By Kim Yoo-chul
KT, the nation's dominant fixed-line operator, is betting heavily on the rapidly-expanding domestic wireless-related market.
The "Mobile Wonderland" project is aimed at enabling smartphone users to gain easier, wider and cheaper access to the Internet.
In this project, KT is a step ahead of its rival SK Telecom.
It has a nationwide network of access points or AP meaning it can improve its infrastructure through a minimal investment.
In contrast, SK Telecom has to spend many times KT’s investments in order to merely cope with its rival.
This advantage can be converted into a myriad of services for mobile users. Some experts even point out a possibility of a change in the pecking order of mobile providers ― KT could move ahead of SKT.
KT controls 90 percent of the fixed-line market and, thus, CEO Lee Suk-chae is not satisfied with its current wireless market share of 30 percent.
KT executives say the acquisition of its fixed and wireless units has begun paying off to help cut costs and strengthen the group’s capability of providing various convergent services. It has acquired the wireless unit KT Freetel.
KT plans to invest 5.1 trillion won or some $4.3 billion by the end of 2014 to widen its networks in order to meet rising demand for high-speed data services.
Of the total, 2.4 trillion won will be used to boost its third-generation (3G) networks, while 1.67 trillion won has been allocated for the next-generation telecom network called long-term evolution (LTE), making it possible to complete what the company calls is "3W networks" ― WCDMA, WiBro and Wi-Fi, said company spokeswoman Kim Yoon-jeong, Monday.
"3G and LTE may not be the sole answer to better respond to the higher demand in data traffic," Kim said.
The growth in its overall 3G data traffic has tripled during the December 2009-May 2010 period and smartphone users were using an average of 300MB of data per month ― 21-fold more than a feature phone user, the spokeswoman said.
KT executives say over 90 percent of its total data traffic is proceeding within its Wi-Fi and WiBro networks, far exceeding the data capacity even after the introduction of LTE networks in 2014. Wi-Fi is faster than 3G networks in downloading and processing data.
Market analysts say KT’s steady but heavy investment to construct a ``backbone’’ in Wi-Fi is helping the firm easily expand its APs across the country.
Kim said KT has been on a stable route to expand its wireless Internet zones to 40,000 by the end of this year from the current 28,000.
By 2011, KT is aiming to boost the numbers to 100,000.
SK Telecom, which has already built 7,500 Wi-Fi zones as of the end of the first half across the country, was planning to expand to 10,000 by September.
KT plans to expand its WiBro networks to 84 regional cities by the end of March 2010 from the current 19 cities, helping more high-end portable device users access wireless services without charge.
"We will make it possible for commuters on Seoul subway trains and buses to use Internet services via our Internet connectivity device called "Egg.’" Egg will help convert WiBro signals into Wi-Fi signals from next month,’’ said Kim at KT.
WiBro is the Korean variation of mobile WiMAX, providing broadband access on the move. The Egg-based Wi-Fi services are already being tested on a number of Seoul taxis.
Market analysts were welcoming KT’s updated plan for Wi-Fi and WiBro networks, citing strong basis in fixed- and wireless-networks, backed up by heavy investment.
Evidently, KT shares are "undervalued," when considering its higher growth potential in the local data wireless sector.
"KT is leading the way from business-to-business (B2B), cloud computing and smart working to wireless data sectors with detailed plans," said Kim Dong-june, an analyst at Eugene Investment. The brokerage presented its "strong buy" view to KT shares and maintained 67,000 won as its target.
"SK Telecom’s plan to heavily invest into 3G and LTE networks is costly and requires hefty investment. In contrast, KT can spend a fraction of that to expand APs for Wi-Fi and other networks for full wireless coverage," said another analyst at a foreign brokerage in Seoul.
Kim at Eugene also added that the series of upcoming smartphones and tablet-style PCs will help it raise the revenues of the wireless data-related markets.
KT, which is Apple’s exclusive Korean partner, will stock Apple’s latest iPhone ― the iPhone 4 ― from next month on local shelves. KT, which has received 210,000 pre-orders for the iPhone 4, will launch another pre-order campaign.
"With data investment plans, KT is strengthening its `all-in-one’ product lineups, backing up the corporate consistencies towards new revenues," said Kim.
KT is expected to release LG Electronics’ Optimus Z and HTC’s Legend from September, as well as the iPhone 4. It is tapping the possibility to launch Samsung Electronics’ Galaxy K in October at the earliest
Apple’s iPad is close to a Korean debut. KT executives say it will release a maximum of five tablet-style PCs by the end of 2010.
"ARPU ― the key barometer in gauging the profitability of telecom companies ― is at a stable level for KT thanks to the steady increases in new clients. We are still positive over KT’s plan to attract 1.8 million net customers this year," said Sung Jong-wha, an analyst at Meritz Investment.