Rivals Want Piece of KT Network

By Kim Tong-hyung
Staff Reporter

SK Telecom, the country's top mobile telephony operator, isn't too happy about the prospects of facing an oversized foe in the wireless market. So the idea is to press regulators to sever limbs off its industry archrival before they meet in the ring.

The gloves have come off in the telecommunications fight since KT, the country's largest telephone and broadband Internet company, announced plans to absorb its wireless unit, KTF.

KTF is the country's No. 2 mobile telephony operator with a 32-percent market share and rivals claim that the company's consolidation with its fixed-line parent would threaten the health of competition in the wireless market.

KT, which has been reeling from a declining voice business in recent years, counters that absorbing KTF is the only viable solution for the company to sustain growth, with its public-switched telephone network (PSTN) services exposed as a decaying business model.

SK Telecom, naturally the leader of the anti-KT camp, had maintained officially that the KT-KTF merger should be rejected on the grounds of antitrust concerns.

However, with the Korea Communications Commission (KCC), the country's broadcasting and telecommunications regulator, and the Fair Trade Commission leaning toward blessing the marriage, SK Telecom is now ready to talk more about the conditions for the approval.

SK Telecom, as well as the other rivals of KT, including LG Group's three telecommunications units (LG Telecom, LG Dacom, LG Powercomm), are suggesting a long list of preconditions for regulators to consider.

However, the most notable demand is that KT should be required to separate its network business as the cost for absorbing KTF. KT is unrivaled in terms of infrastructure, including phone lines and optical cable network, and rivals claim that the company's dominant fixed-line network would deprive them of a fighting chance once it is allowed to leverage the wireless sector.

However, KT is balking at the claims, pointing out that it is already opening its network to rivals through local look unbundling (LLU). Rival companies requested KT access to the phone lines in only 145 cases over the past eight years, as they also had the options of borrowing facilities from the Korea Electronic Power Corporation (KEPCO) and cable system operators, KT officials said.

``KT has been consistently claiming that it has been opening its network, but the other companies just didn't find the need to use it and doesn't this logic also prove the point that it wouldn't cause much trouble if KT's network was neutralized?'' said Lee Hyung-hee, director of SK Telecom's CR strategy division, during an open debate held at the National Assembly Library, Monday.

The panel also included KT Vice President Suh Jeong-soo, Korea Information Society Development Institute (KISDI) researcher Yeom Yong-seob and other industry officials and policymakers.

``Network infrastructure is a core part of a telecommunications company's competitiveness, even more so with the emergence of convergence services like Internet protocol television (IPTV). If the vast network of KT is neutralized, it would be easier for many other companies, who don't have phone lines, to invest in the market,'' said Lee.

``KT insists that the industry already has alternatives to its network, but it is also true that it would be impossible for other competitors to build a network that could rival that of KT. The company also rejected about 86 percent of the requests by SK Broadband to access its network, so it's hard to say that the LLU is working.''

KT's Suh claimed that the KT-KTF merger is in line with the latest industry trends for convergence, and would contribute to the expansion of the country's market for telecommunications and broadcasting.

thkim@koreatimes.co.kr

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