“The claims of telecom companies that they need basic charges in order to maintain and repair their network infrastructure pale in comparison to trillions of won in profits. I will scrap basic charges to share profits with marginalized members of society like elders,” Moon said. (Image: Yonhap)
SEOUL, May 12 (Korea Bizwire) – As Moon Jae-in was sworn into office as the 19th president of South Korea earlier this week, a pledge made during his campaign to scrap what is widely known as minimum phone bill charges has come back into the spotlight, a policy many voters viewed favorably amid a record high youth unemployment rate and the rising cost of living in the country.
While South Korean mobile phone users continue to cheer on the newly elected president in support of a regulation proposal that could see South Koreans save up to 11,000 won every month, mobile providers, whose minimum charges have been a financial bonanza, are now scrambling to prepare for possible tougher financial regulations that could see their profits slashed by up to a total of 7 trillion won, putting telecom companies on a collision course with the incoming president.
Major telecom providers such as SK Telecom, LG Uplus and KT Corporation argue that the ‘basic fee’ that all customers pay is necessary in order for them to invest in and maintain their network infrastructure.
Moon slammed the claim in a speech to the press last month, saying that basic charges were originally intended to help telecom companies build network infrastructure, but now that enough capital investment has been provided, that is no longer the case.
“The claims of telecom companies that they need basic charges in order to maintain and repair their network infrastructure pale in comparison to trillions of won in profits they make. I will scrap basic charges to share profits with marginalized members of society like elders,” Moon said.
Despite the prospects of the new administration possibly heading for a clash with the telecom industry, public support for Moon’s promise to scrap minimum charges is continuing to grow, with over three in ten people calling for an end to the so-called minimum charges, according to a report released last month by the Green Consumer Network Korea.
The report also revealed seven in ten people felt little to no change in their phone bills during previous administrations, despite promises to slash phone bills, with 34 percent calling to put an end to the minimum charges once and for all, while over half the respondents said their high phone bills were financially burdensome, more so than the price of the phone itself.
Major telecom providers such as SK Telecom, LG Uplus and KT Corporation argue that the ‘basic fee’ that all customers pay is necessary in order for them to invest in and maintain their network infrastructure. (Image: KT)
Some raise questions, however, as to how Moon will deliver on his promises, as the government can’t legally force private telecom providers to give up their profits, nor can it enforce the scrapping of a fee on private enterprises unilaterally.
Others call for market deregulation to create competition that might force major network providers to lower their service charges in fear of losing customers, without a sudden drop in profits which could leave an adverse impact on their investment capability.
During the presidential campaign, Moon revealed a series of plans including one to scrap minimum charges in South Korea and create a roaming-free zone with China and Japan, and another to cover more areas with WiFi, ultimately making the whole of South Korea a free WiFi zone.
Similar pledges were made in previous election campaigns by Moon’s predecessors, with the Lee Myung-bak administration promising to slash phone bills by 20 percent, while the government under now imprisoned former president Park Geun-hye sought to do away with membership fees.
Hyunsu Yim (hyunsu@koreabizwire.com)
