The South Korean government and the nation’s leading telecom company, SK Telecom, are having trouble seeing eye-to-eye on the mandate to reduce the cost of phone bills.
SEOUL, Nov. 9 (Korea Bizwire) – The South Korean government and the nation’s leading telecom company, SK Telecom, are having trouble seeing eye-to-eye on the mandate to reduce the cost of phone bills.
On November 8, the two sides concluded negotiations over wholesale prices of mobile virtual network operators (MVNO) – low-cost mobile service providers.
The wholesale prices refer to the costs associated with MNVOs “renting” networks from the three wireless carriers (SKT, KT, LG U Plus). The haggling over how much or how little to pay is a yearly occurrence.
The outcome was somewhat disappointing for the Ministry of Science and ICT, which represented government interests throughout the negotiations. The government had aimed to whittle down wholesale prices of main LTE monthly phone plans by 10 percent compared to the year before (under conditions of revenue sharing agreement), but the final figure was 7.2 percent.
When the news broke, the MVNO industry was crestfallen, with statements like “Business will become extremely difficult going forward” being bandied about.
A spokesperson for the Ministry of Science and ICT explained that though the ministry “understands the company’s side of things”, its mission going forward has not changed.
SKT is refusing to back down on the topic of a “universal phone plan” that is being pushed hard by the government. In a conference call on November 6, the company made its position clear by saying, “In regards to the possible creation of a universal phone plan, what this entails is the government deciding civilians’ phone bills, which to a telecom company is difficult to agree to.”
The universal phone plan, if realized, would charge users around 20,000 won per month while guaranteeing a greater number of minutes and data then the most modestly priced monthly phone plan currently in the market. The government has tapped SKT to lead the rollout of the initiative next year, and it defends the necessity of the plan by arguing its implementation would discourage discrimination against customers in a time when prices of phone plans are steadily rising.
SKT has refused to entertain another suggestion by the government to offer a 11,000 won discount to basic pension recipients at or above the age of 65. The Ministry of Science and ICT had previously revealed its intentions to pass the notion into law, but SKT was averse to the possibility, stating, “As the number of seniors grows, the losses will mount”.
The government, however, remains undeterred. A spokesperson for the Ministry of Science and ICT explained that though the ministry “understands the company’s side of things”, its mission going forward has not changed.
S.B.W. (sbw266@koreabizwire.com)
