South Korea’s government plans to issue a license to a fourth mobile operator by the end of the year as a means to introduce more competition.
The Ministry of Science, ICT and Future Planning (MSIP) has been pushing for the three mobile players to offer more competitive pricing and said it will soon introduce incentives to pave the way a fourth operator, the Korea Times reported.
The ministry has long discussed the need for an additional operator to bring more competition to the market and will now move ahead and accept applications for spectrum bids and business licences.
Over the past year the regulator has phased out lucrative activation fees, lowered interconnect rates and set limits on handset subsidies in an effort to reduce household telecoms expenses.
The Times quoted a ministry official as saying: “While existing mobile carriers turn their income sources to lending telecom network infrastructure, budget mobile phone services providers may develop their business models in advertisements from content applications. This will ultimately reduce the telecom expenses of ordinary customers.”
MSIP noted that it will likely adopt “European-style” support policies, giving the newcomer benefits in roaming, spectrum bidding and spectrum rental fees, the Times said.
Since a fourth operator will not start with a nationwide network, it will need to be able to rent capacity from or roam on the other operators’ networks.
CJ Hellovision, T-Broad and Hyundai HCN are said to be considering making a bid, according to the Times, but the estimated KRW1 trillion ($901 million) to get operations off the ground could be a barrier to many potential applicants.
A fourth operator could reduce households’ telecoms expenses to some extent, an industry source told the Times, “but fiercer competition in the market may undermine investment sentiment for future networks and the Internet of Things technologies”.
The country’s largest operator, SK Telecom, has a 50 per cent market share and almost half of its subscribers have 4G connections.