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Posted : 2012-02-16 18:17
Updated : 2012-02-16 18:17

KT wants to charge more for Internet use


KT CEO Lee Suk-chae
By Kim Yoo-chul

KT wants to charge more for Internet use but its bid led by CEO Lee Suk-chae faces opposition amid populist sentiment gripping the National Assembly.

Sources say KT’s decision to “disable” Internet access by smart televisions was part of Lee’s plan to squeeze more out of Internet use.

Samsung Electronics protested and the government intervened, forcing KT to back off. Lee made his point, although no new pricing decision was made.

``Our chairman believes the new charging system will generate revenue to boost the money-losing fixed-line business,’’ a KT official said Wednesday. But Lee’s move is being delayed by lawmakers.

``The ruling Saenuri Party has shown no sign of acting on it because of the coming elections, the source said.

Even, the politically-savvy Lee is not doing much, considering lawmakers and potential presidential candidates are trying to win the hearts and minds of voters. Raising Internet fees would not be popular.

SK and LG Uplus are maintaining unlimited data pricing. By paying fixed basic fees, they are free to download unlimited amounts through high-speed Internet.

However, smart and other wireless devices are straining the networks.

In order to upgrade its data transmission capacity, Lee wants customers to pay in accordance with the data amounts they use.

``Because KT is the nation’s dominant fixed-line operator, there is more pressure on it than on others,’’ said a company official.

KT failed to adopt the new system in 2005 hit by a public backlash.

It is reeling from heavy losses from its fixed-line business. The number of the company’s public switched telephone network (PSTN) customers is rapidly declining, while it has been receiving fewer-than-expected Internet call customers, according to the firm.

During the fourth quarter of last year, the revenue for KT’s PSTN business declined 14.1 percent to 605 billion won. Revenue from Internet calls just added 2.3 percent, or 80.8 billion won, during the same quarter a year ago, which isn’t enough to offset profit decline in PSTN.

``Considering KT’s undeniable advantage in managing fixed-line networks, the introduction of new Internet pricing will boost the company and its role as the positive factors to stock investors, though this will draw much criticism from Internet users,’’ said an analyst at a Europe-based investment bank in Seoul.

``If television manufacturers agree to pay for network usage, then telecom carriers receive new earnings revenue and the burden for marketing and investment will lessen, as well,’’ said the analyst.

KT normalized the Internet service for Samsung’s Web-enabled TVs after the two companies agreed to settle through negotiations.

It had earlier limited Internet access of Samsung-made TVs in protest to the electronics firm’s refusal to join talks on the cost of using its network, unlike LG Electronics who entered into discussions.

KT’s action was, however, short-lived because it failed to create an alliance with other telecom and broadband firms such as SK Broadband, SK Telecom and LG Uplus.

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