Government Support Needed VS Market-Driven... Reigniting the Sunset Policy Debate on Altteul Phone

Discussion Forum on Establishing a System to Enhance Consumer Rights for Altteul Phone
Mandatory Wholesale Provision Expired Last Year... Conflicting Opinions

[Asia Economy Reporter Oh Su-yeon] As the mandatory wholesale provision for MVNOs expired last September, opinions are divided. MVNO operators argue that the sunset clause should be abolished to create a stable business environment. On the other hand, the three major telecom companies insist that MVNOs should develop self-sustainability in a free market environment without artificial government support.

On the 23rd, National Assembly members Park Wan-joo, Jeong Pil-mo, and Jang Kyung-tae, belonging to the Science, Technology, Information and Broadcasting and Communications Committee, held a forum titled "13 Years Since the Introduction of MVNOs, Institutional Establishment for Enhancing Consumer Rights - Focusing on Mandatory Wholesale Provision, Wholesale Price Calculation Methods, and Mandatory Consumer Protection Measures."

Participants are taking a commemorative photo at the '13th Anniversary of the Introduction of Altteul Phone, Institutional Settlement Discussion for Enhancing Consumer Rights' held at the National Assembly Members' Office Building on the 23rd.

It has been 13 years since MVNOs were introduced to bring changes to the telecom market structure centered on the three major MNOs and to reduce household telecom expenses. Article 38 of the Telecommunications Business Act mandates telecom companies to provide network access to MVNO operators. In this process, the government negotiates wholesale prices with SK Telecom on behalf of MVNOs. This system, first implemented in September 2010, has been operated under a sunset clause every three years. It has been extended three times and expired last September. Numerous bills proposing either the abolition of the MVNO mandatory wholesale provision sunset clause, a three-year extension, or regulations on the market share of MVNO subsidiaries of the three major telecom companies have been submitted to the National Assembly. These were discussed at the Science and ICT Committee’s second subcommittee on the 14th but failed to reach consensus among lawmakers.

The MVNO industry argues that mandatory provision should be maintained without sunset to ensure business stability and that the mandatory wholesale providers should be expanded from SK Telecom alone to all three major telecom companies. Conversely, the three major telecom companies argue that to enhance MVNO competitiveness, the mandatory wholesale provision should be abolished or the current sunset system maintained.

Professor Moon Hyung-nam of Sookmyung Women's University Graduate School of Business stated in his presentation, "MVNO rates are up to half the price of the three major telecom companies under the same conditions. Using MNO networks ensures the same quality, which is an advantage." However, he added, "Customers bear a significant burden because they must purchase unlocked phones, and there are no truly unlimited data plans. Customer support is also poor." Professor Moon noted, "The Ministry of Science and ICT has failed to reach a conclusion on policy direction, resulting in a regulatory gap. If the mandatory wholesale provision is to be extended, a revision of the Telecommunications Business Act is necessary."

Park Sang-ho, Research Director at the Public Media Research Institute, presented on "13 Years Since the Introduction of MVNOs, Directions for Creating an MVNO Ecosystem." Park said, "With the increase in bundled product subscribers, the market dominance of the three major telecom companies is transferring and user lock-in is progressing. If user lock-in worsens, it could lead to restricted competition and market inefficiency, reducing user welfare." He also suggested, "For a genuine competitive environment between MVNOs and MNOs, MVNOs need to evolve beyond voice calls, unique branding, and data communication to data services centered on content, platforms, networks, and devices. Policies should be prepared considering this."

In the subsequent comprehensive discussion, Kim Hyung-jin, chairman of the MVNO Operators Association representing the MVNO industry, said, "As Professor Moon mentioned in his presentation, MVNOs lack LTE and 5G truly unlimited data plans because the three major telecom companies do not provide wholesale access for these." He added, "We would appreciate it if the three major telecom companies could provide wholesale access promptly for the benefit of MVNO users." He also stated, "It has been confirmed that MVNOs contribute to reducing household telecom expenses, the original policy goal when the system was introduced. Now, the sunset clause should be abolished promptly so that MVNOs can continue as a normal business."

Lee Kyu-hwa, Executive Director of Business Cooperation at LG Uplus, an MNO operator, said, "Strengthening market share regulations on subsidiaries of the three major telecom companies is somewhat inconsistent with the purpose of promoting MVNO competition." He added, "Market share caps through regulation could become a barrier to new entrants. Market share regulation should be carefully considered from the perspective of promoting competition and user benefits." He concluded, "We will consider growth directions through cooperation and coexistence rather than new regulations."

Assemblyman Jeong Pil-mo said, "In principle, MVNO operators should secure self-sustainability and differentiation in a market environment free from artificial government support. However, even if left to market autonomy, we need to consider minimum protection measures for MVNO operators to prevent the three major telecom companies from abusing their dominant position. Measures to protect MVNO users are also necessary."

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