Wednesday, February 06, 2008

South Korea - rate cuts

Phone Call Rates to Be Deregulated in September

The Presidential Transition Committee said Friday that it will push to abolish call rate restrictions on the country's largest telecommunications companies _ SK Telecom and KT _ so that they can voluntarily cut rates beginning September. The abolition should lead to a decrease in rates by 15 percent, according to the transition team.

The committee also decided to allow the entry of new companies, which do not have frequency and telecommunications networks, into the market in order to help cut the rate further. Minor companies will be able to collect subscribers by renting space on networks and facilities from the two major players.

However, the team will allow all telecommunications companies to set fixed periods for subscription from April to ease potential tense competition coming from the removal of subsidy regulations in March.

The measures are included in a package to reduce mobile and broadband fees, and will be formally announced in the near future, according to the transition team.

The government previously set call rate restrictions to prevent the dominant SK and KT from taking subscribers from minor companies _ KTF and LG Telecom _ by cutting rates.

When the restriction is dropped in September, SK Telecom and KT will likely reduce their call rates, which will prompt an overall cut in telecommunication costs.

``The new measures will encourage firms to reduce the call rate one by one,'' an official of the Ministry of Information and Communication said on condition of anonymity. ``Northern European countries saw about 22 to 50 percent cut from 2002 to 2006 with similar measures.''

``We have not yet finalized the policies due to sensitive issues among the telecommunications companies,'' an official of the team said. ``Some of the policies could be changed during final discussions.''

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