Korea to open up telecoms markets

Price fears may lead to nation's first MVNOs

Simon Burns, vnunet.com 30 Jul 2007

In a reversal of long-standing policy, South Korea's government plans to force large local telecoms firms to share their networks with smaller rivals. The move follows complaints that incumbent carriers are keeping prices artificially high.

Under the new proposals outlined by communications minister, Roh Jun-hyong, new firms may be able to establish so-called mobile virtual network operators (MVNOs), which rent bandwidth on mobile infrastructure to run their own distinct mobile voice and date networks.

Similar policies will be implemented in the fixed-line telecoms sector, which covers traditional phone networks and internet services.

Roh told local reporters that he was confident the policy would reduce telecoms charges, according to the Korea Herald.

Korea's government has hitherto tended to stage-manage competition in the country's telecoms markets. By limiting entrants to a handful of major local conglomerates, authorities have hoped to promote steady growth without cut throat price competition. The planned network-sharing regulation appears to be a partial relaxation of this policy.

However, the new rules will currently only apply to the largest incumbent carrier in each market. In addition, if that dominant carrier has less than 50 per cent market share, it will not be obliged to share its network. This has led to complaints that a carrier could deliberately hold its share slightly below 50 per cent to avoid having to follow the new rules.

While the country's fixed line telecoms are clearly dominated by former monopoly holder, Korea Telecom (KT), the mobile market is more open. The largest mobile provider, SK Telecom, has just 52 per cent of the market, according to data from the Korea Herald. SK Telecom already has overseas experience in the MVNO market, as an investor in the US MVNO, Helio.

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