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Can SK Telecom bridge the gap between physical and digital security?

South Korea is one of most technologically advanced economies in the world. It has the highest rate of 4G availability of any country and regularly tops the UN’s telecoms rankings. But with the 4G market reaching saturation, mobile operators are now struggling to sustain growth.

SK Telecom, the country’s largest operator, is no exception. It reported a 3.7 per cent decline in consolidated revenue last year, having increased spending on measures to improve consumer loyalty. At the same time, the firm is also attempting to diversify its business. New industries for the telco have included media, retail and commerce and marketing. However, in 2018 the company set its sights on a new target: security.

At the end of 2017, SK Telecom had zero security-related revenue. However, after acquiring physical security company ADT Caps in partnership with Macquarie Group in May 2018 and SK Infosec in December 2018, it now controls two Korean companies that finished 2017 with a combined KRW 989 billion (£660m) in security-related revenues.

Physical meets digital

SK Telecom is bringing together two different business focused on two very disparate forms of security. ADT Caps is a company that specialises in physical security: mainly gate systems, alarm systems, CCTV and security guards. The company has a strong record in selling to both businesses and consumers.

Meanwhile, SK Infosec is a managed security services provider (MSSP), offering services like network monitoring, cybersecurity threat defence, cloud security, cybersecurity consulting and an IoT security platform.

For the most part, these two domains have remained largely separate. However SK Telecom intends to combine the physical aspects of ADT such as alarms, video monitoring and entry point control with the digital aspect of SK Infosec such as the Internet of Things (IoT) and network security to create new services that bridge the gap between the physical and digital world.

This will all be tied together by SK Telecoms’ own expertise, including its 5G and AI applications. By uniting these services, the company will hope to capitalise on a broader industry trend: the convergence of information technology (IT) and operational technology (OT).

A widening threat surface

While there is definite value to connecting OT and IT systems from both operational and security standpoints, as network connections increase so do threat vectors. There is the infamous case of the Casino’s network that was hacked via a connected fish tank. This lesson is important for companies such as SK Telecom that have ambitions for security convergence.

If physical access points like doors are tied into the same platform as digital access points like Wi-Fi routers and data centres, a malicious actor may be able to hold not just data hostage but an entire building or warehouse. Machinery can be shut off or damaged, doors can be locked or elevators halted.

The use of AI video security can provide operational efficiency and recognise new threats more quickly than humans, but if too much human control is taken out the network and the AI fails or makes an error, it could cause havoc before people step in.

Connected OT can cause real physical damage to property or people once physical systems like those on a factory floor are connected. This is a challenge not just for SK Telecom but for ICT companies and wider industry as a whole. The push towards the connected world is not without pitfalls and they are not always obvious. Companies need to be meticulous as they incorporate more OT systems into digital networks.

What competition does SK Telecom face?

SK Telecom is not alone in its ambitions to offer converged security services. Plenty of security and hardware vendors have been active in this space, trying to establish thought leadership. For example, Cisco and HP Enterprise have both put out white papers on the topic.

Meanwhile, security companies like Forcepoint in the US are already offering security convergence platforms. SK Telecom is not even the only telco trying to invest in both physical and cyber security. Telstra in Australia offers cybersecurity services to enterprise customers and also owns SNP an Australian physical security company that specialises in alarm systems.

Expanding outside of South Korea

However, SK Telecom is well prepared with its leadership in 5G, expansive AI platform and newly acquired security assets. The company has ambitions to expand its security business outside of South Korea; if it is successful it will face other managed security service provider (MSSPs) and telcos in the Asia Pacific region such as NTT and Singtel who are making headway toward security convergence as well. In the future, the security conversation will no longer be about digital or physical but they will be one and the same.

SK Telecom’s strongest asset remains its network. A global leader in mobile networking, the company has a strong angle for security; secure the networks and you secure everything that is connected. The company has already launched 5G, which offers greater control of who and what can connect and when. With its investments across network, security and AI, SK Telecom has a chance to be a secure 5G leader.

An extended version of this feature was initially published on Verdict, which is part of the same group as NS Tech.