KT Upgrades Broadband Network
By Cho Jin-seo
Staff Reporter
KT is raising the standard of the broadband Internet environment in Korea a few notches by upgrading its network speed from 10 megabits to 50 megabits per second for some 5.3 million subscribers with no extra charge.
The company revised the price plans for its Megapass Internet service last week. It stopped its 10-megabit service and instead offered a 50-megabit one to users at the same price ― 30,000 won ($30) per month. By doing so, it is reducing the number of options from three (100Mbs, 50Mbs and 10Mbs) to two (100Mbs and 50Mbs).
The action is a blessing for the nation. South Korea is one of the world's most wired countries in the world, but worries have been rising that its Internet network is becoming outdated. The price of broadband subscription has also remained almost unchanged for years, while it is continuously going down in other countries.
KT also decided to offer a 2,000 won discount to 50-megabit users and 3,000 won to 100-megabit users if they sign up for the subscription on the Web site. Now Megapass has become the most cost-efficient broadband Internet service in Korea, while it has already been recognized as the most reliable one.
``We believe that more and more consumers want to have discounts in their monthly fees rather than unwanted gifts at the time of signing the contract,'' said Seo Yu-yeol, chief of marketing strategy ``We will make our best efforts to improve the quality of Megapass.''
The free upgrade will be implemented step-by-step, region-by-region. When completed, this project will cut 190 billion won from KT's annual revenue, considering the original price of the 50-megabit plan was 3,000 won more expensive than the 10-megabit plan.
It is a timely improvement for KT and South Korea. In rankings recently released by the International Information Technology and Innovation Foundation (ITIF), Korea was placed first in the penetration rate for broadband. The country excelled in household penetration with 93 percent of homes having a broadband connection, more than 10 percentage points ahead of any other nation.
The problem was speed and price. Korean citizens still have better and cheaper options than people in most of other countries. But when compared to its neighbor Japan, Korea's Internet was slow and expensive.
According to the ITIF report, the average Internet speed of South Korea was 49.5Mbs, while Japan's was 63.6 megabits. Korean consumers also paid $0.37 for each megabit per second, while Japanese Internet service operators charge only $0.13 to their customers.
It was households and offices still using the 10-megabit line that pulled down the nation's average network speed. Ten megabits per second is enough for sending e-mail and reading news articles, but is considered not fast enough for more advanced services, such as Internet-protocol TV.
Currently some 7.8 million households are using the old-fashioned 10-megabit service from the three companies, among which 5.3 million subscribe to KT. The company's upgrade plan is likely to provoke Hanarotelecom and LG Powercomm to do the same. The upgrade to 50 megabits is just a transitory step. The eventual goal of KT is to connect every home with fiber optic cables by 2011.
The so-called FTTH (fiber to the home) network will have a network speed of over 100Mbs, which will be more than enough to send high-quality video and audio signals for Internet-protocol TV services. To that end, the firm spent has 400 billion won on network devices so far, and has allocated another 280 billion won for this year.