Mobile carriers urge KCC to block Kakao’s free phone service

The domestic mobile carriers ― SK Telecom, KT and LG Uplus ― are expected to urge the telecommunications regulator to block Kakao Talk’s free voice service, which started here Tuesday.

They claim that the free call service offered by the nation’s most popular mobile messenger service provider could deal a mortal blow to them. However, the Korea Communications Commission (KCC) has remained aloof to the complaints, saying that the free service is within legal boundaries.

Mobile phone carriers are struggling to cope with declining voice business and poor returns from their massive investments in data networks despite the exploding popularity of smartphones and touch-screen tablets, with the dominant mobile operating systems run by Apple and Google compromising their control of content value chains.

Kakao Talk has more than 35 million Korean customers, who have downloaded its app for free chatting and photo sharing. It adding voice over Internet protocol (VoIP) functions is a nightmare for industry leader SK Telecom, which is also concerned about an overloaded data network.

“The KCC, the country’s telecommunications regulator, should step in and block Kakao Talk’s free voice services. Otherwise, there is no choice but to push for an increase in our charges,” said an SK Telecom official.

“This (Kakao Talk’s free voice services) is obviously too big a blow for us to absorb. If necessary, we will seek to team up with our rivals.’’

KT and LG Uplus for once are fully on the side of their bigger industry rival. A KT spokesman said the company will be monitoring Kakao Talk’s free voice services closely and dissect the impact on its business.

The KCC, however, is backing Kakao Talk, saying that free voice calls are good for customers. In an election year, the government has been sensitive about inflation and has been throwing everything including the kitchen sink at rising prices.

“We think there are no serious problems for the current mobile VoIP service provided by Kakao Talk. A shutdown of the new service is highly unlikely,’’ said a senior KCC official.

Other KCC officials said it will be possible to regulate Kakao Talk’s free voice service, which will have a blurry position under Korea’s current telecommunications laws. They did add that the need for mobile VoIP regulations doesn’t mean that the rules have to be tough.

Kakao Talk’s free voice service is now available for Apple iPhone users and will soon be introduced to handsets powered by Google’s Android operating system.

Choi Yoon-mi, an analyst at Shinyoung Securities, said that Kakao Talk’s free voice services will eventually pose a serious threat to the biggest two mobile providers.

“Kakao’s free call service will hit SK Telecom and KT heavily as chances are very high that the Kakao service to be expanded further based on stronger market position,’’ said Choi Yoon-mi, an analyst at Shinyoung Securities.

“SK Telecom and KT permit the use of free Internet calls to customers signed to their 54,000 won a month unlimited data packages. However, with Kakao Talk providing free calls, there is that much less reason for customers to sign up to the carrier’s premium package priced at 61,000 won a month.’’ <Korea Times/Kim Yoo-chul>

news@theasian.asia