The banking sector expected momentum in the budget phone business, but regulations remain a major hurdle.

Following Vitality in Entering New Business Markets
Debate Over Market Share Limitation Law as an ‘Obstacle’, , ‘[Daily An = Reporter Lee Semi] Expectations for banks gaining momentum in new business expansion by entering the budget phone market have recently cooled. This is due to concerns that regulation will be a hindrance as the political sphere engages in discussions including the financial sector as a target for budget phone regulation.’,
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, ‘There are voices calling for broadening the path to seek new vitality, taking into account the reality that the banking sector cannot avoid the impact of political risks, such as the prolonged impeachment process.’,
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, ‘According to the financial sector on the 13th, the National Assembly’s Science, Technology, Information and Broadcasting Communications Committee recently discussed the “Budget Phone Market Share Limitation Law” (tentatively named). However, due to ongoing controversy over the related discussions, the conclusion was not reached and the issue has been delayed.’,
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, ‘While the Ministry of Science and ICT and others argue that market share limitations should not be imposed on those other than telecommunication companies to foster a competitive telecommunications market, the opposition emphasizes protecting small businesses and seeks to restrict the financial sector’s entry.’,
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, ‘Previously, Rep. Kim Hyun of the Democratic Party proposed a bill last October to limit the budget phone market share of subsidiaries of the three major telecom companies, SKT, KT, and LGU+, as well as large enterprises like KB Kookmin Bank’s Liiv Mobile and Toss, to 60%. The Ministry of Science and ICT also proposed a plan at the 2nd subcommittee last month to limit the market share of the three major telecommunication companies to less than 50%, excluding the Internet of Things (IoT).’,
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, ‘Currently, budget phone companies that are subsidiaries of the three major telecommunication companies include SK Telink, KT M Mobile, KT Skylife, LG HelloVision, and Media Log. The market share of budget phones by these five companies, excluding IoT lines, is about 47%. Including KB Liiv Mobile and S-One under major corporate affiliations brings the share to 51.8%.’,
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, ‘The failure to finalize the discussion was because limiting these shares to around 50% would essentially make competition meaningless and eliminate incentives to lower prices. To attract customers to budget phones that are 40-50% cheaper than existing telecom companies, the activation of major corporate budget phones like KT M Mobile and KB Liiv Mobile is somewhat necessary, as it can help reduce household telecom expenses.’,
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, ‘The entry of the financial sector into the budget phone market has caused backlash from small budget phone operators. The claim is that the financial sector is offering rates below cost to take market share from small operators.’,
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, , ‘Given the situation, the prevailing perspective within the financial sector is that it will be difficult to avoid impact regardless of any policies that emerge regarding the budget phone business. Until now, there had been growing anticipation for profitability because financial authorities were expanding the scope of new technologies and new business for the banking sector by relaxing regulations.’,
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, ‘Particularly, the budget phone market is considered a competitive battlefield for new business within the banking sector and has drawn attention due to expectations. It is expected that the number of budget phone subscribers could surpass 10 million rapidly if bank branches succeed in attracting IT-vulnerable customers. As of June, according to the Ministry of Science and ICT, the number of budget phone subscribers was recorded at 9.29 million, close to the 10 million mark.’,
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, ‘Currently, Kookmin Bank officially registered its budget phone service Liiv Mobile as an ancillary business through innovative financial services from the financial authorities last April. This will allow other banks to enter the budget phone market without separate reporting. Shinhan Bank also commenced the formal procedure for approval of its delivery app “Dangeyo,” operated through a regulatory sandbox, as an ancillary business on the 11th.’,
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, ‘However, with the possibility of being hindered by new regulations rising again, there is a noticeable atmosphere of disappointment.’,
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, ‘A financial sector representative stated, “Imposing market share regulations will diminish competitiveness, ultimately affecting consumers,” and added, “For now, the only approach is to monitor the situation and prepare strategically as it unfolds.”.’