Since the early 1990s, the telecommunications industry has become an important source of growth and development of the Korean economy, and has widely influenced civil life while enhancing corporate and industrial competitiveness. The role of the telecommunications industry is expected to become even bigger in the future. The industry remains largely influenced by government policies and regulations, and this will hardly diminish as long as the industry is highly concentrated.

To further our understanding of the economic issues of the telecommunications industry, the Korea Economic Research Institute (KERI) together with the Association of Information and Telecommunications Studies (AITS) conducted an extensive policy-oriented research.

This report is a collection of papers written by various members of AITS under the financial support of KERI. The papers review issues arising in the Korean telecommuni- cations industry, and provide policy suggestions. Among a number of important issues, the papers here analyze the economics of number portability, bundling and convergence of services, and asymmetric regulation between dominant and non-dominant firms.

The main policy suggestions included in this report are as follows: First, the government, instead of prohibiting subsidy on mobile phone, should focus on removing switching costs which locks consumers to certain service providers while reducing competition between them. Second, the government should eliminate the restriction on bundling by dominant service providers. As an alternative, the anti-competitive effects of bundling by owners of essential facilities should be properly analyzed and decisions on whether to allow their package of  services should be made on a case by case basis. Third, the government should avoid protecting competitors by means of asymmetric regulation through, for example, lessening their burden of access charges, prohibiting dominant providers from bundling, introducing number portability in sequence, or by requiring approval by the government of the prices offered by a dominant mobile service provider ex ante.