KT to Provide High-Speed Internet as a Universal Service

Dec 10, 2019

Starting from the 1st of January, everyone in South Korea will be able to use high-speed internet from any location in South Korea. KT will be providing a high-speed internet service that reaches up to 100Mbps (except for islands) for anyone who applies for its service.
It has been confirmed that KT submitted a letter of application to become a provider of high-speed internet as a universal service to Ministry of Science and ICT (MSIT).
As a result, South Korean Government has finally completed every preparation to implement a system that will provide high-speed internet as a universal service after three years of preparation. South Korea has become the 8th country to provide high-speed internet as a universal service followed by the U.S., Spain, and Finland.
Although there are still few administrative procedures that KT needs to go through, KT has basically achieved 100% in high-speed internet penetration rate in South Korea.
MSIT is planning to notify KT about its decision to designate KT as a provider of high-speed internet as a universal service sometime during the middle of this month. Although there are still few procedures that are left, it is likely that there will not be any setback to implementing the system.
The system is set to be implemented on the 1st of January and it allows anyone that has been neglected from high-speed internet due to blind spots to use a high-speed internet service at a reasonable fee.
It is estimated that there are about 880,000 buildings in South Korea that do not receive a high-speed internet service from any internet provider. Most of these buildings are located in areas where internet providers have decided not to install optical fiber cables due to reasons related to economic feasibility.
KT will be providing high-speed internet that reaches up to 100Mbps for anyone who are from areas that do not receive high-speed internet and applies for its internet service.
Percentage of compensation for losses is 60%. Loss of 60% that occurs from KT providing a universal service will be divided amongst 20 telecommunications companies that make more than $25.2 million (30 billion KRW) in annual sales according to their annual sales.

KT to Provide High-Speed Internet as a Universal Service

KT had paid close attention during a process of gathering opinions as contents of the official announcement could change. It is heard that it submitted a letter of application under a condition that there would not be any change to the contents of the official announcement.
Although KT has basically become a provider of high-speed internet as a universal service, it will be up to South Korean Government to operate the system smoothly as the selection process had not been easy.
KT, its competitors, and MSIT had gone through debates for many months regarding benefits and percentage of compensation for losses within a consultative group that was established to select a provider.
If loss is not compensated through the system for compensation for losses, amount of accumulated operating loss can increase as KT is concerned. Local call, which is another universal service, is a prime example. If benefits are considerably lower than expectations or the cost of universal service is excessive, there needs to be an improvement to the system.
This is the reason why MSIT included a supplementary provision that it is going to apply 60% of compensation for losses first in 2020 and that it can adjust the percentage in the future. Regardless of how the supplementary provision is decided at the end, KT is planning to request for a higher percentage whenever there are losses.
Meanwhile, universal service is defined as a service that anyone can use under any circumstance at a reasonable cost. Some examples are local calls, public phones, and ship radio. All these services are provided by KT as universal services.
Staff Reporter An, Hocheon | hcan@etnews.com

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