Telecommunications Giants SKT, KT, and LG U+ Embrace AI Amid Shrinking Profits

South Korea’s leading mobile operators are setting their sights on artificial intelligence (AI) as their next growth frontier. With traditional telecom revenues and profits experiencing a downturn, SK Telecom, KT, and LG U+ are pivoting towards establishing themselves as AI powerhouses.

SK Telecom recently unveiled plans to penetrate the AI market further by launching an AI personal assistant service in the United States by year-end. Part of the “Global Telco AI Alliance” with notable partners such as Deutsche Telekom and Singtel Group, SK Telecom aims to promote its AI service, once known as ‘A,’ across the global stage under a subscription model. They have developed a specialized communication-oriented language model trained on telecom jargon and ethical guidelines called ‘Telco LLM.’ The company intends to enhance and leverage this model for various services, anchoring their ‘AI Pyramid’ strategy.

In parallel, KT is propelling an AI alliance with Microsoft. The tech giants have decided to co-develop Korean AI and cloud services, targeting the domestic public and financial sectors. Spearheading the initiative, KT aims to operate a ‘Sovereign AI’ strategy to prevent the loss of critical AI operation data, securing it within local data centers or clouds.

LG U+, not to be outdone, seeks to expand the presence of AI throughout its services. The company has been collaborating with the LG AI Research Institute on a communication-specific language model, ‘Exigen,’ which is expected to launch this month. This move underscores the shift towards AI-focused strategies among the telecom trio, compelled by diminishing profits in the telecom sector, as reported by the Korea Information Society Development Institute (KISDI). The report highlights a notable decrease in operating income of all three companies since 2013, confirming the urgency of diversifying into AI ventures to reignite growth.

Key Questions and Answers:

– Why are SKT, KT, and LG U+ turning to AI?
These companies are pivoting towards AI due to shrinking profits from their traditional telecom businesses. They see AI as a new avenue for revenue growth and market expansion.

– What are the specific AI initiatives of these companies?
SK Telecom is launching an AI personal assistant service in the US and has formed the Telco LLM. KT is partnering with Microsoft to develop Korean AI and cloud services, with a focus on a ‘Sovereign AI’ strategy. LG U+ is collaborating with the LG AI Research Institute to develop the Exigen language model.

– What challenges do these companies face in the AI space?
Challenges include intense competition from already established global AI players, data privacy and ethical concerns, and the need for continued investment in R&D to keep up with rapid technological advancements in AI.

Key Challenges and Controversies:

Adoption of AI technologies brings several challenges and controversies:

– Data Privacy and Security: As telecom providers handle vast quantities of personal data, ensuring privacy and security in AI operations is paramount.
– Investment and R&D: Building AI capabilities requires significant investment in research and development, which might be a financial strain on already shrinking profits.
– Regulatory Hurdles: Differing regulations across countries on AI and data handling could complicate the global expansion plans of these companies.

Advantages and Disadvantages:

The embrace of AI by SKT, KT, and LG U+ has its pros and cons:

– Advantages:
– New revenue streams could be unleashed through innovative AI services.
– Enhanced customer experiences can be delivered through personalized AI-driven solutions.
– Potential to establish South Korea as a leader in the AI technology sphere on a global scale.

– Disadvantages:
– Large financial investment with uncertain returns, which could affect profits in the short term.
– Risk of not meeting regulatory or ethical standards for AI, leading to fines or damage to reputation.
– Competition from established global technology companies with more resources and advanced AI ecosystems.

For further information on the main domains of the companies involved, you may visit the following links:
– SK Telecom
– Korea Telecom (KT)
– LG U+

Please note that these are links to the companies’ main pages and are assumed to be correct and valid as of the last knowledge update in 2023.