By Kim Tong-hyung
Staff Reporter
Internet protocol television (IPTV) is getting all the hype as the next big thing in high tech. However, it's reasonable to think that Internet telephony, much less sexier as a technology but with clearer relevance as a service, would be more of a difference maker in the telecommunications industry.
Industry watchers believe the market for voice over Internet telephony (VoIP) is ripe for an explosion, with the Korean Communications Commission (KCC) deciding to introduce number portability for Web-based calls from next month.
The policy will allow telephone users to switch to cheaper VoIP services without changing their numbers, and carriers Hanarotelecom and LG Dacom see it as an opportunity to snatch customers away from the industry giant, KT, which currently controls more than 90 percent of the country's fixed-line subscribers.
LG has a head start. The company has just 1.1 percent of the fixed-line market, but has more than 900,000 customers for its VoIP services, which is good enough to be king of the new world for the moment.
LG, which has been getting 80,000 to 100,000 new customers every month, is targeting 1 million VoIP subscribers by the end of September and 1.4 million by the start of next year.
The company is providing VoIP modems to customers free for the first year and lowered the prices for their Wi-Fi phones around 30,000 won to 70,000 won.
Hanarotelecom, soon to be renamed SK Broadband after being acquired by wireless giant SK Telecom in February, has VoIP ambitions of its own.
The company, looking to tap into SK's 23 million plus wireless customers, is betting heavily on its ``bundled'' services, which combine mobile telephony, broadband Internet and IPTV in a single package at discounted rates. And Hanarotelecom officials see VoIP as an important part of their packaged offerings. The company is targeting 300,000 VoIP customers by the end of the year.
Dacom and Hanarotelecomm could manage to fully commit to VoIP due to their anonymous presence in the fixed-line market,
The same could not be said for KT, which is struggling to figure out how to balance its customer pool between public switched telephone networks (PSTN) and Internet telephony.
Cheaper rates, especially on long-distance calls, are a strong selling point for VoIP and KT concerned that a large migration of its PSTN customers to Internet telephony would result in a decline in average revenue per user (ARPU).
However, the company is also uneasy about the prospects of losing subscribers to rival carriers, with some industry watchers predicting that the number of KT customers could eventually drop below the 20 million mark.
KT had successfully pressured the KCC to delay the adoption of number portability, which had been slated for August, saying that the data systems of VoIP operators provide insufficient direction information for 119 emergency calls.
The company sought to buy more time to introduce its own version of VoIP, dubbed service over IP (SoIP), to prevent loss of customers.
Regulators, however, have no reason to delay number portability further as rival VoIP providers completing network integration tests between their call tracking systems and the network of the National Emergency Management Agency.
KT is pushing SoIP, which provides video calling and data transfer as well as voice, as a differentiated service.
It's questionable, however, if video calling will be a killer application for Internet telephony when few use the function on mobile phones. Other applications such as online banking are expected to make little difference since they are easily accessible on computers.
KT currently has 200,000 customers signed up for its SoIP services.