ID :
204532
Wed, 08/31/2011 - 10:43
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Shortlink :
http://m.oananews.org//node/204532
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Auction should not lead to mobile rate hike
(EDITORIAL from the Korea Times on Aug. 31)
Bittersweet win
SK Telecom, the nation???s largest mobile carrier, won the auction for the ???golden??? spectrum 1.8 GHz band for its super-fast wireless service. But the winning is certainly bittersweet as the operator is feeling the financial burden due to the excessively high bidding price of 995 billion won ($920 million).
The nation???s first auction of the bandwidth was just over Monday as SK???s rival, KT Corp., dropped out of the race. It appeared that both SK and KT are losers because they have engaged in a ???war of attrition.??? The winner is the government that has succeeded in making a windfall from the auction.
In the overheated hertz war, KT has taken a realistic approach to avoid collateral damage by withdrawing from the bidding. The operator, which already has 20 MHz of the 1.8 GHz band, plans to concentrate on cloud computing instead. It is fortunate that KT has taken the step to prevent the race from becoming self-destructive.
At stake is how SK will rise from what is seen as a ???Pyrrhic victory.??? Concerns are growing that the mobile firm may pass the financial burden on to its subscribers. The company has to pay over twice as much as the minimum bidding price set at 445 billion won. Of course, the victory will help SK solidify its dominant position further in the local market. The 1.8 GHz band is widely used for the supper-fast wireless service using the fourth-generation (4G) mobile technology called long term evolution (LTE).
But the excessive competition has actually forced SK to pay extra money for the acquisition of the bandwidth. Considering its sound financial status, the telecom firm will have little difficulty in settling the bid. The question is whether the new band is profitable. Pessimists caution that the high price may hurt profitability of the service operator. If that is the case, SK has no other choice but to hike mobile rates.
In the end, consumers could become the ultimate victim of the government???s misguided hertz auction policy. To put it simply, the government may face criticism for pinching money out of consumers??? pockets by selling the band expensively to mobile carriers. In addition, the auction runs counter to the Lee Myung-bak administration???s move to force the firms to lower rates to ease subscribers??? burden.
It is necessary for the Korea Communications Commission (KCC) to overhaul the method of auction in order to prevent an overheated race and the resulting ???curse of a victor.??? No doubt such a curse could devastate the local market, hurt the competitiveness of mobile service providers and cause damage to consumers. The regulator should not attempt to defend itself and shirk its responsibility.
SK is required to make more investment in providing better mobile services by using the new wireless band. It should focus on cost-effective operation and consumer-oriented services. The last thing is a rate hike.
Bittersweet win
SK Telecom, the nation???s largest mobile carrier, won the auction for the ???golden??? spectrum 1.8 GHz band for its super-fast wireless service. But the winning is certainly bittersweet as the operator is feeling the financial burden due to the excessively high bidding price of 995 billion won ($920 million).
The nation???s first auction of the bandwidth was just over Monday as SK???s rival, KT Corp., dropped out of the race. It appeared that both SK and KT are losers because they have engaged in a ???war of attrition.??? The winner is the government that has succeeded in making a windfall from the auction.
In the overheated hertz war, KT has taken a realistic approach to avoid collateral damage by withdrawing from the bidding. The operator, which already has 20 MHz of the 1.8 GHz band, plans to concentrate on cloud computing instead. It is fortunate that KT has taken the step to prevent the race from becoming self-destructive.
At stake is how SK will rise from what is seen as a ???Pyrrhic victory.??? Concerns are growing that the mobile firm may pass the financial burden on to its subscribers. The company has to pay over twice as much as the minimum bidding price set at 445 billion won. Of course, the victory will help SK solidify its dominant position further in the local market. The 1.8 GHz band is widely used for the supper-fast wireless service using the fourth-generation (4G) mobile technology called long term evolution (LTE).
But the excessive competition has actually forced SK to pay extra money for the acquisition of the bandwidth. Considering its sound financial status, the telecom firm will have little difficulty in settling the bid. The question is whether the new band is profitable. Pessimists caution that the high price may hurt profitability of the service operator. If that is the case, SK has no other choice but to hike mobile rates.
In the end, consumers could become the ultimate victim of the government???s misguided hertz auction policy. To put it simply, the government may face criticism for pinching money out of consumers??? pockets by selling the band expensively to mobile carriers. In addition, the auction runs counter to the Lee Myung-bak administration???s move to force the firms to lower rates to ease subscribers??? burden.
It is necessary for the Korea Communications Commission (KCC) to overhaul the method of auction in order to prevent an overheated race and the resulting ???curse of a victor.??? No doubt such a curse could devastate the local market, hurt the competitiveness of mobile service providers and cause damage to consumers. The regulator should not attempt to defend itself and shirk its responsibility.
SK is required to make more investment in providing better mobile services by using the new wireless band. It should focus on cost-effective operation and consumer-oriented services. The last thing is a rate hike.
