[Reporter’s Notebook] KT’s Token Compensation Plan Shows No Sincerity

On December 30, KT issued a public apology for a hacking incident caused by comprehensive security failures, which resulted in the leakage of personal information of 20,000 people and nearly led to financial damages amounting to several hundred million won. Kim Youngseop, CEO of KT, pledged that the company would be "reborn," but there are several aspects of the customer compensation plan announced that day that raise questions.

Kim Youngseop, CEO of KT, is moving after finishing the briefing on 'Customer Apology and Information Security Innovation Measures' held at the Gwanghwamun building in Jongno-gu, Seoul on the 30th. Photo by Yonhap News

The most notable part of KT's compensation plan was the decision to waive early termination fees. This means that customers wishing to cancel their contracts would not be charged a penalty, but this announcement comes nearly five months after the first unauthorized micro-payment damages occurred in early August. During the months-long investigation, it was revealed that illegal femtocells could be used to steal call and text information. If KT had truly recognized the importance of information security and customer trust, it should have proactively offered to waive termination fees and provided compensation. Even this decision was only announced defensively after the government released the results of its investigation and expressed the need for such measures.

The process for applying for the termination fee waiver is also far from customer-friendly. Customers who wish to cancel must first pay the termination fee and then apply separately for a refund.

Looking at the compensation plan for customers who remain with KT, it is also difficult to sense genuine sincerity in the apology. The plan, which offers no bill discounts and instead splits benefits into smaller parts, is reminiscent of Coupang’s compensation approach. The offer of 100GB of data per month is useless for customers on unlimited data plans, and roaming services are irrelevant to those who do not travel abroad. The online video service (OTT) vouchers could be seen as a tactic to promote bundled products with the telecom company.

This stands in stark contrast to the approach taken by competitor SK Telecom, which in August offered a 50% discount on all customers’ telecom bills without requiring a separate application. After the USIM information hacking incident, SKT introduced this discount plan as a last resort in May, when the number of subscribers switching from SKT to KT and LG Uplus surged.

In contrast, KT did not experience a large-scale outflow of customers after the illegal femtocell incident. As a result, the scope of termination fee waivers is inevitably smaller compared to SKT. It is difficult to understand why KT’s plan lacks practical benefits such as bill discounts.

There is a saying that crisis is an opportunity. KT’s security incident could have been a chance to win back customers’ trust through sincere compensation and apology. CEO Kim stated, “Protecting and achieving customer safety, convenience, and satisfaction is the reason KT exists.” However, looking at the measures announced, it is hard to shake the feeling that KT, a “company without an owner,” has chosen a short-sighted approach aimed at minimizing its own losses.

The year 2025 will go down as an ignominious year in which all three major telecom companies, including KT, were exposed for critical security vulnerabilities. Genuine sincerity toward customers will be the driving force that enables these companies to restore their honor.