SK Telecom buys landline network for backhaul

Do landlines still have a purpose? Ironically, their most significant ongoing value may be in support of the wireless networks that helped to marginalize them. South Korea mobile giant SK Telecom, one of the most advanced mobile carriers in the world, is buying the landline network of affiliate SK Networks for about $717 million. SK Telecom has long leased backhaul capacity on the SK Networks' landline facilities, a cost that has represented a whopping 71 percent of SK Telecom's total network expenses since 2002, The Wall Street Journal reports.

That's a shocking percentage and probably larger than what many wireless carriers have experienced, but also likely not all that surprising to mobile carriers that consistently have seen backhaul as their single largest and most vexing expense, one that is growing in both cost and complication as they migrate to 3G and 4G networks and receive higher traffic volumes driven by more advanced applications.

A handful of other wireless carriers around the world have studied or made similar moves in the last year, so it will be interesting to see if more mobile carriers see landline buys as a way to actually cut costs and improve efficiency, as SK Telecom does.

For more:
- The Wall Street Journal has this report [1]