Telecom firms spar over plans for ‘bundling’

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Telecom firms spar over plans for ‘bundling’

The Information Ministry is considering allowing all telecommunications companies to bundle sales of wireless and fixed-wire services, a practice now prohibited among companies deemed to hold a monopolistic position, defined as half the market. Should the rules be relaxed, it could auger big changes in the telecommunications market. As of late July, Hanarotelecom, Korea’s No. 3 in the industry, had 3.6 million subscribers for its high speed Internet service, of whom about 80 percent were also using its fixed-line telephone service. Customers using both services received a 2,000-won ($2) discount in their monthly phone bills. This package has been offered since 1999. In July, Hanaro added a new video-on-demand service, called hanaTV, to the list. Customers subscribing to all three services receive a bigger discount and receive a single bill. In June 2004, KT began its “one-phone service,” which links their landline telephone to their cell phone service. When they are away from home, subscribers use their mobile phone on KT’s cell system; at home, the instrument automatically converts to a wireless landline phone, with correspondingly cheaper rates for calls. But with KT prevented from offering further cuts in fixed-line charges, because it has a share of over 50 percent in that market, it was unable to offer sufficient discounts to lure many customers to its “one phone” service. KT, as the dominant player in the fixed-line and high-speed Internet markets, and SK Telecom, the leader in mobile services, have been prohibited thus far from offering bundled services because of those fair trade laws. But if the rules are changed, KT will be able to offer bundled services with it subsidiary KTF. That makes smaller companies nervous about being swamped. According to Cho Kyung-sik, the telecommunications policy director at the Ministry of Information and Communications, the administration plans to set up safety measures so that front-line companies can conduct bundled sales without threatening free competition. “We will create detailed standards sometime within this year,” he said. The industry expects that competition will become fiercer through the bundling of wireless and fixed-wire services. KT is preparing fixed-wire services bundled with high speed Internet, as well as fixed-line services with wireless Internet, through its subsidiary, KTF, the second-largest cell service provider in Korea. “In order to give them [other companies] fair access to cable networks, we will cooperate with SK Telecom and LG Telecom to come up with products that integrate fixed-line and wireless products,” a KT official said. SK Telecom, with no landline presence, argues that such service should be removed from bundles entirely. by Suh Kyung-ho
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