Korean operators divided over changes in tariff rules

Korean operators divided over changes in tariff rules

02 DEC 2014

South Korea’s mobile operators are taking widely different stances on the possibility that the country’s rules for setting mobile tariffs could be amended or scrapped.

The ICT Ministry said in October it would examine how the tariff policy rules are working, fuelling speculation that the regulations would be eased or dropped, the Korea Times said.

The regulations were introduced in 1991 and required operators to obtain approval from the government before introducing new tariffs. In 2010 the rules were revised, allowing the market leader to only report a price cut to the government and not have to wait for approval.

SK Telecom, the market leader with 49 per cent share of mobile connections, reportedly supports the regulations being phased out while the number 2 and 3 players oppose any changes, as they insist the tariff rules are still needed for them to compete effectively.

LG Uplus, with a 19 per cent market share, said in a statement last month that a policy “to accelerate competition needs to be enhanced instead of abolishing the regulation to reduce the household telecom expenses”.

The ministry is reviewing how any change will impact consumers and is expected to make a decision within the next few weeks.

Opposition lawmakers have stated that the regulation has only helped the market leaders and not encouraged fair competition, the Times reported.

Meanwhile, both KT and LG Uplus have been hit with heavy fines by the Fair Trade Commission (FTC) for unfairly reducing prices of their corporate messaging services.

LG Uplus was fined KRW6.2 billion ($5.46 million) while KT has to pay a KRW4.3 billion fine. The penalties, however, are preliminary and will be adjusted after the FTC figures out the actual related sales, Yonhap News Agency reported.

The corporate messaging sector, dominated by smaller players back in 2006, is now 71 per cent controlled by KT and LG Uplus, which the FTC said have abused their market position to excessively lower prices and stifle competition.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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