Government-Backed Fourth Mobile Carrier Funded by Taxpayers: Little Benefit, Major Side Effects

However, it is questionable whether the current push to introduce a 4th mobile carrier is truly being pursued in a manner consistent with market-economic order and the promotion of consumer welfare.

The domestic telecommunications market has already reached saturation.

Accordingly, it is highly likely that policy financing support will be unavoidable in order to guarantee an adequate level of profit for a 4th mobile carrier.

Moreover, in order to help such a carrier secure a certain level of market share, it will inevitably lead to the regulation of existing operators.

In fact, the Ministry of Science and ICT, the competent ministry, has stated that it will provide massive support benefits in the early settlement stage of a 4th mobile carrier, offering policy financing worth around KRW 400 billion and tax credits.

It has also announced policies amounting to “reverse discrimination,” such as allowing a 4th mobile carrier to use the facilities and roaming networks of existing operators and easing network buildout obligations.

Under the goal of promoting competition in the mobile telecommunications market, the policy being pursued is in fact one that depends on fiscal support for a specific company and the infringement of the rights and interests of existing operators.

Attempting to promote a market economy through anti-market means is a contradiction that cannot stand from the outset and a violation of principle.

In particular, if a 4th mobile carrier fails in the market, recovery of the approximately KRW 400 billion in policy financing will become impossible, and all the burdens—including the enormous restructuring costs that would arise in the process of market exit—will ultimately have to be borne by taxpayers and consumers.

If a company could expect sufficient profits and possessed new technologies and service competitiveness capable of surpassing existing operators, it would have entered the market as a 4th mobile carrier without any government support or control.

The reality, however, is that since 2010, there have been seven failed attempts to select a 4th mobile carrier.

Even major conglomerates that might have been expected to have the will to do so have shown no intention of entering the market.

The failed case of a subsidiary of Japan’s Rakuten Group entering the 4th mobile carrier business, only for persistent losses to leave even the parent group facing serious management difficulties, should serve as a cautionary lesson.

Riding vague expectations created simply by the six-character policy label “4th mobile carrier” and pursuing a policy that in fact runs counter to consumer interests and the advancement of the market economy is nothing more than populism.

The Center for Free Enterprise (CFE) calls on the government to immediately withdraw the current push for the 4th mobile carrier project, which relies on handing out taxpayer money, unilateral government control, and a distorted market structure.

The government must not forget that the ultimately desirable solution is not the artificial restructuring of the market through the introduction of a 4th mobile carrier, but the voluntary emergence of a 4th mobile carrier in a freer market created through regulatory innovation.

Eunkyung Kwak, Secretary General, Center for Free Enterprise (CFE)

Original title: 혈세 지원, 정부 개입형 제4이동통신, 실익은 적고 부작용만 크다

Author: Center for Free Enterprise (CFE)

Date: 2024-01-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=comment&pn=2&idx=26392