KT’s release of the Apple iPhone appears to be reshaping the Korean telecommunications market irrevocably, while allowing the company to leverage its fixed-line dominance over the mobile market. / Korea Times file

By Kim Tong-hyung
Staff reporter

The plot had remained the same for years ― KT, the huge but boring telecommunications giant, being repeatedly pummeled by its smaller and cooler rival, SK Telecom, in a competition that mirrored that of Tom and Jerry's.

However, it now appears that KT is finally fighting back with pace and purpose, imposing a serious challenge on SK Telecom's supremacy in mobile telephony by wielding the planet's hottest electronic gadget.

Since absorbing its mobile telephony unit, KTF, coming into 2009, KT, the country's largest telephone and broadband Internet provider, had focused on leveraging its fixed-line dominance to the wireless market.

And progress has been quick since the company won the bid to bring in the Apple iPhone, perhaps the technology industry's most critical consumer product at the moment.

KT officials had never doubted that the iPhone would be a game-changer here, but the impact of Apple's do-it-all smartphone has even exceeded the imagination of the optimists. Since its late November release, KT has sold more than 600,000 iPhones, with the handsets nearly singlehandedly igniting a smartphone boom and putting the industry on the cusp of a mobile Internet explosion.

This has a flustered SK Telecom responding with a slew of premium devices powered by the Google-backed Android mobile platform, which is considered the industry's best bet to challenge Apple's supremacy in consumer smartphones, but its attempts to find a definite ``iPhone killer'' has so far been muted.

``Since we released the iPhone, the consumption of wireless data has been increasing across all of our wireless users,'' said Pyo Hyun-myung, who heads KT's wireless division.

``Wireless communications is becoming more about data than voice, which is much like the transition from horse carriages to cars. We are in the best position to deliver a ubiquitous wireless Internet environment that could be logged on at any time using any device.''

Smartphones, which pack voice, e-mail, Web browsing, video, games and music into a single device, are becoming increasingly critical for mobile-phone carriers, as they hope that the increased customer revenue from their data services will make up for declining voice sales.

And the successful introduction of the iPhone here has also provided KT with a platform to rebrand and promote itself as a provider of complete, premium consumer experience. Obviously, KT's dominating coverage in fixed-line and wireless Internet networks, its most significant advantages over SK Telecom, are emerging as a key strength as smartphones and other mobile Internet devices become mainstream.

KT believes that its dual strength of fixed-line and wireless systems will be further manifested as the industry pushes for fixed-mobile convergence (FMC) services, which may eventually be in significant demand by business users.

FMC allows subscribers to switch between fixed-lines and mobile networks using a single handset, using Wi-Fi networks for calls at home or in the office and cellular networks on the move.

The new type of Internet telephony services is a critical part of KT's strategies for the corporate market, dubbed as ``SMART (save cost, maximize profit),'' aimed at providing cost-effective business solutions for companies and government organizations here and abroad. KT hopes to generate 5 trillion won in revenue from its SMART products by 2012.

For the first quarter of this year, KT reported an operating profit of 552.7 billion won (about $486 million), which represented nearly a 44 percent increase year-on-year and marked the first time in six years it edged SK Telecom on a quarterly basis, with its rival reporting 480.5 billion won.

KT's revenue for the Jan.-March period was 4.82 trillion won, a near 74 percent annual increase, while average revenue per user (ARPU) increased 4 percent and data sales increased 15 percent.

``KT's 3.9 percent increase in ARPU is impressive, considering that SK Telecom's ARPU dipped 1 percent during the same period. The 15 percent increase in user data revenue is staggering, since iPhone users account for just 4 percent of KT's mobile customers,'' said Sung Jun-won, an analyst from Shinhan Investment.