Yoon Young-chan "KB Live M Threatens MVNO Market Backed by Parent Company's Capital"

Yoon Young-chan, Member of the Democratic Party of Korea. Photo by Yoon Young-chan's Office

[Asia Economy Reporter Oh Su-yeon] Yoon Young-chan, a member of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee from the Democratic Party of Korea, stated on the 24th that KB Live M is threatening fair competition in the MVNO market by leveraging the massive capital of its parent company. He emphasized, "It is urgent to prepare government-level measures for healthy market development and coexistence among operators."

KB Live M has been operating its MVNO business since October 2019, after receiving a special exemption from the Financial Services Commission in April 2019 to engage in non-financial business. Over the past two years, its subscribers have increased sixfold, rapidly growing to a total of 300,000 subscribers as of June this year.

However, during this process, Yoon pointed out that KB Live M disrupted the MVNO market by conducting loss-leading marketing to rapidly expand its business based on the overwhelming capital power accumulated by its parent company (KB Kookmin Bank) through interest rate spreads. The business model involves undertaking low-price marketing that incurs losses to secure customer data in the MVNO market, with the losses covered by the parent company's interest income.

KB Live M provided cash gifts of up to 220,000 KRW through partnership sales immediately after the iPhone 14 launch last October. Additionally, it led a cutthroat competition beyond typical discount benefits by launching below-cost plans that incur losses of up to 260,000 KRW per line due to excessive fee promotions, Yoon criticized. Last year, during the National Assembly’s Science and ICT Committee audit, it was pointed out that KB Live M violated the Korea Communications Commission guidelines and received administrative recommendations.

While KB Live M’s low-price marketing temporarily reduces user burdens, it is highly likely to drive out small and medium-sized operators in the long term, making the MVNO market dominated by large corporations. Many small and medium MVNO operators are reportedly at risk of being pushed out of the market due to the low-price marketing backed by the financial power of large corporations.

Yoon said, "To fundamentally prevent large corporations from dominating the MVNO market centered on small and medium operators, strong registration conditions are applied when subsidiaries affiliated with telecom companies enter the MVNO market," adding, "For fair competition and healthy development of the telecommunications industry, the same standards should be applied when large corporations, including those in the financial sector, enter the MVNO market."

He also pointed out, "Institutional improvements such as accounting separation are necessary to prevent excessive financial profits from being used for sales and marketing expenses," and stressed, "The government should establish response measures before the temporary MVNO business permit expires in April next year."

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