Korea Communications Committee (KCC) announced that it would select another provider to boost WiBro service. Currently, KT and SK Telecom have the license to offer the service in Korea.
KCC promised strong support for WiBro service as a way to increase investment in communications industry. KCC also hinted that it will provide numbers to WiBro users so that they can take and make voice calls. It was designed to add competition between WiBro and other mobile services. Plus, the authority plans to deprive SK Telecom of its exclusive right to use the 800Mhz frequency and reallocate lower than 1Ghz frequency bands, which offers better call quality, to WiBro service.
To encourage facility investment, KCC plans service quality assessment that would push service providers to put more money in quality improvement. The government is going to host a ministerial meeting with countries preparing for WiBro service to provide policy support for the service expansion around the world.
As KCC demonstrated a strong will to encourage investment by supporting WiBro service, SKT, which has been far from enthusiastic about the service, might feel threatened. SK Telecom's WiBro subscribers number around 1,000 persons. On the surface, KT and WiBro met government requirement for investment in the service, but when it comes to service quality in coverage areas and the number of subscribers, the two fell short of government's expectation.
Will the government strategy be successful? It's rather skeptical. Both of SK Telecom and KT operate mobile services and it's not easy for them to invest more aggressively in WiBro out of fear about cannibalization.
In particular, Hanaro Teleocm gave up on the service license. In this situation, the question is who would jump in the business that requires huge new investment. To offer call quality comparable to existing mobile services, about 3-4 trillion won is required.
Yujin Investment and Securities said that building new networks is far less cost-efficient for a new comer especially considering increased investment cost. Also, abundant liquidity of existing industry players will make it more difficult to enter the industry, said the firm. Given that the price of 3G license was 1.3 trillion won, it is unfair to provide voice call numbers to WiBro providers, who pay only 130 billion won, said Yujin.
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