SKT, KT Heating Up Customer Service War

By Kim Yoo-chul
Staff Reporter

SK Telecom and KT, the nation's two biggest telecommunication carriers, are competing to attract more customers.

They plan to promote sales of the latest smartphones, give more subsidies and propel converged mobile services.

Analysts are mixed whether such aggressive moves will eventually pay off.

But they generally say it is crucial for them to put customers as their top priority at a time when the local telecom industry has entered a new phase with the arrival of the iPhone.

Triggered by this KT import, SK Telecom plans to introduce Google-powered handsets sometime in January, according to SK representatives.

"We are engaged in head-to-head competition with KT. SK Telecom plans to increase the portion of Google-backed handsets to 20 percent of the total by the end of next year," an SK Telecom spokesman said, Tuesday.

"The South Korean version of Motorola's Droid mobile will be introduced in January next year at the earliest. The plan is targeting to smartphone users on the local market," he added.

SK Telecom has boosted its subsidy for Samsung's OMNIA II smartphone to 600,000 won on average for a new customer, which is 20 percent higher than KT's subsidy for the iPhone.

Meanwhile, the nation's top carrier has lowered start-up fees of its services by 28 percent, while the runner-up KT has cut its membership fee by 20 percent to secure its "bottom line."

"The market share war has expanded into the fixed- and mobile-converged sector, in addition to handsets and service plans," Kim Dong-june, an analyst at Eugene Investment, said.

The nation's main telecom operators are launching attractive service packages to encourage subscribers to sign up.

The deals, which include mobile, Internet and fixed-line rates at a discount, follow a recent spate of mergers and acquisitions across the country.

Fixed-line incumbent KT merged with sister mobile unit KTF, and SK Telecom purchased SK Broadband (formerly Hanaro Telecom).

SK Telecom is currently in the midst of integrating its broadband unit with its existing operations. Meanwhile, LG Telecom announced that it would merge with its wire units LG Powercomm and LG Dacom by 2010.

iPhone Effect

But attention is being focused on SK Telecom's future smartphone strategy.

There is some speculation that SK might introduce Apple's iconic devices onto the local market as iPhones are gaining some popularity capitalizing on "Apple Mania."

KT is forecast to sell 500,000 iPhones on the local market, dominated by Samsung Electronics and LG Electronics.

"Still, nothing has been decided yet over the iPhone. The one clear thing is SK Telecom will take aggressive marketing promotion for the sales of OMNIA II smartphones," another SK Telecom spokesman said.

Analysts and industry watchers say the competition between SK Telecom and KT for market share will be getting fiercer and fiercer as the debut of the iPhone will spur sales of smartphones and boost the wireless data market.

"The time is ripe for SK Telecom and KT to introduce more detailed service, mobile and wireless data-related measures for new customers. The iPhone debut is leading the new trend," Kim added.

"The smartphone market competition will be fierce next year. The iPhone debut will increase the popularity of smartphones and the supply of such phones will rise sharply going forward," Oh In-bum, an analyst at Dongbu Securities said.

yckim@koreatimes.co.kr

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