[Population Decline Impacting Industry] Telecom Companies Growing Internet of Things... Need to Increase Data Utilization

Integration of Vehicles and Machines with Communication
Cost Reduction through Shared 5G Infrastructure
"Need to Examine Market Innovations and Demographic Changes"

The population decline calculation for the three mobile carriers is inevitably complex. While the primary users of communication are shifting from people to objects, the three carriers are jointly utilizing 5G infrastructure in rural areas experiencing population hollowing. Experts have also suggested that the industry should break away from the traditional practice of collecting mobile communication fees "regularly" once a month, triggered by the population decrease.

'Shared Network' Construction in Rural Areas

SK Telecom, KT, and LG Uplus, the three major telecom companies, have been working with the Ministry of Science and ICT since April 2021 on the "Rural 5G Shared Usage Plan" to provide 5G services in rural areas such as eup and myeon. The target areas were selected based on population density and data traffic, covering eup and myeon in 131 cities and counties. These areas have about 15% of South Korea's total population, with approximately 92 people per square kilometer, which is a lower population density compared to areas where each carrier builds its own base stations (3,290 people per square kilometer).

In the rural 5G shared network areas, overseas arrivals and MVNO (Mobile Virtual Network Operator) subscribers can use the service without discrimination. A telecom industry official said, "To reduce the 5G service gap between urban and rural areas and to cut infrastructure maintenance and operation costs efficiently, the three carriers decided to use a shared network. Although these areas have a small resident population, the focus is on ensuring that travelers and visitors do not experience inconvenience in using mobile communication."

The telecom companies are expanding the Internet of Things (IoT) market, encouraging objects rather than the declining population to use communication services. They generate revenue through objects connected to the internet rather than people. The two key concepts of the Fourth Industrial Revolution are hyperconnectivity and superintelligence; while artificial intelligence (AI) handles superintelligence, the Internet of Things is characterized by hyperconnectivity.

According to the monthly mobile subscription status and line counts by usage published by the Ministry of Science and ICT, the mobile phone market is already saturated. The number of mobile phone lines increased only slightly from about 55.87 million in December 2020 to 56.24 million in October last year, a growth of just 370,000 lines (0.7%) over nearly three years. In contrast, the number of IoT lines rose from 10.05 million to 21.51 million during the same period, an increase of 11.46 million lines (114%). Services targeting people have reached their growth limit. Now, machines like automobiles are the new customers for telecom companies.

The "2022 IoT Industry Survey Report," released by the Ministry of Science and ICT and the National IT Industry Promotion Agency after surveying about 30,000 domestic IoT businesses, shows that the total IoT sales in South Korea reached approximately 21 trillion won in 2021, a 38% increase from 15 trillion won the previous year. Particularly, the construction, facility management, safety, and environmental sectors accounted for 30% of IoT service usage, the highest among all fields.

Intelligent Internet of Things stock photo / Photo by Mun Ho-nam munonam@

"Considering Customized Services for the Elderly and Overseas Users"

There are also ways to utilize the abundant big data held by telecom companies. A representative example is the collaboration between Seoul City and KT to establish late-night bus routes. Seoul City analyzed 3 billion call records from KT subscribers during late-night hours from midnight to 5 a.m. to determine bus routes, intervals, and stops. In 2017, transportation officials from Kyiv, the capital of Ukraine, visited South Korea to learn about Seoul's late-night bus routes and other transportation policies based on big data.

Industry insiders advise that telecom companies should devise strategies to achieve both cost reduction and service improvement in response to population decline. A former KT executive, who requested anonymity, argued that telecom agency stores should move away from being "mobile phone sales outlets" and innovate distribution channels through online and unmanned services. He suggested, "For elementary school students or the elderly who rarely move residences, services could be provided only within a certain area while reducing communication fees." A representative from the Korea Intelligent Information Society Agency said, "It is also a good approach for telecom companies with technology and know-how to partner with small and medium telecom equipment companies and expand into overseas markets such as Europe."

An anonymous ICT industry expert said, "We need to respond to social structural changes and pioneer markets with services that did not exist before." He added, "With the inevitable decrease in the younger generation and labor force, telecom companies can propose measures to address demographic changes." He further suggested, "As the number of foreign workers increases in the future, mechanisms for social inclusion must be established, and ICT should play a role. Tasks such as learning languages, overcoming cultural differences, and assisting administrative support should be handled through ICT services rather than manually by people."