By Kim Yoo-chul
Staff Reporter
KT, Korea's top fixed-line operator, is close to a creating a joint venture with Intel and Samsung Electronics aimed at spreading WiBro, an indigenous mobile Internet technology, known as WiMax overseas.
The joint effort comes at a time when relations between KT and Samsung have soured over their smartphone cooperation, with KT enjoying a heyday as the supplier of Apple's 3G-based iPhones.
"KT has recently asked Intel and Samsung Electronics to jointly invest in a legal entity for the expansion of wireless broadband (WiBro) technology in other countries," a high-ranking industry executive told The Korea Times, Monday. The venture would take the form of a special purpose company (SPC) in order to minimize investment risks.
KT spokeswoman Kim Yoon-jeong said the company was reviewing such a possibility, though she didn't go into details.
Shin Young-june, a spokesman of Samsung Electronics, said the company was also looking at participating in the project, while a representative of Intel's Korean branch wasn't available for comment.
An SPC is a legal entity created to fulfill narrow, specific objectives, and is typically used by companies to isolate them from financial risks.
"The new body will be launched sometime in the latter half of the year," the source said.
Under the alliance, Intel will produce a chipset with a built-in WiBro module, which will eliminate the need for additional devices to access advanced wireless internet connections from personal computers and mobile devices.
By the end of the first quarter of next year, KT will finalize its plan to expand its domestic WiBro network to 84 towns and cities. It recently clinched a 200 billion won deal with Samsung Electronics to buy the latter's WiBro equipment.
KT has increased its investment budget for WiBro to 1.2 trillion won from an earlier projection of 1.1 trillion won by the end of 2011.
"This is a win-win strategy for KT, Samsung and Intel. With the joint investment, KT will strengthen its WiBro business across the country, while Samsung and Intel are expected to see visible returns amid a higher appetite for such services," another source said.
Intel, which is heavily banking on the success of WiMax in Russia and India, is seeking to penetrate the booming mobile device segment in Korea.
One factor favoring WiMax players is that compared to 3G they offer international and new players a lower upfront cost to enter the fastest-growing mobile market in the world.
The collaboration enables KT to build a nationwide WiBro network that uses the 10 MHz channel bandwidth.
Previously, KT used 8.75 MHz, making it difficult to deploy the technology in most other countries.
The service has virtually failed to appeal to customers here due to limited coverage ― launched in June 2006, it is only available in and around Seoul, and a few other cities on a limited basis.
But the situation has changed after the country's top regulator, the Korea Communications Commission (KCC), unveiled a plan to give more advantages to operators who invest more in WiBro.
Since the KCC said it was planning for early adoption of a Mobile Virtual Network Operator (MVNO) policy, KT and its biggest local rival SK Telecom have been allocating more investment for the service.