The effect of regulations on the Korean mobile telecommunication industry
Mobile telecommunication industries in most countries are under regulatory authorities' control to some degree. Since most network industries have a tendency towards natural monopoly, and telecommunications networks are usually believed to exhibit network effects, the regulation in telecommunication industry might be necessary in order to engender effective competition among network operators.
Although it may be necessary to have regulatory measures to guarantee competitive market environment, whether current asymmetric regulatory measures in the Korean mobile industry are engendering the competition among the three Korean network operators is somewhat questionable. If there needs to be any regulation, its justification is to protect the consumer benefits rather than protecting incompetent firm, which very well could be a free rider of the asymmetric government protection.
In this paper, a couple of asymmetric regulatory measures in the Korean mobile telephony industry will be examined for their merits. First regulation in question is market share targeting for the market leader. Secondly, sequential introduction of mobile number portability (MNP) will be tested.
This study is consisted of three independent chapters attempting to answer above issues. First chapter is a theoretic approach of market share targeting of the incumbent firm. By comparative analysis of equilibrium in the cases of with and without such regulation. I will attempt to show any distortions in market behavior, welfare change and policy implications. Second chapter will be devoted to examine the effect of implementing sequential MNP in the Korean mobile market. This empirical study is expected to show whether the asymmetrical regulatory measure was effective and necessary to engender the competition in the market. Third and final chapter is to show what determines switching cost of consumers, and how effective these regulations have been.
Mobile communications networks;
Telephone number portability;
0505: Business costs