Need for Regulatory Measures in Financial Sector MVNO Business... Restriction on Launching Products Below Wholesale Price

As the Financial Services Commission is discussing the formal business approval of KB Kookmin Bank's MVNO service (KB Live M), there are calls within the banking sector to regulate the launch of products priced below wholesale rates.

The Korea Mobile Distribution Association (KMDA) stated on the 29th that the Financial Services Commission needs to impose MVNO business regulatory measures on banks, including KB Kookmin Bank, similar to those applied to subsidiaries of mobile carriers.

KMDA's main argument is that conditions should be imposed to prevent the launch of products priced below wholesale rates. Previously, the Ministry of Science and ICT prohibited subsidiaries of existing carriers from launching products below wholesale prices as part of their registration conditions. KMDA commented, "KB Kookmin Bank's refusal to accept the condition banning sales of products below wholesale prices shows an intention to continue competition through predatory pricing below cost rather than innovative services. When banks, whose business is money, engage in money-driven marketing, small and medium-sized mobile distribution merchants cannot compete."

Furthermore, KMDA argued that the registration condition limiting the market share of mobile carrier subsidiaries' MVNOs to under 50% should be equally applied to the banking sector. KMDA stated, "Mobile carrier stores create jobs for about 50,000 young people and provide essential face-to-face mobile communication services to digitally vulnerable groups such as the elderly. If the ban on selling products below wholesale prices and market share regulations for financial sector MVNOs are not enforced, the mobile communication market will be encroached upon by financial sector MVNOs, leading to the collapse of mobile communication neighborhood businesses."

They added, "We agree with the noble cause of promoting MVNOs to reduce household communication expenses. If a reliable measure to prevent banks' money-driven marketing is established, we would not oppose designating the MVNO business as a subsidiary operation of banks," emphasizing their position.