Major Conglomerate Subsidiaries' MVNO Market Share Capped at 60% Passes Science and ICT Committee Subcommittee

On the 26th, the National Assembly Science, ICT, Broadcasting and Communications Committee's Subcommittee on Bill Review convened
Assemblyman Kim Hyun's 'Partial Amendment to the Telecommunications Business Act' Passed

A bill limiting the market share of subsidiaries of mobile carriers and large conglomerates in the budget phone market to 60% has passed the Subcommittee on Bill Examination of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee.

Yonhap News

According to the National Assembly on the 26th, the 'Partial Amendment to the Telecommunications Business Act' proposed by Representative Kim Hyun was passed at the Subcommittee on Information and Communications Broadcasting Bill Examination of the Science, Technology, Information and Broadcasting and Communications Committee held that day. The core of the bill is to limit the market share of subsidiaries of mobile carriers and large conglomerates in the budget phone market to 60%. It also includes provisions to restrict the number of large conglomerate-affiliated budget phone operators according to presidential decree.

Representative Kim cited examples such as the market share held by mobile carrier subsidiaries being about half and the business entry of commercial banks like KB Kookmin Bank. He explained the reason for proposing the bill, saying, "To guarantee the survival rights of small and medium budget phone operators, it is necessary to limit the excessive influence of large conglomerate budget phones and especially to prevent mobile carriers from controlling the budget phone market through subsidiaries as a roundabout means."

However, there are concerns that consumer benefits may shrink. A telecommunications industry official said, "If the market share limit makes it difficult for large conglomerates to acquire additional customers, consumers' choices will be reduced," and questioned, "Although the bill was proposed to support small and medium budget phone companies, shouldn't revitalizing the budget phone market by using large conglomerate services be the priority?"

The bill proposed by People Power Party Representative Shin Sung-beom, which includes the government’s prior verification of wholesale prices calculated by wholesale providers, was postponed as ruling party members opposed to the amendment to the Broadcasting and Communications Commission Establishment Act left the session, causing a lack of quorum. Shin’s bill also includes limiting the market share of mobile carrier subsidiaries, excluding large conglomerate affiliates, to 50% or less in the budget phone market.

Wholesale prices are the fees budget phone operators pay to rent the network from telecommunications companies. The government has introduced prior regulation of wholesale prices with a sunset clause to protect budget phone operators with weak bargaining power. However, due to concerns that prior regulation fosters dependent small operators, the system will switch to post-review from March 30 next year.

The budget phone industry holds the position that it is unreasonable for budget phone companies to negotiate wholesale prices with mobile carriers. An industry official said, "Prior regulation should be reinstated," adding, "Budget phone operators have low bargaining power, so it will be difficult to lower fees."

On the other hand, the opposition views Representative Shin’s bill negatively, saying it is a rollback to the previous system without even implementing post-regulation of wholesale prices.