Mobile carriers protest 'excessive' gov't control

SKT, KT, LG Uplus cry out over introduction of universal fare

By Jun Ji-hye

Concerns are deepening over excessive government regulation of mobile carriers after a state committee on Friday approved a bill drawn up by the government to introduce a “universal fare plan.”

Following the approval by the Regulatory Reform Committee, the bill to revise the Telecommunications Business Act will be submitted to the National Assembly for a vote after going through deliberation at the Ministry of Government Legislation and a Cabinet meeting.

The Ministry of Science and ICT plans to submit a final bill to the Assembly by June, according to officials.

The controversial proposal is designed to impose a duty on the top mobile carrier to operate a flat-rate payment system offering 200 minutes of voice calls and 1 gigabyte of data in about the 20,000 won ($19) price range. The top mobile carrier in the nation is SK Telecom.

The bill also states that an ICT minister reexamines the top mobile carrier's universal fare plan every two years.

Once SK Telecom operates such a fare plan, its two competitors _ KT and LG Uplus _ will have no choice but to release similar fare plans.

The ICT ministry said the bill is to reduce the burden of households' mobile costs in accordance with President Moon Jae-in's core election pledges.

But those working for telecommunications companies claimed that the bill will bring about excessive government control in private firms' businesses, which will drag down their investment. They also said the three telecom companies' operating profits could be reduced by about 60 percent once the universal fare plan is introduced.

“We are concerned that the government's intervention in a private firm's decision on rate systems will decrease desire for competition in the market and future investment,” a SK official said, Monday.

The official said it was also regrettable that the firm's ongoing efforts to reduce mobile costs for households had not been considered in the committee meeting, noting that SK Telecom has lowered its charges for the vulnerable and for senior citizens.

“We expect the National Assembly to conduct a rational discussion about the bill,” he said.

Prof. Kim Do-hoon of Kyunghee University raised a question over a populist approach, claiming the government is pushing to introduce the controversial plan although there already have been alternatives for cheaper mobile costs, such as an “altteul” phone.

“The universal fare plan may be effective but can be seen as a populist policy,” he said.

The Altteul phone service is operated by a mobile virtual network operator (MVNO), offering wireless services at a lower price for consumers by renting the necessary infrastructure from telecom carriers.

The professor said the universal fare plan will result in lowering the level of services for consumers in the long term.

Altteul phone service operators are also protesting against the government move out of concerns that large companies could invade field of their business.

For their part, brokerages expect the committee's approval of the controversial fare to exert a negative impact on stock prices of telecom companies in the short term.

“There is also the possibility for the bill to be pending at the National Assembly for a long time if lawmakers hold differing opinions,” said Kim Joon-seop, an analyst from KB Securities.