[Insight & Opinion] The Solution to Communication Cost Burdens Lies in Industry Restructuring, Not a Fourth Carrier

Published 21 Jul.2023 11:29(KST)

The government has once again proposed establishing a fourth mobile carrier, claiming it will break the monopoly structure, in response to pressure from civic groups and politicians who argue that communication costs are too burdensome for ordinary citizens. The idea that adding more carriers will promote competition and lower prices is overly simplistic and seems disconnected from reality. Before the current structure of three major carriers was established, there were already five competing companies, but two (Hansol Telecom and Shinsegi Telecom) were pushed out and merged due to competition. This shows that the number of carriers is not the core issue.

A new carrier cannot gain an advantage over existing carriers that have built expertise over more than 30 years. There is even suspicion that forces seeking to profit from company establishment are influencing this move. In most countries with larger territories and populations than ours?such as the United States, Japan, the United Kingdom, France, and China?there are no more than three nationwide carriers. To solve the problem, efforts should focus not on increasing the number of carriers but on transforming the telecommunications environment through innovative restructuring.

Although it is said that carriers form cartels, it seems that regulatory authorities and carriers are somewhat colluding. Communication fees are controlled by regulators. To ensure fair competition, the top carrier requires a license, while mid-tier carriers only need to register. Prices are thus somewhat manipulated behind the scenes. It is unfair to blame carriers unilaterally regarding pricing. The "Dan-Tong Law," which mandates equal subsidies for everyone, ended up enriching only the carriers. Prices can be adjusted based on factors such as rental fees for sales locations, labor costs, and the scale of the carrier’s sales, so the idea that prices must be the same everywhere at all times to be fair was unrealistic.

Instead of increasing carriers that cannot be competitive, it is necessary to creatively and rationally restructure the telecommunications industry itself. Lessons can be drawn from other countries’ examples. One idea is to separate the core wired network and operate it as a wholesale business accessible to all carriers and local governments. This would turn it into a public utility under regulatory control and supervision without competition. In the early 2000s, the UK broke its monopoly by separating BT’s wired core network into a wholesale business unit. This approach could help discover various business models beyond just a fourth mobile carrier.

Another idea is to create regional carriers centered in several major cities. This would allow providing affordable services to groups that do not need to move to other cities. When moving to another city, users could purchase short-term USIM cards from vending machines, similar to roaming.

Our mobile communication services are considered backward because the service model is limited to individuals. Services begin when individuals sign simple contracts called subscriptions. Large companies with tens of thousands of employees cannot enter into enterprise-to-enterprise contracts with carriers. Leading countries allow contracts based on usage period, device replacement cycles, and data usage, often spanning 10 years. Customized package contracts tailored to corporate users’ needs are possible. Global multinational companies worldwide want such contracts, but they are impossible in Korea.

Rather than establishing an unsustainable fourth mobile carrier, it is far more efficient to develop creative and diverse service models that can reduce communication fees. To become a telecommunications advanced country, it is not technology but the advancement of telecommunications service protocols that is essential.