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Competitive Dynamics in the AI-based Intelligent Contact Center Market Among Korea's Big Three Telcos

GOOVER DAILY REPORT August 4, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Market Entry and Early Developments
  3. Technological Innovations and Service Offerings
  4. Market Performance and Corporate Client Acquisition
  5. Strategic Challenges and Competitive Pressures
  6. Conclusion

1. Summary

  • This report investigates the competitive landscape of the AI-based Intelligent Contact Center (AICC) market among Korea's three major telecommunications companies: SK Telecom, KT (Korea Telecom), and LG Uplus. It outlines their distinct strategies, market positioning, and technological innovations aimed at acquiring corporate clients through advanced AI solutions. Key developments highlighted in the report include KT's early market entry with significant revenue growth, SK Telecom's subscription-based service model and strategic investments, and LG Uplus's tailored B2B AI solutions. These insights reveal how each company is leveraging AI technology to drive market growth and client acquisition.

2. Market Entry and Early Developments

  • 2-1. KT's Early Market Entry and Initial Success

  • KT was the first among the three major Korean telecom companies to enter the AI-based Intelligent Contact Center (AICC) market in 2017. By 2021, KT elevated its internal AICC team to the KT Enterprise official business division, introducing the AI voice bot 'Gini.' This forward-thinking initiative led to impressive results, with KT securing contracts worth over 2500 billion KRW in its AICC segment as of the previous year. Additionally, in January 2022, KT launched 'AICen Cloud,' a service combining cloud capabilities with AICC solutions, featuring real-time transcripts, voice and chat bots, and an assistant for consultations. KT’s early market entry and strategic innovation have played a significant role in increasing its market share.

  • 2-2. SKT and LG Uplus Entering the Market

  • SK Telecom (SKT) and LG Uplus entered the AICC market later than KT but have made significant strides. SKT introduced the 'SKT AICCaaS' (All-in-One Contact Center as a Service) subscription model on July 20, 2023. This service incorporates all necessary AICC functionalities, from call infrastructure to AI solutions and dedicated support lines, accessible via a cloud-based subscription model, which removes the need for costly initial infrastructure investments. This approach has opened the doors for small and medium-sized enterprises to adopt AI-driven contact center solutions more affordably. Moreover, SKT invested in 'Persona AI' and, by 2024, aims to dominate the cloud-based contact center market. LG Uplus, meanwhile, launched its AI model-based customer platform 'Chat Agent' on March 8, 2024. This platform includes AI-driven agents for various customer service needs and has already been applied successfully in the B2B space, such as with Cuckoo Electronics and Cuckoo Homesys call centers. Their AI Call Bot solution showed promising performance, handling work equivalent to that of 36 human agents during a one-month trial.

3. Technological Innovations and Service Offerings

  • 3-1. KT's 'A'cen Cloud' and AI Models Implementation

  • KT was the first to enter the AICC market among Korea's three major telecommunications companies in 2017. By 2021, KT's AICC team was promoted to a formal business unit under KT Enterprise. The company has introduced AI voice bot 'Genie' and achieved 2,500 billion KRW in orders in the AICC sector, triple the amount from 2022. In January 2022, KT launched 'A'cen Cloud', a service combining cloud capabilities with real-time conversation records, assistant software, and voice/chat bots. KT's unique proposition includes using massive AI models to analyze customer intention, context, and sentiment to provide sophisticated responses. Their AICC solutions have been deployed across various sectors, including finance, insurance, cards, and commerce, resulting in improved consultation quality and reduced operational costs.

  • 3-2. SK Telecom's 'SKT AICCaaS' Subscription Service

  • SK Telecom introduced 'SKT AICCaaS', an all-in-one subscription-based AICC service, on July 20, 2022. This cloud-based service eliminates the need for infrastructure investment and includes all necessary features and solutions, such as call infrastructure, consultation applications, AI solutions, dedicated lines, and system operations. This approach allows SMEs to adopt AICC at a lower cost and scale functionalities step-by-step. Additionally, SKT has secured corporate clients like SK Rent-a-Car for this service and aims to become the leader in the cloud contact center market by continuing strategic investments, such as becoming a strategic investor and third-largest shareholder in Persona AI, known for its advanced natural language processing and generation technologies.

  • 3-3. LG Uplus's 'Chat Agent' and AI Solutions

  • On March 8, 2022, LG Uplus launched 'Chat Agent', an AI model-based customer consultation platform. The solution, branded U+AICC On-Premises, includes four types of AI agents: U+ Consultation Agent, Technical Consultation Agent, U+ AI Product Recommendation Agent, and U+ Biz Market Guide Agent. These agents can handle professional questions and commands outside of predefined scenarios and are designed to enhance business AI capabilities. In March 2022, LG Uplus applied its AI consultation solution 'AI Call Bot' at Cuckoo Electronics call center during a one-month trial, where the bot managed workloads equivalent to 36 human consultants.

4. Market Performance and Corporate Client Acquisition

  • 4-1. KT’s Revenue and Market Share Growth

  • KT was the earliest entrant among the three major telecom companies into the AI-based Intelligent Contact Center (AICC) market, launching its services in 2017. KT has seen substantial growth, achieving over 2,500 billion won in contracts in the AICC segment last year. This figure is more than triple the amount recorded compared to the 69% share of large domestic AICC contracts secured in 2022. In 2021, the AICC team was promoted to a formal business division within KT Enterprise, further solidifying its market position. KT’s AICC services leverage their proprietary AI voice bot called Genie and the cloud-based ‘A’sen Cloud’ service, integrating real-time transcripts and various assistant features. These developments highlight KT’s significant revenue and market share growth in the AICC market.

