Korean companies steal steam from major telcos

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The month of September sees Korea celebrating Chuseok – a harvest festival where locals go back to their hometowns and celebrate by indulging in a feast of traditional Korean food.
With plans in the pipeline to rewrite Korean laws governing telecommunications, however, this year Chuseok may not be the only ‘feast’ in Korea.
As early as September 23^rd, new Korean regulations will be in place to theoretically enable absolutely anyone to set up a mobile telephony service. Companies will be able set up as mobile virtual network operators (MNVO), by nibbling away on the networks of telcos such as SK telecom and KT.
For the time being only cable television operators and financial service providers seem to have RSVP’d to this slightly less traditional feast, salivating and rubbing their hands together with glee at the prospect.
The Korean telecom market is currently dominated by SK telecom, KT and LG telecom, but the new regulations promise to add fuel to the fires of competition, something the traditional telcos have already expressed some displeasure at.
To add insult to injury the RSVP comes with conditions, and the potential MNVOs will only bite if the price is right, making this more of a Christmas dinner family feud than a jubilant banquet.
SK has already vociferously declared that wholesale minutes sold to the future MNVOs should not drop to more than 30% less than the existing retail price.
However the prospective MVNOs are after a 50 to 60% percent reduction, claiming that such prices are necessary to make their business possible.
In an attempt to aggressively mark their territory, SK and KT have also proclaimed that the MVNOs should direct their attention to the sale of data services instead. Enhancing the user experience for smartphones and staying well clear of conventional telephony – because that’s their bag.
The Telco’s and the MVNOs will, however, have to wait till next month for the Korea Communications Commission (KCC) to lay down the pricing guidelines and standards. Until then it will be unclear as to how these new regulations will impact the industry.
Maybe it’s about time that the main telcos get into the holiday spirit of the harvest month, unwind and generously let the industry expand, providing a low cost option to customers and a new profit channel for other companies. After all, as you sow you shall reap.