 KCC Chairman |
By Cho Mu-hyun
The Korea Communications Commission (KCC) seems to have lost near total control of regulating the volatile broadcasting and mobile market.
Many consider the nation’s telecom regulator to be in its twilight alongside the nearing end of the Lee Myung-bak administration. A drastic reshuffle is expected though all possible scenarios drawn by industry officials here predict that the commission will lose much of its jurisdiction and administrative power.
The most recent criticism came when it was revealed in a KCC filing to national assemblyman Choi Jae-cheon that the three domestic mobile phone operators spent nearly 2 trillion won in subsidies for contracts last year, with expectations looming that it will be a similar figure this year.
The carriers are unrelenting in offering huge subsidies for new handsets. Earlier last month, Samsung Electronics’ Galaxy S3 was sold at only 160,000 won ($143.85) but has an original price of 994,000 won. They stopped offering the subsidies after warnings by the regulator but started again late September following the release of new phones.
“The KCC has attempted to make various regulations to control these kinds of marketing feuds but so far has not been successful,” said an industry official at a mobile carrier who declined to be named. “Other bigger projects by the KCC in attempting to create a consumer friendly market have had nearly no effect.”
According to data from the KCC SK Telecom, KT and LG Uplus spend one-third of their marketing costs on subsidies to lure consumers.
Choi also blasted the three carriers for advertisements that were deceptive such as offering to change handsets for free when in fact they charge more for services following the swap. “This kind of policy brings confusion to customers and distorts payment methods,” he said, while expressing concern that this year’s figures will be similar.
The regulatory agency has tried numerous policies in its bid to create a healthy market ecosystem but none of them have returned the intended results.
One move was the introduction of the so-called “blacklist” which came into effect in May. Before its implementation, handsets were only sold in the mobile carriers’ retail outlets and all of them had a registered international mobile electronic identification chip embedded in them, needed for the phone to work. The new method did away with that and phones can now be sold in convenience stores and by retail chains and the manufacturers themselves. The KCC expected the expanded supply channels to bring handset prices down as they were considered too high due to the telecommunication companies’ monopoly.
The result was disastrous. Rather than the hoped-for drop in prices, the new system forced mobile carriers into fiercer competition to prevent customers shopping for phones at other stores.
In broadcasting, the situation has not improved. A recently launched and subsequently halted service by KT SkyLife that provided broadcasting by radio transmission without the use of an antenna was banned by the KCC. There was no law that regulated the said technology. Though the regulator internally judged the service to be illegal a month before it began, it only made the announcement after it was launched. This came despite KT SkyLife’s assertion that they actually received the green light for the new system. All of this further hurt the KCC’s regulatory control.
Another industry observer noted that the ultimate failure of the regulator was the unsuccessful “converge” of mobile and broadcasting services. “There are talks of dividing the sectors again in the next administration as the KCC experiment has shown that it might be better to regulate them separately,” said an industry official.
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