KT sees big breakthroughs in fixed-line business

Top executive bets on IPTV and high-speed Internet

By Kim Yoo-chul

KT, the nation's top fixed-line operator, is aiming high for the further growths in its fixed-line business as the demand rises for Internet-linked televisions and high-speed Internet.

Fixed-line business was once called a "double-edged sword" for the telecommunication giant.

But ironically, that business has been emerging as the savior for corporate sustainability by riding the wave of faster digitalization.

Amid blurring lines between fixed-line broadband and wireless networks thanks to the faster penetration of "smart" gadgets, the company's top level executive is more than upbeat for a turnaround in its broadband-related business.

"When we talk about what's next for the telecom industry, it involves a 'data explosion.' KT has a strong competitive edge in fixed mobile convergence (FMC)-related services in the local market," said Seo Yu-yeol, who leads KT's home business group, in a recent interview with The Korea Times.

Seo, who is one of the top confidants to KT Chairman Lee Suk-chae, was promoted to the top executive-level position in last year's management reshuffle as his key mission is to keep initiatives in fixed-line businesses.

A reduced profit from the fixed-line telephony business is cited as one of the top concerns that may end up hurting KT's bottom line.

However, Seo is not pessimistic because its gradual departure to lucrative high-speed Internet and Internet-enabled televisions has been paying off.

"The dominant position in the local fixed-line market enables us to offer more customized services to the general public along with greater access to high-speed Internet," said the executive.

For the all of last year, KT saw some 10 percent decline in its overall telephony business down to 4.4 trillion won in revenue.

But sales at its Internet-related businesses rose by 6.3 percent to reach 2.74 trillion won year-on-year, according to the data from the Korea Exchange (KRX).

KT said revenues of its Internet-based televisions and calls have steadily been increasing since more of both the younger and the aged customers were buying such services, KT said.

The number of KT's IPTV subscribers as of the end of last year was 2.08 million from 1.17 million a year earlier. KT was securing 7.42 million subscribers for its high-speed Internet services from 6.95 million during the same period.

In the local Internet-telephony business, KT became the top player by securing 2.79 million subscribers as of the end of January this year, which is just slightly higher than LG Uplus’ 2.78 million.

The explosive growth ― KT had 330,000 such subscribers in 2008 ― was because of chairman Lee’s ravenous appetite to foster its Internet-telephony business to eventually take the lead in the local household telecom services market.

"KT was suffering dismally to find new momentum in fixed-line businesses in the past because the communication tool was 'one way.' But things have been changed. All networks inserted into households are now broadband," Seo said.

KT has deployed over 80 percent fiber-to-the-home (FTTH)-based networks in and around Korea's bigger cities and the surrounding suburbs, the senior executive added.

He, however, declined to unveil further financial details such as this year’s sales and profit targets.

N-screen strategy

Seo said whether or not to expect earlier breakthroughs for his division is highly dependent upon its "N-screen" strategy.

N-Screen is mostly based on cloud computing technology and aimed at providing content across a variety of platforms such as televisions, PCs and mobile devices to share and consume information, seamlessly.

Within the changing telecom sector, KT is competing with its biggest rival SK Telecom to enjoy more "first-mover" merits by promoting the strategy in the saturated local market.

"We will persuade our consumers to use bundle packages. Clearly, mich customized content such as educational material will be offered. Also, we have a plan to access all KT's contents with any terminal," added Seo.

KT, which lacks in the variety of handset models rather than its local competitor SK Telecom, is heavily betting on its N-screen strategy because it sees "drastic realignments" in the handset-focused local market if it provides circumstances to allow users to use its "killer content" regardless of device.

"If KT takes the jack-pot in the strategy, then strategies focused on mobile handsets will disappear. It's necessary to have solid fixed- as well as wireless-infrastructure," the executive told the English-language daily.

He said the corporate relationship with Samsung Electronics is recovering as Samsung Electronics is providing WiBro-related systems and N-screen supporting equipment such as set-top boxes.

"Partnership has been extended to all sectors. We don’t see any further problems with Samsung Electronics," he said.

The tie-ups with Samsung deteriorated just right after KT’s ambitious decision to introduce Apple’s iPhone on the local shelves from November 2009.

In a retaliatory action, Samsung diverted most of its premium phones to SK Telecom and deliberately offered only slack support for the few phones that did reach the number two carrier.

KT Chairman Lee Suk-chae had once cited KT’s version of the Omnia II as a good example of Samsung’s discrimination.

Samsung banned KT from referring to its model as part of the Omnia II family, resulting Lee to say the KT version ― the Show Omnia ― is an "illegitimate son."

