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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (11103)	5/30/2001 8:51:06 AM
From: foundation	Respond to of 196593

Confusion in (Korean) Telecom Market By Lee Chang-sup Business Editor A series of anti-market practices and policies have added confusion to the domestic telecommunication industry. Following the inauguration of Minister Yang Seung-taik in late April, the Information and Communication Ministry has made a u-turn in crucial policies. The reversal of the previous policies, whether good or bad, has called into question the credibility and consistency of the government's policy. Yang, who is an undisputable expert in CDMA (code division multiple access) technology, has scrapped key policy guidelines his predecessor, Ahn Byong-yub, set months ago. For example, former minister Ahn set a guideline that a synchronous-mode IMT-2000 (International Mobile Telecommunication-2000) operator must pay 1.3 trillion won to secure a license. It is that same amount that the two successful asynchronous-mode IMT-2000 bidders- Korea Telecom and SK Telecom-paid to get their licenses. Now, suddenly, Yang indicated that the license fee would be lowered to as low as 220 billion won, a repeated request from LG Telecom. The Hanaro Telecom consortium was denied the license even though it showed intention of paying 1.3 trillion won for the licensing fee. Yang also indicated that LG Telecom is the only viable candidate for the symmetrical IMT-2000 project. This angered Hanaro. Now he must clear away the lingering public perception that he is a pro-LG policymaker. In a series of interviews, he made public his idea for implementing ``asymmetrical regulation,'' a logic that would lead to protect such weak players as LG at the risk of handicapping the two profitable players, SK and KT. According to Yang's logic, he would create an ``uneven level playing field,'' to curb profits at SK and KT and help such weak players as LG expand business and profits. Yang advocated the introduction of a three-way competition in the domestic telecommunication market. He indicated that the government might regulate SK and KT until LG is capable of doubling its market share to beyond 20 percent. No policy maker in the world would articulate a market share for a specific company. SK Telecom and KTF, subsidiary of KT, contended that Yang seeks to penalize honor students to support lazy pupils. But the minister said his intention was distorted, saying that the three- way competition in the expanding wireless market could be made without penalizing the two giant players SK and KT. Currently, the mobile phone penetration rate is 56 percent but it would be raised to 76-86 percent, according to Yang, if his policies are put in place. In the wire telecommunication market, Yang believes that KT captures more than 90 percent, while the other players are on the verge of collapse. Furthermore, the wireless telecommunication market is experiencing a downturn phase. Yang also surprised the international community by indicating the delay of the scheduled privatization of KT beyond June next year. He also said that commercial operations of IMT-2000 services would be possible at least 7 to 12 months beyond the original schedule of May next year. Yang, who was the president of the state-run Korea Electronics & Telecom Communications Research Institute, made these bombshell remarks apparently without the full consensus from and consultation with his deputies at the ministry. As a scholar with little exposure to Korea's tough bureaucratic world, it is questionable whether the former president of the state-run Information and Communications University would be able to put his deputies under control. In Yang's perspective, there are some officials who set important telecommunication policies even though they do not even have full command and mastery of office desktops. All in all, Yang is fighting against the ``market,'' ``bureaucrats'' and his ``predecessors''. Yang's logic is that all telecommunication companies must be profitable. The IT industry contributes some 36 percent of the economic growth. IT exports of $51 billion are more than the nation's overall trade surplus. But the reality is that only two giant players- SK Telecom and KT- are profitable while the rest are struggling to keep afloat. Yang is not alone who embarrassed the telecommunication companies. A non-governmental organization called the People's Solidarity for Participatory Democracy (PSPD) has reported that a majority of mobile phone subscribers backed the lowering of service fees. It also published a report that a majority of young netizens want mobile phone carriers not to levy fees on services on so-called caller identification services (CID). These surveys angered the existing cellular phone service providers. Such firms as SK, KTF, and LG argue that it is quite illogical to ask customers to answer whether prices of products and services should be lowered or not. Every consumer wants a reduction of prices. What should be noted here is that the PSPD has lost logic and rationality by demanding the reduction of mobile phone fees on the basis of a survey. It should have conducted a cost analysis of the existing mobile phone service providers as logic to press for trimming service fees by a specific margin. The PSPD said 96.3 percent of the 35,000 netizens it polled, answered that CID services fees must be provided to mobile phone subscribers free of charge. Based on the survey, the PSPD demanded the reduction of the service fees. The government wants mobile phone operators to lower service fees by a significant margin, aimed at helping ease the financial burdens and curbing inflation. But the Ministry of Information and Communication (MIC) countered that no government organization other than the MIC has the right to ask the mobile phone services providers to lower usage fees. The PSPD criticized the MIC for seeking to protect the vested interests of mobile phone carriers. This is alleged to be a kangaroo court's ruling against the mobile phone operators. A criticism of the PSPD's lack of logic does not mean that there is no room for a cut in mobile phone rates. Mobile phone users criticize the government for banning the telecommunication service operators from subsidizing their purchase of new cellular phones. The government's logic is to curb frequent changes of equipment, which forces mobile phone operators to sustain a snowballing deficit and widens the nation's trade deficit. About 60 percent of components in mobile phones are imported. But the users contended that the subsidy ban is to protect producers, namely the mobile phone services operators, not consumers. . ÀÔ·Â½Ã°£ 2001/05/30 17:24 hk.co.kr