KT Focuses on Internet Phone
By Kim Tong-hyung
Staff Reporter
With its traditional telephone services proving to be a decaying business model, KT is now being forced to show a stronger commitment to Internet telephony.
Revealing its new voice over Internet protocol (VoIP) phone at a news conference Wednesday, KT, which controls about 90 percent of the country's fixed-line telephony customers, said it plans to garner 2 million Internet telephony subscribers by the end of the year, up from the current 330,000.
VoIP, which provides cheaper rates on long distance calls, has been giving KT's smaller rivals, such as LG Dacom and SK Broadband, a fighting chance as they look to erode the massive customer pool of the industry kingpin.
LG Dacom is now the country's biggest VoIP operator, with 1.2 million customers, and SK Broadband also hopes that its Internet telephony business benefits from number portability, which allows telephone users to switch carriers without changing numbers.
Despite the offensives from industry rivals, KT had been reluctant to be as aggressive with VoIP, as there were worries of cannibalizing its won customer base for the public circuit-switched telephone network (PSTN), which continues to provide its bread and butter.
However, with the rapid growth of the VoIP market, on which the economic downturn clearly had an effect, further eroding its voice business, KT is now intent on holding its own in Internet telephony.
KT's new VoIP phone, developed by electronics firm Reigncom and generically called ``Style,'' is one of the most advanced VoIP devices on the market. The phone, which comes with a 7-inch touch screen and 1-gigabyte memory, provides a wide range of up-to-date services atop of voice, such as video calls, simple online money transactions and data services such as weather, traffic information and news.
KT said the phone will be on shelves in March with a price tag of around 200,000 won, and plans to release new VoIP phones developed by Samsung Electronics and LG Electronics by the end of the year.
The company also plans to open a Web site whereby users can purchase and download applications for their VoIP phones, which would be KT's own version of Apple's App Store.
The company will introduce a variety of rates for its ``premium VoIP phones,'' luring users to spend more than they would on just voice.
``We plan to sell about 100,000 to 200,000 units of the Style phone, which would be the first of our premium phones lineup to be added by Samsung and LG phones during the third and fourth quarter,'' said Choi Du-hwan, a KT vice president, during the news conference.
``The capability of the phones will allow us to develop new business models, as Apple does with App Store, which allows KT and other developers to profit. The VoIP competition has just been about cost, but we will be providing much more than just cheaper rates,'' he said.
The country's 11 VoIP operators have gathered 2.5 million subscribers since passing the two million mark last October.
The biggest loser on that end is KT, which lost 650,000 fixed-line subscribers in December alone, although its 19.8 million subscribers still account for more than 89 percent of the PSTN market. Industry watchers expect the country's VoIP market to have around 5 million subscribers by the end of the year.