Gov't drive for 4th mobile carrier challenged

Large conglomerates, budget mobile service operators remain negative

By Yoon Sung-won

The government’s drive to introduce a fourth telecom company here faces challenges amid lukewarm responses from large conglomerates and objections from budget mobile service operators.

The Ministry of Science, ICT and Future Planning has pushed ahead with the establishment of the fourth mobile carrier, following SK Telecom, KT and LG Uplus, to accelerate competition in the market and to reduce household telecom expenses in the long run.

Compared with previous attempts, the ministry has been particularly active this time because it has promised diverse incentives for the new business to help its early settlement in the industry.

The ministry will hold a public hearing in Seoul on Tuesday on the issue and invite the three carriers, budget mobile service operators, telecom experts and customer group leaders.

“We will gather various opinions of the people, experts and stakeholders not only from the public hearing but also from the Internet. Based on such opinions, we will decide upon our basic plans and announce them within this month,” an official at the ministry said Monday.

However, the future of the government’s ambitious plan remains uncertain as the major conglomerates, which were expected to be likely candidates with their stable financial capabilities have not applied to run the fourth telecom business.

As of Monday, only four to five mid-sized enterprises, including Korea Mobile Internet (KMI), Internet Space Time (IST), Woori Telecom and Quantum Mobile, have been in preparation for the application, according to telecom industry sources.

KMI has already failed in six previous applications to be the fourth mobile carrier here between 2010 and 2014. IST also has failed to qualify for the business twice before.

Woori Telecom has recently been established by small businesses nationwide. It held a business fair on June 1 and promised it will roll out a rate plan that provides not only voice calls and text messages, but also data packages from about 20,000 won. This is the lower that those provided by the three existing telecom firms.

Woori Telecom said it will arrange up to 1.2 trillion won for initial capital as other applicants are known to set their initial capital at around 1 trillion won. But the amount of initial capital is also expected to hurt their effort to get approval from the ministry as the government has stressed that financial stability is the top requirement for that approval.

Large conglomerates such as CJ, Taekwang, Hyundai Department Store and Hyundai Motor Group have been considered as likely candidates for the fourth telecom business. But they have showed no sign of interest in it thus far.

Expectations are that they may not find the business attractive enough because the local telecom market has already been saturated while it requires a significant amount of investment in establishing network and conducting initial marketing programs.

“Even major telecom operators such as KT and LG Uplus are saying that they have difficulties in making profits,” a telecom industry source told The Korea Times. “Businesses may rather consider focusing on what they are doing best instead of rashly betting on a difficult option.”

A source at Hyundai Motor said, “The nationwide network establishment will cost an astronomical amount of investment. With such financial capacity, it will be much better for us to use the money for automobile technologies such as eco-friendly cars.”

Budget mobile services operators also voiced concerns over the government’s drive that the fourth telecom business will make it difficult to make profit by providing cheaper mobile services.

“The government has said it will foster the budget mobile services. But the fourth telecom business will have to attract subscribers with cheaper rate plans in the initial stage, which will further burden us to make profits and to survive,” a source from a budget mobile service industry said.