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[Newsmaker] KT to pay 35-40 billion won in compensation for network fiasco

KT’s Executive Director Seo Chang-seok, who also leads the company’s network transformation task force, speaks during a press conference at KT’s Gwanghwamun office in Seoul on Monday. (KT)
KT’s Executive Director Seo Chang-seok, who also leads the company’s network transformation task force, speaks during a press conference at KT’s Gwanghwamun office in Seoul on Monday. (KT)
KT will pay 35 billion-40 billion won ($29 million-$33 million) to subscribers in compensation for the massive network outage last week, the country’s No. 2 telecom operator in terms of revenue said Monday. 

In a press conference, executives of the firm acknowledged that the Oct. 25 incident was a human-caused disaster caused by lax oversight on its side and pledged to go “back to basics” to regain confidence from users. 

“We deeply apologize for causing inconvenience and have prepared realistic prevention measures and compensation packages to never allow this to happen again,” said KT Executive Director Seo Chang-seok during a press conference in Seoul on Monday. Seo also leads the company’s network transformation task force formed after the incident. 

As for the compensation, the company plans to exempt the due amount from November’s network usage bill. This would cover all subscribers to wired and wireless broadband internet or IP-type phone services, it added. 

The company has decided to compensate the disruption duration time -- 89 minutes -- by 10 times, so 15 hours of service fees will be exempt from the monthly bill, KT officials explained. 

The exact amount will vary based on the individual' monthly subscription plan. Some 1,000 won will be exempted for a user on a 50,000 won subscription plan, according to KT.

“For mom and pop store owners who use KT’s IP-type phone or devices connected to our internet network, they will receive compensation calculated for 10 days of disruptions,” he said, adding that the compensation will be worth 7,000 to 8,000 won based on the standard 25,000 won plan that business owners subscribe to. 

Total costs of compensation are projected to come to 35 billion won to 40 billion won, officials said. 

KT will run a designated call center and a website to receive users’ complaints for the next two weeks.

As of August, KT had 17 million mobile phone subscribers and 9.4 million subscribers to its high-speed internet, out of a domestic population of some 52 million. 

On Oct. 25, a KT subcontractor in Busan made an input error in the course of router setting maintenance work, which led to a nationwide network outage in less than a minute. A massive connection disruption caused widespread disruptions to daily tasks requiring connectivity for 89 minutes, beginning at 11:16 a.m.

KT initially announced that the network shutdown was caused by a cyberattack, which prompted police to dispatch an investigation team. Two hours later, KT restated that it appeared to have been caused by routing errors, not by large-scale distributed denial of service attacks. 

During Monday’s press conference, the firm said while it all started from a simple error by a subcontracted worker during maintenance work on router equipment, its impact was disproportionate because it was conducted during daytime, not at nighttime as such work was supposed to happen, and without the due supervision of KT staff, which delayed a response. 

KT said it will revamp the security system through automated monitoring for on-site network maintenance.

“For strengthened security, input of commands during the maintenance work will require manager’s approval through OTP (one-time password) devices. Work that does not go through manager approval will be automatically monitored, and the final stage of maintenance will be authentication from a KT official at the control center,” Seo said.

By Kim Da-sol (ddd@heraldcorp.com)
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