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SK Telecom, the nation’s largest mobile carrier, is set to cut its service charges from September. According to one estimate, the rate cuts, which include a 1,000 won discount on the basic service charge and 50 free text messages each month, amount to an average of 28,000 won a year per customer.
The rate cuts should please consumers. But not too much. Consumer organizations and advocacy groups complain that they are too small.
A few months ago, the government claimed the three mobile carriers, whose profits were 3.6 trillion won last year, had room for service rate cuts. But the carriers balked, insisting that they could not afford the cuts because they needed to invest enormous amounts of money in next-generation telecom services.
SK Telecom’s rate cuts are anything but voluntary. The carrier is making the cuts under pressure from the state telecom regulator, the Korea Communications Commission. Barring unexpected developments, two other mobile carriers, KT and LG Uplus, will soon follow suit.
All that a mobile carrier has to do regarding rate adjustments is to report them. But the state regulator announced it agreed with SK Telecom on the rate cuts. By doing so, it virtually admitted arm twisting. It did what consumer advocacy groups, not a government agency, might do.
This is not to say that mobile service charges are reasonable. They are so high that spending on telecommunications services account for 6.1 percent of household expenditures, 2.5 times higher than the OECD average.
Even so, the state regulator was ill-advised to resort to an extralegal means of arm twisting to push SK Telecom to lower its service charges. Mobile carriers, and all private-sector business enterprises for that matter, should be left alone when they are not suspected of breaching the fair trade act by fixing prices.
What the government needs to do is encourage competition among private businesses so that they will provide goods and services at lower prices. It should stop putting undue pressure on them in pursuit of its own administrative convenience.
The rate cuts should please consumers. But not too much. Consumer organizations and advocacy groups complain that they are too small.
A few months ago, the government claimed the three mobile carriers, whose profits were 3.6 trillion won last year, had room for service rate cuts. But the carriers balked, insisting that they could not afford the cuts because they needed to invest enormous amounts of money in next-generation telecom services.
SK Telecom’s rate cuts are anything but voluntary. The carrier is making the cuts under pressure from the state telecom regulator, the Korea Communications Commission. Barring unexpected developments, two other mobile carriers, KT and LG Uplus, will soon follow suit.
All that a mobile carrier has to do regarding rate adjustments is to report them. But the state regulator announced it agreed with SK Telecom on the rate cuts. By doing so, it virtually admitted arm twisting. It did what consumer advocacy groups, not a government agency, might do.
This is not to say that mobile service charges are reasonable. They are so high that spending on telecommunications services account for 6.1 percent of household expenditures, 2.5 times higher than the OECD average.
Even so, the state regulator was ill-advised to resort to an extralegal means of arm twisting to push SK Telecom to lower its service charges. Mobile carriers, and all private-sector business enterprises for that matter, should be left alone when they are not suspected of breaching the fair trade act by fixing prices.
What the government needs to do is encourage competition among private businesses so that they will provide goods and services at lower prices. It should stop putting undue pressure on them in pursuit of its own administrative convenience.
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