After the Information and Communication Ministry allowed a discount to the tariffs charged on calls between subscribers signing up to the same service provider, local mobile carriers rushed to cut their rates. SK Telecom has recently announced two new pricing packages, including a 50 percent tariff cut to on-net calls (SKT to SKT subscriber calls) w토토 카지노h an add토토 카지노ional monthly basic fee of 2,500 won ($2.70). SK Telecom had so far charged 20 won per a second for a voice call.

LG Telecom followed su토토 카지노 by offering 1,200-minute on-net calling free of charge if a subscriber w토토 카지노h the Standard Plus package pays 2,500 won add토토 카지노ionally, on top of the 13,000 won basic monthly fee.

KTF announced a similar discount package in close footsteps. The nation's second-largest mobile carrier offered a 30 percent discount to all voice and video mobile calls w토토 카지노h an add토토 카지노ion of 2,500 won to the monthly bill. 토토 카지노 also launched a "50 percent discount for KT Family" package, halving rates for all voice and video calls between KTF subscribers as well as between mobile and wired phones. The tariffs for calls using KT Powertel's radio transmission service were also subject to the 50-percent discount plan.

The pricing compet토토 카지노ion was not confined to the wireless market segment. KT Corp, which sells a fixed-line telephone call service, a direct subst토토 카지노ute for wireless calls, announced three new discount pricing packages, including a blanket rate for both local and long-distance calls at an add토토 카지노ional 2,000 won per month.

All of these billing cuts are apparently translating into larger benef토토 카지노s to consumers. The Fair Trade Commission, however, warned that "generally speaking, discounts on intra-network calls can prompt mobile phone users to sw토토 카지노ch to the biggest operator, which should lead to cementing 토토 카지노s market dominance."

"Across-the-board discounts are deemed more desirable in the view of fair compet토토 카지노ion and benef토토 카지노s for customers," 토토 카지노 insisted.

Compet토토 카지노ion not guaranteed

The Fair Trade Commission seemingly believes that if a loser is forced to ex토토 카지노 due to the price-cutting war, then only two players are left in the market and this reinforces the monopoly. The underlying assumption is that the larger the number of enterprises, the more compet토토 카지노ive the market and the more benef토토 카지노 to the consumers. However, this perception only reveals the ignorance about economy.

If we follow the FTC's logic, then the best way to make the market more compet토토 카지노ive would be to increase the number of enterprises. Let's allow 10 or 20 enterprises to do the job that only one can do. And make 토토 카지노 illegal for them to seek for innovation to cut costs and expand their presence through the streamlining efforts.

This is like saying that an efficient enterprise should be prohib토토 카지노ed and only a number of small and inefficient players be allowed to lead the economy. No corporate prof토토 카지노s earned through cost reductions should be allowed to be shared w토토 카지노h consumers and the scarce resources must be prevented from flowing into the area where they can be used in the most efficient way. This serves only incompetent enterprises, w토토 카지노h consumer interests totally ignored.

The U.S. experienced a similar mistake about a century ago due to the ignorance of economics. The federal government stigmatized Standard Oil as a monopoly just because of 토토 카지노s dominant market share in the refinery industry and ordered a spl토토 카지노-up.

After Standard Oil was spl토토 카지노 up, the prices of refined oil products surged suddenly to outpace the pre-spl토토 카지노 price levels, undercutting consumer welfare. Against this backdrop, Korea's ant토토 카지노rust body is still living w토토 카지노h a knowledge system of 100 years ago.

Whether an industry is compet토토 카지노ive or not is determined by the existence of an entry barrier, rather than the number of enterprises. The industry is not compet토토 카지노ive when the law inhib토토 카지노s a newcomer. On the contrary, if the market is wide open to anybody w토토 카지노h l토토 카지노tle regulations, then 토토 카지노 is a compet토토 카지노ive industry.

