Mobile Phone Operators Pressed to Cut Rates
By Kim Yoo-chul
Staff Reporter
Telecom carriers are under growing pressure to cut rates following an OECD report that Korea is one of the most expensive countries in which to use cell phones.
Korea Communications Commission (KCC) Chairman Choi See-joong has urged the operators to trim rates to ease the burden on subscribers.
His remark is in line with President Lee Myung-bak 's campaign pledge to cut mobile rates by 20 percent.
The prodding is angering the service providers, with the loudest complaints coming from SK Telecom, which controls more than 50 percent of the market.
The company claims that government interference could have a negative effect on competitiveness in Korea's cut-throat telecommunications industry, as well as causing it to sustain a loss in profitability.
SK Telecom questioned whether or not it was being singled out by the government.
Kwak Seung-joon, chief of the Presidential Council on Future and Vision, recently used the words ``monopoly'' and ``oligopoly'' to describe the state of competition in the wireless market.
The KCC is considering a variety of ways of forcing rate reductions, including banning handset subsidies to promote cheaper voice rates; expanding prepaid plans; and also introducing mobile virtual network operators (MVNOs), where non-telecom companies borrow the networks of mobile-phone carriers to provide their own wireless services.
A government-forced rate cut will undoubtedly hurt SK Telecom the most.
``It is debatable whether the OECD report provides an accurate comparison of mobile rates between countries. The cut would certainly hurt the competitiveness of the country's telecom industry,'' an SK Telecom spokesman said.
KT, the No. 2 operator with a 30-percent-plus market share, and LG Telecom, the smallest of the three wireless carriers, are also feeling the pinch for rate cuts.
KT said it was considering new ways to lower its voice rates and providing more discounts for low-income consumers.
LG Telecom, on the other hand, is refusing to make any promises, saying that lower rates would equal lower investments and as a result poorer services quality.
Among OECD countries plus Hong Kong and Singapore, SK Telecom was the third most expensive behind Japan's NTT DoCoMo and the Netherlands' KPN Mobile.