Content Patients and caregivers advising others, sharing family histories, and more. ID Best Practice Source: J. Gifford, HIT in Chronic Care, Regence, March Providers (By Specialty/Service) ID Patients at Risk Centralized Payers (By Health Plan Class) Claims Drugs, Devices, Equipment, Supplies Data Data sources Clinical mapped to a Treatments/Interventions Repository Drug common Pricing/performance transparency format Lab will clarify the value propositions across (e.g., CCR). providers, payers, drugs, etc. Analytics Image Brian Klepper and Algorithms for achieving transparency (e.g., ETGs, DxCGs, Jane Sarasohn-Kahn, CRGs, APR-DRGs) should be well-accepted and their approaches October, 2007 transparent. 38

39 Open Platform-based Convergence: An Example Source: Y. Murata, Architecture and Business Model of Open Heterogeneous Mobile Network, ITU-T Kaleidoscope Conference, Innovations in NGN, May

40 3. Next Evolution Paths Convergence as an Innovation Innovation Path 1: Regulatory Reform Innovation Path 2: Open Service Platform Innovation Path 3: Ecosystem Restructuring Which Way to Go 40

41 Alternative Innovation 3: Ecosystem Restructuring Tight Coupling between IT Area and Non-IT Area is Pursued to Develop New Markets and to Attain Total Factor Productivity Enhancements. New Architecture IT Area Non-IT Area Layer 3 Ecosystem Living u-home, u-office, u-city u-life, u-health, u-entertainment Layer 2 Ecosystem Service IT Convergence Service Platform Manufacturing, Logistics, Banking, Education, etc Layer 1 Ecosystem Technology Digital Ecosystem Infra HiPOP* Road, Park, Theater, Thema Park, etc * HiPOP: High Performance Open Platform Suk-Gwon Chang, IT 3.0 Policy Vision and Digital Platform-based Growth, IT 3.0 Symposium,

42 New IT Vision by MKE* Collaborative and Productive Digital Ecosystem IT - Non-IT Fusion and Convergence Ministry of Knowledge Economy Source: Myung-Gi Lee, New IT Forum Presentation Material,

43 3. Next Evolution Paths Convergence as an Innovation Innovation Path 1: Regulatory Reform Innovation Path 2: Open Service Platform Innovation Path 3: Ecosystem Restructuring Which Way to Go 43

44 Next Evolution Paths? Future Convergence Which Way to Go? New platform Open Service Stage 4 Platform Regulatory Stage 4 Reform? Intra-modal? Interim innovation platform Intra-modal rennovation Stage 3? Ecosystem Restructuring Stage 4 Inter-modal innovation Inter-modal rennovation Old platform Stage 1 Stage 2 Device/Network Service/Contents Within ICT industry Beyond the ICT industry 44

45 Questions and Answers Thank you! 45