EDITORIAL from the Korea Times on Aug. 12)

Expensive mobile rates: Telecom firms under pressure to lower charges

More than nine out of 10 South Koreans are using cell phones in this country that
boasts of its information and telecommunication prowess. Now, more and more
handset users are complaining about mobile phone service charges that show little
sign of going down as they have in many other countries. They have good reason to
be angry about higher phone bills as South Korea is seen as the most expensive
country in terms of mobile charges.
The Korea Consumer Agency (KCA) said in a report in late July that Koreans paid
the most among wireless users in 15 countries, including the United States,
Britain, France and Singapore, last year. On a purchasing power parity (PPP)
basis, Koreans spent $0.144 per minute for voice rates, compared with Britons,
who came in second at $0.125 per minute. French mobile users paid $0.120 per
minute and Austrians $0.118 per minute.
According to the KCA report, SK Telecom, the nation's largest mobile carrier with
more than a 50-percent market share, was rated as the third most expensive
service provider in the world with its voice charges standing at $0.145. Japan's
NTT DoCoMo topped the list, followed by the Netherlands' KPN Mobile. Of course,
there arose some problems with simply comparing South Korea's level of phone
rates with those of other countries. But local telecom operators need to admit
that their charges are relatively higher than those of their counterparts in
other nations.
Mobile rates have continued to fall in many countries around the world over the
past several years. It is natural for cell phone service providers to lower their
charges since they recover their early investment. But only South Korea has
recorded an increase in its mobile phone charges despite its firms having much
room to cut down the rates. Why has such a thing taken place here?
The answer is simple. Because domestic telecom firms have rushed to spend large
sums of their proceeds on the provision of cash rewards or free handsets to new
clients who switch from one company to another. That is, SKT and two other
providers ??? KT and LG Telecom ??? have been in a fierce competition to increase
their subscribers without making any efforts to slash their charges. The three
firms spent a combined total of 2 trillion won in marketing costs in the second
quarter of this year. SKT alone spent 948 billion won, one-fourth of its revenue,
on providing cash rewards or free phones to new subscribers.
According to the National Statistical Office, each household spent an average
131,500 won on telecommunication charges in 2008, up from 124,700 won in 2003.
Telecommunication bills accounted for 5.6 percent of Korean household
expenditures, much higher than the 2.45-percent average of the member states of
the Organization for Economic Cooperation and Development (OECD). The local
mobile operators claimed that the higher expenditure was due to Koreans'
overspending on cell phone use.
It is wrong for the companies to try to justify their higher charges. It is time
for them to bring their rates down in a move to ease the financial burden on
consumers. Telecom regulators should also be required to make efforts to make the
companies provide better services at reasonable prices. And President Lee
Myung-bak should try to keep his promise to cut mobile rates by 20 percent.
(END)