By Jun Ji-hye
Telecommunications companies are protesting the government's move to introduce a “universal fare plan,” claiming it will bring about too much government intervention in their businesses and eventually harm their competitiveness.
The government is currently moving to revise the Telecommunications Business Act to introduce the controversial plan, designed to oblige 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.
Once SK Telecom releases its own universal fare plan, its two main competitors _ KT and LG Uplus _ will have no choice but to release similar fare plans. This is why the three telecom companies are all out to protest the government move.
The government said such a plan is necessary to help households lessen mobile costs, but companies said such a plan is one of the strongest regulations that could excessively infringe on private firms' rights to operate their businesses and seek profits.
Telecom firms are also claiming the universal fare plan will cause excessive losses as it would result in lowering almost all rate systems and the level of services.
This could weaken their competitive power at a time when they need to make enormous investments in fifth-generation (5G) network infrastructure to begin the world's first commercial 5G services in March 2019.
“The three telecom companies' operating profits could be reduced by about 60 percent once a universal fare plan is introduced,” a SK telecom official said.
Amid a sharp conflict of opinion on the matter, the government officials and those from SK Telecom failed to reach a consensus during an April 27 meeting of the Regulatory Reform Committee. The committee plans to hold its next meeting on May 11.
The committee is the control tower for the government's regulatory management. Once the committee approves the government's proposal for a certain regulation, the proposal goes through deliberation at the Ministry of Government Legislation and a Cabinet meeting. Then, the proposal is submitted to the National Assembly for a vote.
During the committee meeting, Lee Sang-heon, who heads SK Telecom's corporate relations strategy office, claimed the government was forcing the firm to do things it was unable to do.
“Introducing unified rate systems, such as a universal fare plan, means forcing telecom companies not to conduct marketing activities,” he said. “If the government designs a fare plan every two years, there will be no need for firms to compete with each other.”
Despite protests from the firms, the Ministry of Science and ICT said it will continue to push for introducing the universal fare plan, citing it as one of the Moon Jae-in government's core projects.
The ministry stressed there has been a growing demand from the public for reducing the burden of mobile costs.
Some observers say it seems difficult to rule out the possibility for the committee to approve the government proposal this time, as the social climate has changed especially after the Supreme Court ordered telecom companies to reveal their cost breakdowns for 2G and 3G services, April 12.