GiGa Internet - KT's new growth engine

KT Chairman Hwang Chang-gyu speaks about the company’s five key growth engines. / Courtesy of KT

Local firm transforms into total provider

By Kim Yoo-chul

Last year, local telecommunications giant KT seemed to be on a downward spiral. With its operating losses mounting, it expanded its non-telecom business territories, but this effort also failed to yield visible results. Big layoffs, heavy restructuring of affiliates and the downscaling of overseas businesses followed to offset rising concerns by investors over the company’s sustainability.

But new CEO and Chairman Hwang Chang-gyu, a former Samsung Electronics president who is well known for “Hwang’s Law” in memory chips, hopes to bring back success to the telecommunications company, by investing more on telecom-oriented services rather than non-telecom ones.

Hwang believes KT’s overseas business projects take a long time to generate profits and its globalization efforts negatively affect its domestic competitiveness. Thus, he is reexamining the company’s global business strategy.

So far, the changes Hwang has implemented have helped the company improve operations and financial soundness and lead in the era of the Internet of Things (IoT).

The IoT is seen as an important tool in developing a creative economy, bridging the manufacturing industry, the symbol of the Industrial Revolution, and the Internet, the symbol of the information-communication revolution.

To become an IoT pioneer in the telecommunications industry, KT formulated a new corporate vision, “GigaTopia.” In line with this vision, the CEO, who took the top seat only nine months ago, plans invest to $4 billion over the next three years for three goals — upgrading the company’s network to support gigabyte speeds, creating an IoT platform and delivering convergent services to customers. KT has created the Giga business division to oversee these goals.

“This plan will help us evolve from a network operator to a total provider,” the CEO said in a keynote speech under the theme of “GiGAtopia, Creating Value Beyond Connectivity” during the Mobile Asia Expo 2014 on June 11 in Shanghai, China.

“If everything is connected on the Giga infrastructure, the world will become a place with greater safety, comfort and happiness,” he explained.

To roll out its Giga Internet service nationwide, KT has introduced a high-capacity OLT that offers 1 gigabit per second Internet speed to subscribers, which is 10 times faster than the current 100 megabits per second speed. The company first introduced the system in pilot projects in selected metropolitan areas.

The service has started yielding profits for KT. Data from the Ministry of Science, ICT and Future Planning show that the number of subscribers using the company’s high-speed Internet increased from 8.01 million in April this year to 8.07 million in August. The latter figure is the biggest among the nation’s top three carriers, including SK Telecom and LG Uplus.

As KT is the country’s dominant fixed-line operator, it is Korea’s biggest provider of Internet-based TV services with 5.54 million.

Strategic collaboration

“We have to differentiate our services by utilizing network assets such as identification, security and billing capabilities. In the IoT era, more devices and applications and services will require networking. To meet these requirements, we need to reinforce the platform to be versatile,” Hwang said.

The top executive also asked the telecom industry to work together with leading mobile operators needing to “play a leading role in setting a de facto standard” for IoT services.

According to KT Economic Management Institute, IoT technology is expected to create $19 trillion in the next 10 years. A variety of companies, ranging from Google, Apple, Samsung Electronics and LG Electronics to AT&T, Verizon Wireless and Intel are actively investing in IoT.

Korea is one of the most advanced telecommunications markets in the world and, along with Japan and Sweden, is always at the forefront of next-generation networking and services developments. As a result, developments in those markets are closely watched by the rest of the industry.

“The challenge for KT with respect to GiGAtopia is a challenge for all of us. Alone, one cannot achieve anything in an IoT world where everything is connected. Let’s create a new era of IoT together for our prosperity through mutual cooperation,” Hwang said.

At the Mobile Asia Expo, he met with the CEOs from other companies, introducing KT’s strategy for GiGAtopia convergent services and proposing active collaboration among providers for the future of telecommunications services, according to KT officials.