"Top 3 Telecoms Hold Majority of MVNO Market...Need to Monitor Unfair Practices"

[Asia Economy Reporter Eunju Lee] The Fair Trade Commission (FTC) stated that it is necessary to continuously monitor the unfair practices of subsidiaries of the three major telecom companies (SKT, KT, LGU+) that are solidifying their monopoly structure in the budget phone market.

On the 27th, the FTC announced the results of market analysis conducted since May in three sectors: the monopolistic industries of budget phones and automotive parts, and the emerging industry of the Internet of Things (IoT). The annual market analysis conducted by the FTC involves an in-depth examination of market conditions and systems in each sector to identify and improve competition-restricting regulations that hinder market entry or restrict business activities.

The monopoly structure in the budget phone market was analyzed to be strengthening. As of last September, among 52 budget phone operators, the market share of subsidiaries of the three major telecom companies (five companies including SK Telink, KT M Mobile, KT Skylife, LG HelloVision, and MediaLog) rapidly increased from 37.1% in 2019 to 42.4% in 2020 and 50.8% in 2021. The FTC attributed this to the relative competitiveness derived from the parent companies’ brand image transfer effect and customer service convenience. However, it noted that “continuous monitoring is necessary regarding the possibility of unfair practices by the three major telecom companies (such as device subsidies and differential treatment between subsidiaries and non-subsidiaries through customer support).”

The domestic automotive parts market is primarily formed around OEM (Original Equipment Manufacturer) production for automakers, resulting in a very high dependence on automakers. It was analyzed that parts manufacturers rarely supply parts independently to repair shops. Since 2015, the Ministry of Land, Infrastructure and Transport has introduced a certified alternative parts system that can replace OEM parts during vehicle repairs, but activation has been slow due to negative consumer perceptions.

Alternative parts are those with performance and quality identical or similar to parts shipped by automobile manufacturers, but are relatively cheaper. The FTC stated, “Expanding the use of certified alternative parts and improving consumer awareness to activate the certified alternative parts system can enhance consumer welfare.”

Regarding the IoT market, which is in the early stage of market formation, the FTC recommended improving business regulations to accelerate competition. Currently, 70.3% of the domestic IoT market consists of small-scale operators with capital less than 500 million KRW, and business-to-consumer (B2C) transactions such as smart speakers are in the early stages of market formation.

The FTC said, “Since the level of necessary regulation differs between registered telecommunications operators and notified operators (businesses in non-telecom fields such as automotive and home appliances selling products or services with incidental telecom functions), various business regulations should be further relaxed for notified operators.” For example, even if a company adds simple telecom functions to its own products and reports as a telecommunications operator, it should not be subject to the same regulations as major telecom operators or other telecommunications providers.

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