Seo's remarks are well echoed by local financial markets as the end of terrestrial analog service from next year is likely to award a competitive edge to platform- and content-rich KT.

"Throughout this year, KT will not lose momentum in broadband-related businesses that include high-speed Internet, IPTV and fixed calls. Its bundle products combining wireless-, and fixed-related products continue to sell well," said Kim Dong-june, an analyst at Eugene Investment.

The local brokerage added KT had seen a 500,000 net rise in its high-speed Internet subscribers last year, which was the record since 2004. Cancellation rates had also fallen.

서유열 KT사장 ``유선사업 활로 찾겠다’’

유선전화 부문에서 매년 수천억원의 손실을 입고 있는 KT가 IPTV와 초고속인터넷 등을 앞세운 결합상품과 이통사들의 새로운 캐쉬카우로 등장한 ``N 스크린’’ 전략으로 새로운 활로 찾기에 나선다.

KT에게 유선사업 부문은 사양산업이지만 그렇다고 포기할 수도 없는 ``양날의 칼’’과 같은 존재.

서유열 KT 홈고객부문 사장은 최근 코리아타임스와 단독 인터뷰를 갖고 ``통신산업의 차세대를 논할 때 빠뜨릴 수 없는 부분이 바로 `데이터 폭증’’’이라며 ``KT는 강력한 유선 인프라를 바탕으로 유.무선 결합상품 분야에서 충분히 경쟁 우위를 가지고 있어 향후 전망이 밝다’’고 말했다.

이석채 KT 회장의 두터운 신임을 받고 있는 서 사장은 지난해 정기 인사에서 사장으로 승진했으며 KT의 유선사업 관련 전반을 맡고 있다.

KT는 자사 가입자가 초고속 인터넷, 휴대전화, 집전화 등 결합상품을 선택하도록 유도한 뒤, 영화나 교육 서비스 등 경쟁력 있는 콘텐츠를 적극 개발해 고객의 눈을 사로잡는다는 전략이다.

서 사장은 ``기존 셋톱박스를 홈게이트웨이 또는 홈허브로 두고, 가입자가 갖고 있는 어떤 단말기로든 콘텐츠를 이용할 수 있게 하는 N스크린 전략을 구사할 예정’’이라며 ``이 전략이 성공하면 현재 이통시장의 휴대폰 단말기 중심 전략은 무력화될 수 밖에 없는데 KT가 보유하고 있는 강력한 유선 인프라망을 고려한다면 성공 확률은 매우 높다’’고 강조했다.

또 그는 ``인터넷전화를 뛰어넘는 스마트홈 시장이 개화하면 유선사업이 활로를 찾을 가능성이 매우 충분하다’’고 덧붙였다. KT는 인터넷전화, IPTV, 태블릿PC가 결합된 스마트홈 서비스를 다음달 부터 본격 출시할 계획이다.

KT측은 최근 저비용을 강점으로 하는 유선 인터넷전화 가입자 수도 꾸준히 늘고 있다고 밝혔다. 인터넷전화 업체에 따르면 지난해 말 현재 인터넷전화 가입자 수는 총 717만여명에 달해 같은 해 1월말 대비 25%가량 늘어난 것으로 집계됐다.

지난달 30일을 기준으로 한 비공식 집계에 따르면 KT가 279만2천명으로, 278만8천명의 가입자를 확보한 LG유플러스를 근소한 차이로 앞지른 것으로 알려졌다.

서 사장은 ``적극적으로 유선분야에 투자함으로써 기술 변화에 빠르게 대처하겠다는 뜻’’이라며 ``과거 유선산업은 일방향 소통을 벗어나지 못했으나 이제는 각 가정내에서 사용하는 모든 네트워크가 유선이며 이는 쌍방향 커뮤니케이션이 보다 활성화 되고 있다는 뜻’’이라고 말했다.

그는 삼성전자와의 관계에 대해서도 ``지나간 일’’이라며 ``예전과 다르게 관계가 빠른 속도로 회복되고 있다’’고 덧붙였다.

KT는 최근 삼성전자의 갤럭시S 후속모델인 갤럭시S 2를 도입하기로 삼성과 원칙적인 합의에 도달했다. 또 삼성전자는 와이브로 시스템과 셋톱 박스와 같은 N 스크린 서비스 장비를 KT에 공급하고 있다.

서 사장은 ``삼성과의 협력 범위과 유선과 무선을 포함해 전 분야로 확대되고 있는 상황’’이라며 ``KT가 작년에 이어 올해도 사상 최대의 실적을 이어갈 수 있도록 유선사업이 알토란 같은 역할을 할 것’’이라고 자신감을 피력했다.