Court ruling scuppers KT LTE plan

The high-speed fourth-generation network service appears to be literally a “long-term evolution” for KT Corp., the nation’s No. 2 telecom carrier.

KT was scheduled to halt its second-generation mobile service and to announce the beginning of its long-awaited LTE service in a press conference on Thursday.

A Seoul court, however, scuppered KT’s plan on Wednesday, saying “Irreversible damages are expected to the remaining 2G users.”

“Because the telecom regulator has already approved the 2G shutdown after considering all the details, we never expected such a decision to come out,” said Kim Yoon-jeong, a KT spokesperson.

KT has been planning to start the LTE service in the 1.8 GHz band that it has been using for 2G services.

After two failed attempts this year, it finally got approval from the Korea Communications Commission on Nov. 23 to shut down its 2G network.

In order to win the approval, KT has continued efforts to persuade its 2G users to convert to the 3G service along with offering a new handset and some financial benefits.

“We sometimes made personal visits to convince senior citizens in rural areas. We also offered financial compensation even when they change telecom operator,” Kim said.

KT’s number of 2G users has decreased from 2 million in March to some 125,000 now.

But such efforts were not enough to persuade some 900 customers who are still happy with their less smart 2G phones, leading to a class action suit filed against the KCC to nullify its approval last week.

Defying industry expectations about a decision in favor of KT, the Seoul Administrative Court on Wednesday suspended the KT’s plan for further consideration.

Following the decision, KT must maintain its 2G services until the final ruling is made on the class action lawsuit. It is expected to take six to 10 months.

Civic groups have claimed that KT didn’t announce its 2G service suspension 60 days in advance violating a related law and committed illegal activities such as deliberately cutting off service.

KT, however, said it already launched a nationwide campaign to persuade 2G customers in March even though some inconvenience has been caused in the process.

The company pledged to make an appeal, citing a recent case in which a Suwon court in Gyeonggi Province ruled against a 2G user.

At the time, the court said in a ruling that considering the fast growth of the mobile industry, whether to end network services should be a decision for the operator.

Industry watchers said KT is likely to lose some momentum in its network business.

“It seems unavoidable for the company to have problems in narrowing the service gap between rival companies,” said King Ji-hoon, an analyst at Samsung Securities.

“Unlike KT, SK Telecom and LG Uplus (which have already started the LTE service since July) are expected to gain some benefits.”

Civic groups welcomed the court decision on Thursday, hinting at another plan to request the nation’s audit agency to look into the KCC’s approval process. They also urged a boycott of KT.

By Lee Ji-yoon
(jylee@heraldcorp.com)