  • 4-2. SKT’s Corporate Client Acquisitions and Strategic Investments

  • SK Telecom (SKT) has strategically expanded its presence in the AICC market through corporate client acquisitions and targeted investments. Notably, SKT launched the 'SKT AICCaaS' on July 20, featuring an all-in-one subscription-based AICC service, which includes necessary infrastructure, AI solutions, dedicated lines, and system management, all provided on a cloud-based, cost-effective subscription model suitable for small and medium-sized enterprises (SMEs). This allows SMEs to introduce AICC solutions gradually by choosing only the requisite features. Additionally, SKT has invested in ‘PersonaAI’ to become one of its top three shareholders. PersonaAI is recognized as a leading AICC developer, providing subscription-based services and collaborating with significant financial groups like KB Financial Group and Hanwha General Insurance. These strategic moves have positioned SKT to further expand its influence and client base in the AICC sector.

  • 4-3. LG Uplus’s B2B Market Success

  • LG Uplus has achieved notable success in the B2B AICC market with the development and deployment of its AI-driven customer service solutions. The company introduced the 'Chat Agent' platform based on its proprietary AI model 'ixi', which launched on August 8. This platform includes various AI assistants designed to handle different customer needs and commands, promoting LG Uplus's tailored approach to AI solutions. Additionally, LG Uplus provided its ‘U+AICC On-Premise’ solution, including the AI call bot product, to companies like Cuckoo Electronics and Cuckoo Homesys. The AI call bot system demonstrated the capability to perform the work of 36 agents during a one-month trial, showcasing its efficiency and effectiveness. These developments underscore LG Uplus's successful penetration and performance in the B2B AICC market.

5. Strategic Challenges and Competitive Pressures

  • 5-1. Increasing Competition and Market Dynamics

  • The competitive landscape of the AI-based Intelligent Contact Center (AICC) market among Korea's three major telecommunications companies, SK Telecom, KT, and LG Uplus, is intensifying. According to industry sources, KT initially dominated the market, having entered in 2017 and achieving significant growth, including a 2500 billion KRW order in 2021, which was three times the amount from 2022. Recently, SK Telecom and LG Uplus have also launched their AICC services, causing a more competitive environment. Specifically, SK Telecom introduced an all-in-one subscription-based AICC service named 'SKT AI CCaaS', and LG Uplus launched the 'Chat Agent' platform based on their AI model 'ixi'.

  • 5-2. Technological Advancements and Their Impact

  • Both technological advancements and innovative AI solutions significantly impact the AICC market. KT has integrated AI capabilities such as voice bots and chatbots into their 'A'cen Cloud' service, enhancing the efficiency and accuracy of customer interactions. This solution shows impressive results, such as increasing consulting quality by 10% and reducing operational costs by 15%. Meanwhile, SK Telecom has made strategic investments in leading AICC developers like PersonaAI, which specializes in natural language processing and offers subscription-based AICC services. Additionally, LG Uplus's AI chatbot solution, called 'AI Callbot', demonstrated remarkable effectiveness by managing workloads equivalent to 36 human consultants over a one-month trial.

  • 5-3. Challenges in Maintaining Market Leadership

  • Maintaining leadership within the swiftly evolving AICC market is a significant challenge for telcos. KT's early market entry secured an advantageous position, but the advent of sophisticated AICC services by SK Telecom and LG Uplus poses consistent pressures. SK Telecom's SKT AI CCaaS and LG Uplus's innovative AI-driven solutions demonstrate keen efforts to capture corporate clients. These initiatives highlight the importance of continuous technological innovation and strategic adaptability in keeping pace with competitors and sustaining market leadership. Furthermore, leveraging AI to provide 24-hour services without the need for a human agent has become a crucial part of their B2B strategies, indicative of ongoing competitive pressures.

6. Conclusion

  • The report emphasizes the varying strategies and technological innovations being employed by SK Telecom, KT, and LG Uplus in their pursuit of dominance in the AI-based Intelligent Contact Center (AICC) market. KT's early entry and substantial revenue growth underline its influential market position, whereas SK Telecom's strategic investments, including the SKT AICCaaS, signify a robust approach to expanding its market presence and client base. LG Uplus's focus on bespoke AI solutions, as seen with its Chat Agent platform, highlights its success in the B2B sector. Despite these advancements, continuous technological innovation and strategic agility remain critical for maintaining market leadership amid escalating competitive pressures. Future prospects indicate an ongoing evolution of the AICC landscape, driven by further AI integration and tailored solutions to meet diverse business needs. Practical applicability of these advancements suggests an enhanced capability for businesses to offer efficient, AI-driven customer support services, significantly lowering operational costs and improving interaction quality.

7. Glossary

  • 7-1. KT (Korea Telecom) [Company]

  • KT, an early entrant in the AICC market, has leveraged its proprietary AI technology, including the 'A'cen Cloud' service, to achieve significant market share and revenue growth. KT's strategic innovations position it as a key player in the sector.

  • 7-2. SK Telecom [Company]

  • SK Telecom has introduced the 'SKT AICCaaS' subscription service, offering a comprehensive suite of AICC solutions on a cloud-based platform. By securing strategic investments and partnerships, SKT positions itself as a formidable competitor in the AICC market.

  • 7-3. LG Uplus [Company]

  • LG Uplus focuses on delivering customized AI solutions with products like 'Chat Agent', targeting B2B clients and achieving notable performance results. Their approach underscores a commitment to innovation and market adaptation.

  • 7-4. AICC (AI Intelligent Contact Center) [Technology]

  • AICC integrates AI technologies such as voice recognition, text analysis, and chatbots to enhance customer service operations. Its adoption by major telecom companies highlights its importance in streamlining customer interactions and improving operational efficiency.

8. Source Documents