National Planning Advisory Committee to give pressure on ‘telecommunication fee cut’…”backlash balloon effect may occur
Jung Yoon Hee | yuni@ | 2017-06-08 10:12:30
Issue analysis, high level National Planning Advisory Committee… Ministry of Science, ICT and Future Planning in concern
The National Planning Advisory Committee is drawing attention to Ministry of Science, ICT and Future Planning next step as the committee increases the pressure on the telecommunication cost reduction day by day. The Ministry of Science, ICT and Future Planning called on three executives of mobile carriers to come up with countermeasures, and some are worried that the unilateral pressure on the abolition of the monetary base can bring another so called ‘balloon effect.’
According to the telecom industry on June 7, the Ministry of Science, ICT and Future Planning called executives of three main mobile carriers this afternoon and set out measures to cut telecommunication costs. Yang Hwan-jeong, Head of telecommunication policy department of the ministry said, "I thought that the National Planning Advisory Committee had reprimanded us for lacking our preparedness, and I called the executives of three mobile carriers to find a better plan.”
The National Planning Advisory Committee announced on June 6, in an emergency briefing, "We do not see the authenticity of Ministry of Science, ICT and Future Planning additions (reduction of telecommunication costs).” Earlier, the ministry reportedly expressed its disappointment on the abolition of the basic fees on May 25 and through business reports on June 1.
For now, the National Planning Advisory Committee will receive a report from the ministry on June 9, immediately after the boycott of the job report, the appointment of the deputy director of Ministry of Science, ICT and Future Planning of the telecommunication sector is expected to take place. The National Planning Advisory Committee has decided to collect opinions from experts and consumer groups.
Lee Gae-ho, head of Economy 2 of the committee said, "The new deputy minister (Kim Yong-su) is a communication specialist and we asked him to review and submit a plan to fulfill the purpose of the pledge. There is no reason to be dissatisfied with us if there is a compromise such as the abolition of 2G and 3G in the future.” He also added, “It is difficult to proceed with the discussion as it represents only the opinions of mobile carriers.”
In the industry, it is possible that Ministry of Science, ICT and Future Planning offers solution, such as △the abolition of 2G-3G subscriber base fees, △new rate plans for vulnerable groups, lowering data rates for low-income groups, △lowering handset prices by expanding used and mid-to low-end phones, △to increase competition through the launch of mobile communications, and △to spread public wi-fi. In other cases, it is estimated that they will not compromise on the base rate cut of KRW 5,000 ~ 6,000 instead of KRW 11,000.
Meanwhile, there are many criticisms that there is no sharp solution as the government does not have a legal basis to cut telecommunication costs such as the abolition of the base fee. The government is unilaterally interfering with the market. In fact, telecommunication experts criticize the abolition of the basic fee as an excessive populism. It is pointed out that the role of the government is not to reduce communication costs but to create an environment to reduce communication costs through competition.
Kim Sung-chul, a professor at Korea University, claimed, "Telecommunication costs include subsidies for handsets along with supplementary services and there are not many fees for pure telecommunication services such as base fees.” He also added, “Telecommunication cost should be cut in the mid-to long-term through market competition, and if the same context, there must be consistency.”
On the other hand, mobile carriers are careful. 2, 3G abolition of the basic fee may cause a debate on equity, and the incentive to invest in 5G (G) mobile communication will decrease. In the case of cutting down the monthly amount of KRW 11,000 per month, the operating profit will reach KRW 7 trillion a year.
Besides, cell phone sub brands and telecommunication networks, which have made price competitiveness a weapon, will also encounter direct pressure.
Concerns about the so called `balloon effect` stemming from the abolition of the basic fee are also high. In the case of the base fee removal, the mobile carrier will have to reduce subsidies to the distribution network in order to keep the profits. Also, it is pointed out that there may be another type of tariff increase, such as data rate increase and data supply reduction. Choi Min-hee, a member of the advisory committee, stated in an emergency briefing on the afternoon, "The abolition of the basic fee will be included in the 2G and 3G plans and some LTE plans. The reduction of approximately KRW 7 trillion in the case of the basic fee abolishment means that the basic fee for the whole nation is lowered by KRW 11,000.”
A telecommunication industry expert said, "Since the telecommunication costs include the terminal charge, lowering the terminal price will be a way to lower the household telecom cost. It is likely to be considered expanding the low-end phone market or offering a plan for the socially disadvantaged. He said.
