[Preview of Science and ICT Committee Audit③] "Have the 3 Major Telecoms Moved the Battlefield to MVNOs?" Again Under Scrutiny

[Asia Economy Reporter Seulgina Jo] Even in the budget phone market, which is on the verge of reaching the "10 million subscribers era," the concentration phenomenon of subsidiaries of the three major mobile carriers is becoming prominent, making it one of the key issues in this year's National Assembly audit in the IT and telecommunications sector. Contrary to the original intention of promoting market competition, the three major carriers have effectively shifted the battleground to budget phones by leveraging their subsidiaries.

According to industry sources on the 22nd, ahead of the National Assembly Science, Technology, Information and Communications Committee (STICC) audit starting next month, major issues in the telecommunications sector include the concentration of subsidiaries of the three major carriers in the budget phone market, the direction of 5G 28GHz promotion, and measures to prevent internet service speed degradation. In particular, the budget phone issue was also raised during last year's audit.

Recently, the budget phone + unlocked device combination has been spreading mainly among the MZ generation, who prioritize cost-effectiveness, clearly driving growth in the budget phone market. According to the Ministry of Science and ICT's wireless communication service subscriber statistics, as of the end of July, the number of subscribers was approximately 9.81 million, an increase of about 7.7% compared to December last year (9.11 million). Compared to the same period last year (7.32 million), this represents a 34% increase. This is also interpreted as a reflection of dissatisfaction with the 5G quality of the existing three major carriers.

The problem is that as the budget phone market rapidly grows, the restructuring centered on subsidiaries of the three major carriers with strong capital power is also becoming evident. Currently, there are 19 companies operating in the budget phone market, including subsidiaries of the three major carriers. However, as of March, 45.7% (2.77 million) of budget phone subscribers for mobile phone services (6.06 million) belong to subsidiaries affiliated with the three major carriers. This is a double-digit increase from about 37% at the end of 2019.

In fact, the main marketing efforts to secure subscribers in the budget phone industry are led by large companies such as U+ Altteul Mobile, KT M Mobile, KT Skylife, SK Telink?subsidiaries of the three major carriers?and KB Kookmin Bank's Liiv M. Relatively small budget phone operators with less capital and brand recognition have been pushed to the sidelines.

The Legislative Research Office pointed out in its 2021 National Assembly audit issue analysis report that "The budget phone business, which rents networks from the three major carriers to provide communication services, was introduced to promote competition in the mobile market. However, subsidiaries of the three major carriers occupy nearly half of the budget phone market, which deviates from the original purpose of the business."

However, unlike general mobile phones, the share of subsidiaries of the three major carriers in budget phone lines for Internet of Things (IoT) and Machine-to-Machine (M2M) services remains at around 8%. The Legislative Research Office suggested, "Unlike IoT services, the concentration of subscribers in subsidiaries of the three major carriers only in mobile phone services should be analyzed, and policies to prevent the expansion of subsidiary market share should be considered."

Some argue that, considering the increasing market share of subsidiaries of the three major carriers, registration conditions should be changed. Currently, the Ministry of Science and ICT limits the total number of subsidiary subscribers to "within 50% of the total budget phone subscribers."

Additionally, this year's STICC audit is expected to discuss major issues such as platform monopolies, the conflict over paid broadcasting content fees between CJ ENM and telecom companies that led to an unprecedented broadcast interruption, measures to protect internet platform users, and the establishment of AI ethics foundations triggered by the Lee Ruda incident.

This content was produced with the assistance of AI translation services.