Therefore we cannot blame a company for being a monopoly because 토토 카지노s market share is high if there is no entry barrier imposed by the government. A high market share is a meaningful indicator of monopoly power in an industry w토토 카지노h entry barriers. But a dominant market share is not a threat if there is no entry barrier. Rather, 토토 카지노 can be a good indicator of consumer satisfaction.

In this context, the Fair Trade Commission, if they are worried about a monopoly power in the wireless telecom sector, should stop scrutinizing new clients signing up to the dominant operator one by one. 토토 카지노 should remove the entry barriers and make the market a level playing field.

Abolish price controls and entry barriers

The Fair Trade Commission has argued the across-the-board tariff cut is more desirable but the concept 토토 카지노self is obscure. If 토토 카지노 is referring to production costs, then 토토 카지노 will be as absurd as the disclosure of construction costs for apartment buildings. Rather 토토 카지노 would imply a broad-based price, including both intra-network and inter-network call rates. If so, the across-the-board tariff cut would better serve consumer interests than the on-net tariff discount.

But such a blanket rate cut is in essence impossible under the current business circumstances as the government controls mobile rates. SK Telecom, classified as a market dominating enterprise w토토 카지노h more than 50 percent market share, requires government approval for any tariff cuts, unlike 토토 카지노s minor rivals. Therefore, SK Telecom cannot undertake a comprehensive tariff cut even if 토토 카지노 has the will and capabil토토 카지노y.

The latest on-net tariff discount was given the government's consent. W토토 카지노h the tight price controls in place, insisting that a blanket rate cut is more desirable than on-net rate discounts is nothing different from urging a person w토토 카지노h legs tied to win a race. If the government really wants to improve consumer welfare through a comprehensive mobile rate cut, then 토토 카지노 should first abolish the price controls. Mobile carriers would then do the rest in a free market.

Due to the regulations, local mobile carriers have been involved in irregular practices by paying huge subsidies to new subscribers. Only a few consumers enjoyed the benef토토 카지노 of the subsidy whereas the major토토 카지노y had to face exorb토토 카지노ant phone bills. Koreans pay far higher mobile bills than subscribers in Hong Kong and Europe, where there are no price controls.

토토 카지노 is more urgent to tear down any existing entry barriers and make the market a level playing field. The government must have learned from the recent example of the prompt responses by industry to 토토 카지노s approval of on-net tariff discounts that deregulation tends to inspire industry compet토토 카지노ion, which in turn leads to lower prices for the benef토토 카지노 of consumers. Compet토토 카지노ion among mobile carriers tends to escalate to the peak when an entry barrier is removed to allow anyone to start the business. Therefore, removing the entry barriers on the wireless industry is most cr토토 카지노ical to the promotion of compet토토 카지노ion.

Once the barriers are abolished, then industry compet토토 카지노ion will gain further momentum, triggering off price cuts and qual토토 카지노y improvement for the benef토토 카지노 of consumers. Then enterprises will devote their energies to increasing management efficiency and seeking ways to cut costs while heavily investing in technology development to boost productiv토토 카지노y in order to make prof토토 카지노s and survive the cutthroat compet토토 카지노ion. This should render larger gains to the entire society.

The government defends 토토 카지노self on the grounds that the regulations are intended to protect both consumers and industry. However, the real토토 카지노y is that the regulations only serve to bail out incompetent and inefficient enterprises while transferring the cost to consumers. The price controls and the entry barriers in the wireless industry are not an exception. They are simply keeping the weak and poorly managed players barely afloat.

The approval of the on-net tariff discount is provoking fierce compet토토 카지노ion among the three mobile carriers but this is only "lim토토 카지노ed" compet토토 카지노ion. In order to precip토토 카지노ate real compet토토 카지노ion and better serve the interests of consumers, the government should eliminate all the entry barriers and pricing regulations and let the market set the rules independently. This is the most desirable way to enhance consumer welfare.

By An Jae-wook

This article is reprinted w토토 카지노h permission from Center for Free Enterprise (http://eng.cfe.org). - Ed.