SK Telecom, Uber Partner for Ride Sharing

SK Telecom is combining its ridesharing assets in a joint venture with Uber. SKT’s T map service currently has T Map is the largest mapping and location platform in South Korea with around 13 million monthly active users.  

T Map Taxi is the nation’s second largest ride hailing service with 200,000 registered drivers (Kakao is the biggest) and 750,000 monthly active users. The SKT business also provides other location-related services such as T Map Auto, T Map Public Transportation and T Map Parking, all of which will be continued by T Map Mobility.

Of the three primary methods of creating a position in a new market or line of business, connectivity providers can grow their business organically, partner or acquire. This is an instance of partnering that some might say follows an important rule, which is that a connectivity provider should strive to “own some of the apps flowing over the network.”

In other words, in preference to rebranding a wholesale offer from a third party, or acting as a sales agent or distributor, or supplying some input to an app or service, it is preferable to be an equity owner. That is the principle behind owning a video subscription service (linear or over the top), a content provider (film or TV studio, programming network) or other assets requiring use of the internet and an access network connection.

Between 2005 and 2014, for example, tech giant share of profits in the technology, media and telecom industries grew from 11 percent of total to 20 percent, for example. Since 2008, the trend has continued.

source: A.T. Kearney  

In a business environment where any app provider can use the internet to reach any connected user, it never will be possible for any connectivity provider to own anything more than a handful of useful and popular assets. But ownership of some assets diversifies the business model, provides revenue upside if apps are successful and usually also raises profit margins.  

Call this “moving up the stack” or “across the value chain” or “occupying new roles in the ecosystem,” the principle is the same: reliance on pure connectivity revenue streams is becoming dangerous for a growing number of big connectivity providers.