'Circuit breaker' system eyed for telecom firms
Korea Communications Commission Chairman Choi Sung-joon, second from left, with SK Telecom CEO Ha Sung-min, left, KT Chairman Hwang Chang-gyu, third from left, and LG Uplus Vice Chairman Lee Sang-chul during a meeting at the Palace Hotel, southern Seoul, Wednesday. / Yonhap
By Kim Yoo-chul
The country’s top telecom regulator said Wednesday a “circuit breaker” system will be introduced next month to stop mobile carriers from offering too much subsidy.
“I’ve reached a consensus with major mobile carriers on introducing the system,” Korea Communications Commission (KCC) Chairman Choi Sung-joon told reporters after a meeting with CEOs of SK Telecom, KT and LG Uplus in the Palace Hotel, southern Seoul.
The circuit breaker is a restriction which is being used in the stock market to lower volatility when stock prices go up or down too fast.
The local telecom market has huge volatility as mobile carriers have been consistent in launching cash-burning promotional campaigns to steal customers from rivals by providing heavy illegal subsidies.
Under the new system, the KCC will stop the firms from attracting new customers if they provide too much subsidy.
The KCC chairman said SK Telecom CEO Ha Sung-Min, KT Chairman and CEO Hwang Chang-gyu and LG Uplus Vice Chairman and CEO Lee Sang-chul agreed on the new system. “The meeting was very constructive. Follow-up measures will be coming,” said Choi.
LG CEO Lee said the smallest local carrier will try hard to stabilize the local telecom market and to improve service to its customers.
“Carriers are always getting in trouble as they differ over values in services and customers. However, we should stabilize the local market,” said the LG CEO.
Unlike Lee, KT chairman Hwang remained tight-lipped about key pending issues the company faces. KT is restructuring its business units and human resources heavily, to save it from a total collapse.
At a luncheon meeting with reporters after the meeting, the KCC chairman vowed to normalize the market.
“It doesn’t make sense that mobile carriers are trying hard to up shares rather than investing in research and development (R&D),” the chairman stressed.
Choi said the government will impose “heavy penalties” to carriers if they are found to have continued providing illegal subsidies.
“The KCC will take every measure that we can do to normalize the market,” according to the chairman.
The Ministry of Science, ICT and Future Planning (MSIP) recently imposed a complete sales ban to all three operators on a rotational basis. The move was aimed at cooling down the market, where 70 percent of consumers own smartphones, and ensuring a level playing field.