[Initial Insight] Noise Surrounding the '5G Junggan Yogeumje' Plan

Contradicting Yoon's Pledge, It's Time for a 'Standard of Fairness'

"The Galapagos-like regulations in the telecommunications market have not ended."

This was said by a senior executive of a telecommunications company regarding the recent controversy over the '5G mid-tier plan.' He lamented that although the rate approval system introduced in 1991 was abolished after 30 years, the price-setting structure of 'regulation without regulation' still remains.

In line with the government's livelihood stabilization measures, SK Telecom reported more than five plans, including the 5G mid-tier plan, to the Ministry of Science and ICT on the 11th. The plan revealed that day was '24GB of data for 59,000 KRW per month,' one of several plans. The political circles immediately demanded that at least 30GB of data be provided at the same price. To make matters worse, with inflation rising, voices are calling for telecom companies to lower their rates. While scolding telecom companies, electricity rates were raised by 4.3% and city gas by 7%.

SKT is a business subject to the reservation notification system. The reservation notification system, implemented in December 2020, is a system where the Ministry of Science and ICT reviews whether the terms of use of a market-dominant operator harm user interests or fair competition and either approves or rejects them. However, political attacks began even before the competent ministry reviewed and gave opinions. The ruling party is pressuring the ministry by demanding 'reconsideration' even before the review starts. This is why there are criticisms of 'excessive market intervention' by the political circles.

There are also criticisms that the ruling party, which has been aligned with government policies, is acting contrary to the president's pledges. The Yoon Seok-yeol administration declared, "We will achieve private-led innovative growth through regulatory reform." KT and LG Uplus, which quickly prepared to report their plans in response to unexpected political criticism, are closely watching SKT's situation.

There is no justification to reject the new plan. The detailed criteria for rejection prepared by the Ministry of Science and ICT focus on preventing market-dominant operators from setting unreasonably high rates or excluding competitors through predatory pricing. This plan reduces user cost burdens compared to existing similar plans. There is no concern that competitors will be excluded through rates lower than wholesale prices. It is not grounds for rejection.

At the '5G Telecommunication Rate Plan Reform Consumer Rights Enhancement Forum' held on the 14th by the office of Rep. Yoon Doo-hyun of the People Power Party and the People Power Party Policy Committee, Professor Lee Seong-yeop of Korea University Graduate School of Technology Management said, "If the SKT plan does not meet the rejection criteria, the government must approve it," adding, "The approval system was abolished to strengthen autonomy, so exerting influence to make operators lower rates in the same way as before is inconsistent with the purpose of the system change."

Now, the judgment of the Ministry of Science and ICT remains. It is hard to find precedents overseas where the government enforces telecommunications rate levels. The U.S. Congress recommended the Federal Communications Commission (FCC) abolish regulations on mobile rates in 1993. In the UK, although there were regulations on landline phones, all rate regulations were abolished following the removal of price caps in 2006. Japan also abolished the rate notification system starting in 2004. The Ministry of Science and ICT must now review this based on legal grounds and fairness.