Telecom firms given ultimatum over basic rates

By Yoon Sung-won

The Moon Jae-in administration is stepping up pressure on the Ministry of Science, ICT and Future Planning and telecom companies to cut household telecom expenses.

The ministry met with corporate relations executives of SK Telecom, KT and LG Uplus, Thursday, to discuss plans to meet the demand of the Moon administration’s State Affairs Planning Advisory Committee. The committee is acting as a presidential transition team.

Earlier Wednesday, it delivered an ultimatum to the ministry, demanding a plan to cut household telecom expenses by June 9.

“The presidential pledge aims at scrapping basic rates for telecom services for the underprivileged and people in the low-income bracket,” said Choi Min-hee, a member of the advisory committee’s economic division.

“We have decided to make the ministry report on how it will carry out the presidential campaign pledge on reducing household telecom expenses, which will be thoroughly reviewed by the second vice minister.”

She also hinted that the committee can directly pressure the telecom companies, saying, “We will meet with civic groups to talk about telecom fees and arrange for meetings with telecom companies if necessary.”

The People’s Solidarity for Participatory Democracy also urged the ministry to do away with the basic rates.

“President Moon promised to scrap the basic telecom rates, raising people’s expectations,” the civic group said in a statement. “The ministry should not hesitate any longer and abolish all basic telecom rates including those for 4G mobile services.”

On Tuesday, Choi strongly blamed the ministry for “not being sincere in planning how to reduce household telecom expenses.”

The ministry has remained lukewarm about the new administration’s drive to scrap basic telecom rates citing a lack of legal backing to force telecom companies to do so.

Telecom companies also counter that it will be difficult to cut the rates in such a short period of time, considering expected losses and worsened investor sentiment.

“The annual profits of the three telecom companies are expected to decrease by 7 trillion won should they stop collecting basic rates from all their subscribers,” a source from the industry said. “This is double the amount of combined operating profits of the three mobile carriers last year.”

Another telecom industry insider said, “Companies already have plans to offer discounted rates for the underprivileged such as senior citizens living alone and the handicapped. It is hard to accept that we have to scrap basic rates altogether.”

Besides SK Telecom, KT and LG Uplus, providers of budget mobile services have also expressed concern over the administration-led push to cut rates.

“We have been selling services that are cheaper than those of major mobile carriers. If they are forced to sharply cut their rates, we are likely to lose our competitive edge,” a source from a budget mobile carrier said.