By Na Yoon Jae, Jung Yoon Hee yuni@
[ copyright ⓒ The Digitaltimes ]
The National Planning Advisory Committee is drawing attention to Ministry of Science, ICT and Future Planning next step as the committee increases the pressure on the telecommunication cost reduction day by day. The Ministry of Science, ICT and Future Planning called on three executives of mobile carriers to come up with countermeasures, and some are worried that the unilateral pressure on the abolition of the monetary base can bring another so called ‘balloon effect.’
According to the telecom industry on June 7, the Ministry of Science, ICT and Future Planning called executives of three main mobile carriers this afternoon and set out measures to cut telecommunication costs. Yang Hwan-jeong, Head of telecommunication policy department of the ministry said, "I thought that the National Planning Advisory Committee had reprimanded us for lacking our preparedness, and I called the executives of three mobile carriers to find a better plan.”
The National Planning Advisory Committee announced on June 6, in an emergency briefing, "We do not see the authenticity of Ministry of Science, ICT and Future Planning additions (reduction of telecommunication costs).” Earlier, the ministry reportedly expressed its disappointment on the abolition of the basic fees on May 25 and through business reports on June 1.
For now, the National Planning Advisory Committee will receive a report from the ministry on June 9, immediately after the boycott of the job report, the appointment of the deputy director of Ministry of Science, ICT and Future Planning of the telecommunication sector is expected to take place. The National Planning Advisory Committee has decided to collect opinions from experts and consumer groups.
Lee Gae-ho, head of Economy 2 of the committee said, "The new deputy minister (Kim Yong-su) is a communication specialist and we asked him to review and submit a plan to fulfill the purpose of the pledge. There is no reason to be dissatisfied with us if there is a compromise such as the abolition of 2G and 3G in the future.” He also added, “It is difficult to proceed with the discussion as it represents only the opinions of mobile carriers.”
In the industry, it is possible that Ministry of Science, ICT and Future Planning offers solution, such as △the abolition of 2G-3G subscriber base fees, △new rate plans for vulnerable groups, lowering data rates for low-income groups, △lowering handset prices by expanding used and mid-to low-end phones, △to increase competition through the launch of mobile communications, and △to spread public wi-fi. In other cases, it is estimated that they will not compromise on the base rate cut of KRW 5,000 ~ 6,000 instead of KRW 11,000.
Meanwhile, there are many criticisms that there is no sharp solution as the government does not have a legal basis to cut telecommunication costs such as the abolition of the base fee. The government is unilaterally interfering with the market. In fact, telecommunication experts criticize the abolition of the basic fee as an excessive populism. It is pointed out that the role of the government is not to reduce communication costs but to create an environment to reduce communication costs through competition.
Kim Sung-chul, a professor at Korea University, claimed, "Telecommunication costs include subsidies for handsets along with supplementary services and there are not many fees for pure telecommunication services such as base fees.” He also added, “Telecommunication cost should be cut in the mid-to long-term through market competition, and if the same context, there must be consistency.”
On the other hand, mobile carriers are careful. 2, 3G abolition of the basic fee may cause a debate on equity, and the incentive to invest in 5G (G) mobile communication will decrease. In the case of cutting down the monthly amount of KRW 11,000 per month, the operating profit will reach KRW 7 trillion a year.
Besides, cell phone sub brands and telecommunication networks, which have made price competitiveness a weapon, will also encounter direct pressure.
Concerns about the so called `balloon effect` stemming from the abolition of the basic fee are also high. In the case of the base fee removal, the mobile carrier will have to reduce subsidies to the distribution network in order to keep the profits. Also, it is pointed out that there may be another type of tariff increase, such as data rate increase and data supply reduction. Choi Min-hee, a member of the advisory committee, stated in an emergency briefing on the afternoon, "The abolition of the basic fee will be included in the 2G and 3G plans and some LTE plans. The reduction of approximately KRW 7 trillion in the case of the basic fee abolishment means that the basic fee for the whole nation is lowered by KRW 11,000.”
A telecommunication industry expert said, "Since the telecommunication costs include the terminal charge, lowering the terminal price will be a way to lower the household telecom cost. It is likely to be considered expanding the low-end phone market or offering a plan for the socially disadvantaged. He said.
By Na Yoon Jae, Jung Yoon Hee yuni@