Earlier in May, KT's Chairman Chang-gyu Hwang announced the company's GiGAtopia vision (see What's GiGAtopia envisioned by Chairman Chang-gyu Hwang of KT?). Then soon in June, KT made another announcement that it would commercialize gigabit Internet service in the second half of the year.
So, it has been predicted that the company would begin the service probably at the end of the year. But unlike the forecast, on October 20th, KT broke the news, at the World IT Show 2014 which took place as a part of the International Telecommunication Union (ITU) Plenipotentiary Conference held in Busan, that it started Korea’s first nationwide 1 Gbps Internet service titled "GiGA Internet service" on the same day, sooner than previously announced.
The company is about to finally open 1 Gbps home Internet speed era, after a long period of speed stagnation at 100 Mbps - for more than 10 years since its 100 Mbps cyber apartment Entopia LAN service commercialization in early 2000, and 7 years since its 100 Mbps FTTH service launch in 2007.
The GiGA Internet service is expected to support 1 Gbps for users living in a single home or apartment with fiber cabling, 1 Gbps or 500 Mbps for those with UTP cabling (Cat5/5e/6), and up to 500 Mbps for those who live in a very old (decades old) apartment building with telephone lines only.
As we all know, what has been holding Korean network operators back from commercializing gigabit Internet service was not technical issues, but disagreement between the Ministry of Science, ICT and Future Planning (MSIP) and the network operators on service fees and policies. To i) ensure return on investment made in building gigabit Internet networks, and ii) prevent enormous amounts of ggabit Internet bandwidth from being used by only a few heavy users, resulting in unfair and oligopolistic usage of network capacities, the operators have made suggestions, for example:
After prolonged discussion with MSIP over the proposed measures, both parties agreed not to adopt partial volume-based charging, but stick to 'unlimited use plan with fixed rate'. However, to control heavy users' oligopolistic usage of bandwidth, they decide to impose a speed restriction of 100 Mbps on a heavy user whose daily usage reaches 100 GB, for the rest of the day.
Recently, many network operators in the world have also begun commercialization of gigabit Internet service, as can be seen in the table below. So, it is really good to see Korea, the global ICT leader, finally waking up from hibernation, ready to make a leap forward.
Gigabit Internet Service Commercialization
|Operator||Launched on||Speed||PON Type||Vendor||Service Area||Fee (standalone)|
|Google Fiber||2012.07||1 Gbps||GPON||Cisco||Select cities including Kansas, Austin||$70/month|
|AT&T GigaPower||2014.08||1 Gbps||GPON||Austin, etc. (to serve 100 cities in 2015)||$99/month|
|CoX G1GABLAST||2014.10||1 Gbps||Phoenix||$99/month|
|CenturyLink||2013||1Gbps||GPON||Calix||Select cities including Omaha, Las Vegas||$149/month|
|KT's GiGA Internet||2014.10||1Gbps||1G EPON1), GE||Ubiquoss||Nationwide||
|2014.10||500 M||UTP, Phone-line||Ubiquoss||Nationwide||$28/month|
1) 10G-EPON: planned
► KT's GiGA Internet Access Network shown at World IT Show 2014
The above network configuration is illustrated by Netmanias based on the equipment and network configuration displayed during KT's presentation on GiGA Internet service commercialization at the World IT Show 2014. In the KT's displayed network, Ubiquoss's equipment was used, but equipment from other vendors will also be used in KT's commercial network once the service begins.
To ensure timely launch of GiGA Internet service, since mid-2014 KT has replaced the existing EPON OLTs (Gbps) with high-capacity 10G EPON OLTs that can support 10 Gbps per PON port and accommodate up to 5,120 ONT subscribers with a single chassis. KT said currently about 50% of its subscribers are within the coverage of the service, and that it should be able to have 100% of subscribers covered by the end of the year.
Giga ONT, for home installation, has 4 GE ports, which can be conveniently connected to multiple units of IPTV STBs, PCs, etc. In addition, now Giga Wi-Fi (802.11ac) service is also provided, offering 200~300 Mbps of wireless Internet speed as well (see No. 1 in the figure above).
► Services and Plans
In case of standalone Internet service with 3-year commitment, a user will have to monthly pay KRW 30,000 ($28) for 500 Mbps, and KRW 35,000 ($33) for 1 Gbps, respectively KRW 5,000 and 10,000 more than what the user has to pay for the current 100 Mbps (KRW 25,000, $24).
Then, now let's see how much extra profits network operators can create from fixed-rate GiGA Internet service.
As of August 2014, KT has 8 million Internet service subscribers, which includes 3.9 million FTTH subscribers, 2.8 million LAN (UTP) subscribers, and 1.3 million XDSL subscribers. Although unrealistic, let's say for easier calculation that all the subscribers are subscribing to an standalone 100 Mbps Internet only plan with 3-year commitment, and they all want to switch to GiGA Internet service (XDSL users switching to 500 Mbps service, LAN subscribers switching to 1 Gbps plan, and FTTH subscribers switching to 1 Gbps). Then, this switching will increase the company's annual sales from KRW 2.47 trillion to 3.3 trillion, generating additional annual sales of KRW 840 billion. Of course this is only theoretical, and the real additional sales will be a lot less than KRW 840 billion as apparently neither of the assumed conditions can be true in reality.
Given the fact that KT's revenue in 2013 was KRW 23.8 trillion, the expected effect of revenue structure improvement from GiGA Internet service alone is not likely to be significant.
One thing to note, though, is that KT offers a very attractive GiGA Internet bundle plan. If more than 2 users in a family subscribe to KT mobile service (e.g., if dad, mom and a kid are all KT LTE users), GiGA Internet service is free to the family. It sounds pretty appealing, enough to make competitors' customers churn to KT. Then, taking advantage of this, KT, #1 in wired infra, will be able to attract new mobile customers, who are more profitable.
Obviously, similar services and plans from SK or LG U+ will follow pretty soon.
In Korea, whenever one of the big 3 released a new service, the other two joined shortly, releasing the same or similar service with no or few different features. So, again, SK and LG U+ will join KT, launching their own gigabit Internet service. The fierce competition among the three has always been working as driving force that makes Korea become and maintain as the #1 ICT country in the world.
That's what competition is for. Keep it up, big 3!!