KB Live M Official Approval Imminent... Growing Concerns in the Alttel Phone Industry

"Regulation Needed on Wholesale Price Below Rates and Market Share"

KB Kookmin Bank's budget phone service KB Live M is causing tension in the budget phone industry as it approaches formal approval. The financial sector is accelerating customer acquisition while checking the market entry of new players.

The Financial Services Commission will hold a regular meeting on the 12th to discuss the agenda of officially approving KB Live M as a formal service. Earlier, on the 4th, the Innovation Finance Review Committee under the Financial Services Commission resolved at the plenary session to designate budget phones as ancillary banking services.

KB Live M is facing the expiration of the budget phone regulatory sandbox business special case period on the 16th. Although the final hurdle remains, since it passed the Innovation Committee smoothly, the telecommunications industry highly anticipates the possibility of final approval. Once Live M receives formal approval, other banks are expected to enter the market soon after. Toss has already started a budget phone business under the name 'Toss Mobile.' Shinhan Bank and Hana Bank have also shown interest in the market by launching budget phone partnership plans.

From the government and consumer perspective, there are significant advantages when the financial sector enters the budget phone market. The government introduced budget phones to alleviate the monopoly of the three major telecom companies, but subsidiaries of these three companies still dominate the budget phone market. If financially strong and competitive financial sector players enter, market competition will intensify, which is expected to reduce household telecommunications expenses.

However, there is strong opposition mainly from small and medium budget phone operators. Financial sector players are more interested in using budget phones to sell financial products and secure customer big data to enhance their core business competitiveness rather than making profits from budget phones like existing telecom operators. They also possess enormous capital. Even if they incur slight losses from budget phone sales, they may sell plans below wholesale prices or engage in excessive prize competitions to support their main business. In fact, KB Live M drew criticism from the budget phone industry last year by selling plans cheaper than the wholesale price (approximately 33,000 KRW cost), such as the Youth Hope LTE 11GB+ plan.

The budget phone industry argues that if financial sector players enter the market, regulations should be established to prohibit selling plans below wholesale prices and limit market share, similar to the rules applied to subsidiaries of the three major telecom companies. Since December last year, mainly small and medium operators have held five meetings with the Financial Services Commission to convey their position. The Korea Mobile Distribution Association (KMDA) recently issued a statement advocating the need for such regulatory measures. The industry expects that financial sector budget phones will likely face restrictions on selling plans below wholesale prices.

As the financial sector's market entry is anticipated, existing operators are accelerating customer acquisition. SK Telecom established an MVNO (budget phone) sales team to support budget phone operators using the SKT network. KT launched a partnership card to provide benefits to budget phone customers, and KT M Mobile started the 'Daydeuk' promotion, offering up to 150GB of additional data monthly for two years. LG Uplus subsidiary Medialog is running the 'Data Freedom' promotion, providing an additional 50GB or 150GB of data monthly for 25 months.