KT CEO blasts big firms for ‘free riding’

KT CEO Lee Suk-chae delivers a speech at a technology exhibition at the COEX Convention Center in southern Seoul, Tuesday.

KT Chief Executive Lee Suk-chae has urged the government and the nation’s leading technology companies LG and Samsung Electronics to pay for using its networks.

“Korea needs a new paradigm. The digital revolution has changed everything. Despite heavy data traffic amid rapid rises of data-intensive devices such as tablets and smartphones, no one is ready to pay in return for using networks,’’ said Lee in a technology forum held at the COEX Convention Center, southern Seoul, Tuesday.

“If the current situation continues, then Korea will see a big data blackout. This is an expected scenario. There’s no free lunch. It doesn’t make sense to ride free on networks,’’ stressed the CEO, who is outspoken on key pending issues,.

The remarks come as telecom companies KT and SK Telecom are being pressured to secure their bottom line amid explosive demand for wireless data. Analysts say Lee’s “well-prepared’’ speech was aimed at warning the government and apparently Samsung and LG.

Earlier, Lee ordered his top confidants to limit access to certain TV applications that slowdown overall network speed in a move that may cause a clash with major TV makers aggressively marketing Web-connected TVs.

Growth in Internet-enabled devices is giving huge profits to set makers such as Samsung and LG, however, the trend is hurting telecom companies, ironically, as the firms should invest heavily to guarantee network stability without subsidies and support from manufacturers.

“Network traffic increased 153 times since smartphones came to Korea three years ago. Huge burdens over network investments are weighing on consumers as KT has no option but to collect money from customers to secure cash for the networks,’’ said the KT CEO, blasting the “free-loading” scheme being pushed by manufacturers.

KT saw a decline in operating profit in the first quarter of this year as its latest decision to cut monthly charges for mobile phone plans dragged it down.

“How can KT earn money and how we can guarantee our corporate sustainability without policy changes? This is the right time for the government to do more,’’ the CEO said.

KT spokeswoman Kim Yoon-jeong said TV manufacturers are free-riding on its network, while its capacity to invest and upgrade it is shrinking due to worsening profitability.

The network-related issue could have wider global implications as search giant Google and Apple are also preparing Web-based TVs, allowing viewers to access social networking services, online games and music. Apple is to introduce its set from the latter half of this year, according to sources.

“It’s urgent telecom companies secure sources for network investment,’’ said KT’s top executive.

Samsung Electronics spokesman Song Cheol-gyu declined to comment, while LG Electronics was also quiet on the issue.

Both companies are negotiating with KT over paying for using KT’s network for their Web-connected televisions and smartphones. Samsung aims to sell 50 million TVs this year globally with half the shipments being Internet-enabled.

LG Electronics also aims to have around 60 percent of its TVs come with its own NetCast Internet platform installed. <Korea Times/Kim Yoo-chul>

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