Small Budget Phone Operators: "Entering the Financial Sector Again? Threatening Industry Survival"

Public Opposition Voices Expressed in Statement on the 24th

Altteul Phone Square
[Image source=Yonhap News]

[Asia Economy Reporter Cha Min-young] "Allowing financial institutions with massive capital to enter the MVNO market under the name of deregulation will undoubtedly threaten the survival of small and medium-sized MVNO operators."

The Korea MVNO Association, representing small and medium-sized MVNO operators, issued a statement on the 24th opposing the entry of financial institutions into the MVNO market. This comes as calls to relax the 'separation of banking and industry principle,' which restricts financial institutions from entering other industries, have surfaced, and some signs of banks attempting to enter the MVNO market have been detected.

The concerns of small and medium-sized operators stem from past experiences. KB Kookmin Bank's MVNO brand, KB Livem, launched in 2019, became a disruptive force in the telecommunications market with its unprecedented pricing plans. According to the Korea Mobile Distribution Association (KMDA), KB Livem offers an unlimited plan with a network usage fee of 33,000 KRW at a minimum price of 22,000 KRW for two years. Small operators are helpless in the face of banks willing to incur losses.

The association stated, "We oppose the recent moves by financial institutions to enter the MVNO service market as it threatens the survival of small and medium-sized MVNO operators," and criticized, "Even if large corporations attract subscribers by launching aggressive pricing plans below wholesale prices and offering excessive gifts and incentives based on their capital strength, small and medium-sized MVNO operators have no means to compete."

The association also called for amendments and improvements to the current Telecommunications Business Act. Article 38 of the Telecommunications Business Act stipulates that the wholesale price calculation method should exclude avoidable costs such as marketing and advertising expenses from the retail price (which includes 100% operating profit) of the wholesale provider. The association argues that this method guarantees 100% operating profit for mobile carriers.

The association emphasized, "Accordingly, the wholesale price becomes excessively high, making it difficult to recover investment costs for essential facilities such as switching and transmission equipment, thereby hindering the emergence of facility-based MVNO operators," and added, "This makes it difficult to expand and advance the diversity of the MVNO business."

Furthermore, the association demanded the abolition of Article 2 of the supplementary provisions related to MVNOs in the Telecommunications Business Act. "Currently, Article 2 of the supplementary provisions sets a sunset clause that terminates the wholesale provision obligation of mobile carriers (wholesale providers) after a legally defined period, making long-term investment by MVNO operators difficult and threatening the very existence of the MVNO business," the association stated.

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