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KT Outage Incident, Compensation Not Easy... Small Business Owners and Retail Investors Frustrated (Comprehensive)

Terms of Use Continuous Over 3 Hours Condition
Difficulty in Proving Individual Causality
Compensation Amount Expected to Be Minimal
Possibility of Class Action Lawsuit Filing

KT Outage Incident, Compensation Not Easy... Small Business Owners and Retail Investors Frustrated (Comprehensive)

[Asia Economy Reporter Cha Min-young] Damage caused by the KT wired and wireless communication outage is being confirmed across the country, but realistically, compensation for damages is expected to be difficult. KT has yet to identify the exact cause even 24 hours after the incident. Some are also raising the possibility of class-action lawsuits by consumers affected by internet service disruptions, similar to the '5G quality' controversy.


Outages Under 3 Hours... Compensation Uncertain

According to the government and industry on the 26th, KT estimates that the communication access outage that occurred from around 11:20 a.m. the previous day for 40 to 85 minutes was due to a routing (network path setting) error. However, the exact cause, including how the routing error occurred, has not yet been determined. The delay in a statement from KT CEO Koo Hyun-mo is also believed to be due to this.


Professor Kim Seung-joo of Korea University's Graduate School of Information Security pointed out, "Neither the Ministry of Science and ICT nor the Korea Internet & Security Agency (KISA) initially diagnosed it as a DDoS attack," adding, "The fact that KT, an insider, initially announced the wrong cause indicates a lack of expertise or insufficient response manuals, so a calm analysis of the cause was necessary."


It is also uncertain whether compensation for the access outage will be properly provided. The scale of compensation is based on the operator's own terms and conditions. According to KT's terms, customers subscribed to mobile phone, high-speed internet, IPTV, and other services must be compensated if they cannot receive service for more than three consecutive hours without their own fault. However, this incident officially ended after about 1 hour and 25 minutes. It is also difficult for self-employed individuals and others to prove a causal relationship for direct damages. Since the outage duration is calculated on a daily basis, the amount of compensation is expected to be minimal.


KT Outage Incident, Compensation Not Easy... Small Business Owners and Retail Investors Frustrated (Comprehensive) [Image source=Yonhap News]

Currently, KT's internal decision is expected to be important. Since KT corrected its position from a DDoS attack to a routing error in the afternoon of the previous day, the focus is on an internal error, and nationwide damage has been confirmed. Lee So-ra, head of the User Protection Division at the Korea Communications Commission, said, "It is difficult for the government to enforce compensation under the terms and conditions, so KT needs to proceed with self-compensation," adding, "We are also currently monitoring dispute mediation."


Previously, KT announced a self-compensation policy separate from the terms and conditions during the Ahyeon Station fire in 2018. It waived up to six months of fees for affected wired and wireless subscribers. For affected small business owners, compensation was provided as follows based on the outage period: 400,000 KRW for 1-2 days, 800,000 KRW for 3-4 days, 1,000,000 KRW for 5-6 days, and 1,200,000 KRW for 7 days or more. A KT official responded that the compensation issue is "under discussion."


Moves for Damage Compensation... Calls for Terms and Conditions Improvement

There are also signs of moves to file damage compensation lawsuits. On the joint lawsuit platform 'Angry People,' which was the starting point for the 5G quality lawsuit, posts from those affected by the KT outage are appearing. Attorney Kim Jin-wook of Juwon Law Firm said, "Store owners who had difficulty processing POS payments due to the communication outage can claim compensation for property damages equivalent to the average sales decrease during that time and for mental damages." Mental damages caused by online exam interruptions or inability to trade stocks can also be subject to damage compensation claims.


This incident has also raised calls to improve terms and conditions that do not consider our society's dependence on the internet. Kim Ju-ho, head of the Socioeconomic Team 1 at the People's Livelihood Hope Headquarters of the People's Solidarity for Participatory Democracy, criticized, "The three-hour continuous outage standard is a story from the old wired telephone days. In a situation where autonomous vehicles are being developed, it is unimaginable for communication to be disconnected even for one minute."


KT Outage Incident, Compensation Not Easy... Small Business Owners and Retail Investors Frustrated (Comprehensive) [Image source=Yonhap News]

KT's nationwide wired and wireless internet network was paralyzed for about 40 to 85 minutes starting around 11:20 a.m. the previous day. KT initially estimated the cause as a 'large-scale DDoS attack' but corrected it to a 'routing (network path setting) error' in just over two and a half hours, drawing criticism. KT stated, "Initially, traffic overload led us to suspect a DDoS attack, but after careful examination, we identified a routing error as the cause."


Since KT directly mentioned a routing problem, the industry speculates that routing-related settings may have been incorrectly configured, causing traffic to be concentrated on a specific network. Routing refers to selecting the optimal path when transmitting communication data within a network. Telecom companies use this to efficiently manage large-scale traffic and ensure smooth internet network operation. KT has not disclosed the specific circumstances under which the routing error occurred.


An official from the telecommunications equipment industry said, "Because there are so many different paths open, it is not easy for outsiders to draw a specific picture just because it is a routing problem," adding, "However, since even a five-minute outage is a very serious situation, KT, as the party involved, should directly provide a detailed explanation to the public."


The service outage was sequentially restored from around noon, but instability continued until the next day, the 26th. On major online communities, complaints such as "Is it still not over?", "KT IPTV that was working fine since morning suddenly stopped," and "The internet is down again; is anyone else experiencing this?" have been ongoing since early that morning.


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