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Korea to pick 4th telecom carrier

The South Korean government said Thursday it would select a fourth telecom carrier within the year to spur competition in the saturated market that is currently dominated by three players ― SK Telecom, KT and LG Uplus.

The Ministry of Science, ICT and Future Planning announced the plan as part of its reform bill on the nation’s mobile network services.

In Korea, three companies have occupied the mobile network market over the past decade, with SK Telecom, the largest, taking up almost half the share.

The government predicted a fourth player in the market would renew competition and ultimately lower service prices.

Minister of Science, ICT and Future Planning Choi Yang-hee speaks at the government-ruling party meeting on the telecom industry at the National Assembly in Seoul on Thursday. (Yonhap)
Minister of Science, ICT and Future Planning Choi Yang-hee speaks at the government-ruling party meeting on the telecom industry at the National Assembly in Seoul on Thursday. (Yonhap)

In order to lower the entry barriers such as huge initial investments and limited frequencies, the government plans to offer the new player priority in frequency allocation and allow it to build up a nationwide network in phases, not all at once.

“A fourth player may not lower consumer prices immediately. Creating a new competitive environment is more meaningful,” said an industry source. “In the long run, we could expect prices to fall as well.”

Potential candidates are expected to undergo a tough selection process as their failure to ensure a soft landing in the market could lead to huge social costs, including consumer damages.

In order to encourage competition, the government also plans to elevate the market share of low-price service plans from the current 10 percent to 12 percent next year by offering incentives for service providers.

Another key revision is the abolishment of the 25-year-old approval system of new service plans. Under the new bill, companies will be allowed to launch their new plans without approval so that they can respond to consumer demands immediately.

The launch process that usually takes one or two months will be reduced to 15 days, during which the government reviews possible consumer harm or antitrust issues.

The ministry plans to collect public opinions in the coming weeks and will announce the final plan in June.

By Lee Ji-yoon (jylee@heraldcorp.com)
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