Korean Gov't Opposed to Restricting Competition
With content platforms such as Netflix and YouTube increasing their presence in South Korea, a debate is raging over reinstatement of the expired regulations that restrict a paid TV service provider’s market share.
Some are advocating reinstatement of the regulations to prevent a certain paid TV service provider from dominating the market, while others are against it on the grounds that the regulations are against fair competition and ultimately stifle the competitiveness of local paid TV services.
The Science, ICT, Broadcasting, and Communications Committee of the National Assembly held a meeting on Nov. 27 to deliberate on amendments to the Broadcasting Act and the Internet Multimedia Broadcasting Business Act for reinstatement of the regulations, which expired on June 27.
The regulations block a service provider’s sum of shares in the cable TV, IPTV and satellite TV segments from exceeding one third of the entire paid TV service market. The regulations targeted the KT Group, which has KT Corp., a leader in the IPTV market, and KT Skylife, which is the sole provider of satellite TV service in Korea. The two companies’ combined market share reached 30.38% in the first half of this year. With the expiration of the regulations in June, the KT Group has been seeking to expand its market share beyond the one-third limit, causing concerns that it could get too big.
The reinstatement of the expired regulations is unlikely to occur in the near future though. The committee decided to discuss it later after some clash of opinions at the meeting.
The South Korean government is opposed to the reinstatement. The Korea Fair Trade Commission recently presented its anti-reinstatement opinion to the National Assembly, saying that the regulations hinder business activities and market competition.
Likewise, the Korea Information Society Development Institute say that major players can still be kept in check by means of regulations other than restrictions on market share. Both the U.S. and the EU are doing away with similar market share regulations, too.
Those in the industry are saying that the reinstatement will add to the difficulties of local service providers with global over-the-top video streaming services like YouTube and Netflix competing for the local content market.
“Netflix invests about US$8 billion in content a year, and local companies should be able to enlarge themselves and invest more to compete with such giants,” one of them explained, adding, “The reinstatement should not occur because the regulations are against natural market changes.”
At present, the KT Group is planning to acquire D’Live, a cable TV company, via KT Skylife. Likewise, LG U+, an IPTV provider, is going to enlarge itself by acquiring CJ Hello, another cable TV operator.
It is also pointed out that the reinstatement will strangle the satellite broadcasting industry. “KT Skylife is the only satellite broadcasting company in South Korea now and its market share will be limited to the current level of 10.19% if the regulations are reinstated,” said an industry insider.