KISDI Draft Completed... Follow-up Work
Possibility of New Entrants in Financial Sector... Gathering Opinions from Business Operators
The Korea Communications Commission (KCC) is considering including financial sector-related content in the upcoming guidelines for gift promotions by MVNOs, scheduled for release at the end of September. The KCC plans to start gathering opinions from operators.
On the 10th, a KCC official stated that they are preparing to release the MVNO gift promotion guidelines (Guidelines for the Sound Development of the MVNO Market) by the end of September. The KCC also announced this plan through its 2023 work agenda.
Last year, the KCC formed a research team to begin legal reviews for creating the MVNO gift promotion guidelines. The Korea Information Society Development Institute (KISDI) completed a draft of the guidelines, which is currently being refined. A KCC official said, "KISDI created the draft as a research project, and we are now revising it to reflect current market conditions and operator feedback."
According to the Ministry of Science and ICT’s wireless communication service subscription status, as of the end of February, the number of MVNO subscribers reached 13.35 million. As market competition intensifies, the value of gifts offered to attract subscribers has also increased. Gifts worth over 100,000 KRW have appeared multiple times, prompting the KCC to verbally warn operators to refrain from providing gifts exceeding 30,000 KRW.
Unlike mobile network operators (MNOs) who can lock in subscribers with 24-month contracts, MVNO plans have no way to retain subscribers. Even if consumers chase high-value gifts and switch numbers every few months, this cannot be prevented. The resulting costs fall entirely on the MVNO operators. Amid this extreme cutthroat competition, a consensus on the need for guidelines has formed among operators.
With new MVNO entrants from the financial sector expected to enter the market, related content is also likely to be included in the guidelines. The Financial Services Commission will hold a regular meeting on the 12th to discuss the approval of KB Live M as an official service. The MVNO industry believes KB Live M is highly likely to receive approval. Once KB Live M passes the gate, other banks are expected to follow suit. Toss has acquired an existing MVNO operator to launch the "Toss Mobile" service, and Shinhan Bank and Hana Bank have introduced MVNO partnership plans, reflecting growing interest from the financial sector in the MVNO market.
The MVNO industry is concerned that the entry of financially backed players could lead to an expansion of cutthroat competitive marketing. In particular, if deposit or loan interest rate benefits are offered, the impact on the market is expected to be significant. The Korea Mobile Distribution Association (KMDA) even issued a statement calling for regulations on financial sector MVNO businesses.
A KCC official said, "We expect MVNO operators to provide various opinions regarding potential problems arising from the entry of financial capital," adding, "A consensus-building process will be necessary."
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