ANAHEIM--Telecom service providers must move beyond the business of connecting people to pursue the business of connecting devices as a means to offer more sophisticated services, a Korean Telecom executive told listeners at the Optical Fiber Communications conference Wednesday.

This year, KT is planning to bring fiber to 1 million facilities and broadband to another 477,000 through fiber-to-the-curb. But it is also driving aggressively to connect devices, 17 billion of which will enjoy connectivity by 2012. For example, about a third of the movie theaters in Korea show movies delivered over broadband from KT’s data centers.

“It’s a game to connect things—any things,” said Lee Sanghoon, KT’s senior executive vice president, describing the business telecom service providers should be in now.

For example, rapid declines in the cost of flat panel screen devices make them ripe for use in new connection businesses. The display screens that KT bought for about $3,000 last year cost less than $2,000 today, Sanghoon said.

Sanghoon imagines advertising panels in the subway and at the airport, menu screens in fast food restaurants and small screens on supermarket carts, all wired to allow much more dynamic flexibility in the messages they display. KT already sells displays to high-end apartment buildings as video bulletin boards for announcements in the lobby; KT sells ads to Lexus and BMW on the screen.

KT charges customers about $50 per month for use of the display and asks for 2% to 5% of the display time for advertising. But it divides the accrued advertising revenue three ways: a third goes to KT, a third goes to the local agent who finds advertisers and the remaining third goes back to the customer (the location owner), in cash. This kickback helps encourage the location owners to install the displays.

“Just selling broadband and leased lines, that stage is over,” Sanghoon said. “You’re not selling Lego blocks. The business we’re aiming for is to try to provide solutions tailored to customers’ needs.”

“The biggest bottleneck is not the technology, not the solutions,” he said. “It’s the people and the culture.”