Korea to undergo mobile revolution in 2012

By Kim Tae-gyu

The country’s mobile communications industry is expected to face a set of revolutionary changes in 2012 and the beneficiaries will be end customers as they involve far cheaper service charges.

The Korea Communications Commission (KCC) reviewed applications late last week for the nation’s fourth wireless carrier to compete with SK Telecom, KT and LG Uplus with the aim of making a selection by early December.

A local consortium has already submitted a tender for a license, while another consortium involving Hyundai Group is poised to do so before the Nov. 18 deadline.

Market observers point out that the newcomer would ignite a competition to slash service charges because it does not have to build a new network. Instead, it will take advantage of existing ones.

``The fourth operator will have no choice but to cut prices because it can’t compete with established players through brand image or service quality,’’ Woori Investment & Securities analyst Stan Jung said.

Controversy continues concerning charges for mobile telephony services and some clients and civic groups grumble that telecom carriers are fattening their bottom lines from overly high bills.

They put their fingers on the oligopoly of the industry as the country has allowed three-way control since the early 2000s when two firms were taken over by SK Telecom and KT.

The complaints prompted the KCC, the telecom regulator, to introduce more rivalry within the domestic market by allowing a new operator.

Other good news from the perspective of end users is a new system, which enables telephone service subscribers to select devices on their own. The KCC is thinking of phasing in the scheme next May.

Until now, Korea has adopted a closed-standard policy under which handset users were obliged to select mobile phone models offered by specific carriers. But the new open-standard system will allow people to pick the devices themselves and allow them to change service providers when they wish.

As a result, a person does not have to buy a new handset after losing one ― they can simply use second-hand ones. They can also bring a model launched only overseas onto market here.

``It will revolutionize the way cellular phones are locally distributed,’’ a KCC official said.

Most experts concur.

``Currently, only mobile operators sell handsets. But from next year, handset makers, discount chains and online shopping malls will start,’’ said a Seoul analyst who asked not to be named.

``We will have more transparency in handset prices, which are currently obscured by so many subsidies from cell phone producers and wireless operators. In a nutshell, more competition will lower prices.’’