By Cho Jin-seo
Staff Reporter
Telecom companies are being bullied by the government to lower their mobile phone fees, especially for the low-income group .
SK Telecom, KTF and LG Telecom said that they have been recently talking with the Ministry of Information and Communication regarding the price of their mobile services, especially since the presidential office openly disparaged them that they should ``rationalize'' the high fees.
The three firms have been enjoying an oligopoly in the mobile phone market. The ministry has maintained a carrot and stick policy on them, by not allowing a new player to join the field and by punishing them with massive penalties from time to time. The ministry also has an indirect grip on the market as it has the right to approve the price policies proposed by the firms.
The companies said they are disgruntled with the sudden call from Cheong Wa Dae, but may not be able to ignore it.
``It's the same old election-year event,'' an LG Telecom official said. ``The ministry has said that they don't want to force the telecom firms to do so, but then Cheong Wa Dae began to speak out, probably because they are concerned about votes.
``But we are not a public company. We have to consider our shareholders' interest before following the government's instruction,'' he said.
On Tuesday, the presidential office's spokesperson Chun Ho-sun said that the government should lower the mobile fees to a rational level and should provide special offers to underprivileged people and juniors. The remark contradicted the ministry's policies, which rule out direct interventions in the price-setting process of the firms.
SK Telecom, the biggest of the three, said that it is discussing with the government about the issue but nothing has been fixed yet.
``We believe that the prices should be set by market principles,'' a spokeswoman said. ``We don't want to raise questions about helping underprovided people, but it doesn't sound good when the government says we must follow their orders.''
The three firms have enjoyed high profits in the past few years from the enclosed mobile service market. SK Telecom's operating profit amounts to about a quarter of its revenue. KTF and LG Telecom's operating profit rates are at around 10 percent.
Consumer groups have asked the firms to lower the fees and the government to open up the mobile service market so consumers can naturally benefit from free competitions between multiple carriers.
The ministry has said that it may force SK Telecom to lease its networks to others as early as next year so new players can provide mobile services without making heavy investment in facilities.