Telecom operators have been caught by the Fair Trade Commission (FTC) for price fixing. Consumers have ample reason to feel betrayed because KT, Hanaro, Dacom, and Onse have been avoiding competition by fixing prices on local calls, computer rooms, and internet land lines. The FTC has yet to make a final decision on how to proceed, but it reportedly collected a lot of critical evidence on several occasions in 2003 and 2004.
Hoping for unlimited competition in the telecommunications business is a little much. Competition between a company that was privatized after being attached to a massive state corporation and companies that got started later on is also difficult. It is also a fact that there needs to be a certain degree of regulation for telecommunications services, to keep everything in shape, such services being as essential in modern life as air and water. That is why the need for government intervention is needed under so-called "managed competition." In the case of local calls and internet lines, which companies have been caught fixing prices for, the government gets to regulate prices though with market elements, such as by allowing companies to report prices or receive approval for them. The companies rendered that process ineffective, however, by agreeing on prices before going to the government.
The Ministry of Information and Communication shares the blame for making the price fixing possible. One suspects the policy that leads to excessive constraints on competition essentially acted as consent about price fixing. KT, the biggest company, recorded W1.799 trillion in ordinary income last year. If a considerable degree of that came from wrongful prices, KT has nothing available to say in response to the criticism that its business performance was taken from consumers' wallets.
Policy officials need a change in thinking. Even if "managed competition" policy is to be maintained, the ultimate goal is not protecting businesses. Consumers have to be at the center of policy. Telecommunications experts say the ministry's policies are biased in favor of protecting companies, and it would seem that view was not a useless one.
The Hankyoreh, 30 March 2005.
[Translations by Seoul Selection (PMS)]
Consumers Come First in Telecommunication Policy |
