NHN's dominance worries minister

Choi Moon-ki, the minister of science, ICT and future planning, has expressed concerns about the dominant structure of the Internet industry, saying the nation's dominant portal operator NHN has "too much market power."

"NHN has focused too much on external growth under the helm of a young CEO. NHN should think more about making a social contribution to society. It has too much market power," Choi said at a press conference at the government complex in Gwacheon, Gyeonggi Province, Wednesday.

It was the first time the minister officially expressed concerns about NHN's dominance of the Korean market. NHN owns Naver, the largest search portal.

Referring to an ongoing probe by the Fair Trade Commission (FTC) over allegations NHN engaged in unfair business practices, the minister said the ministry won't allow NHN to control the entire Web portal-related market.

"The FTC is taking a cautious approach against NHN. A company which generates more than 1 trillion won in revenue, annually, needs to spend more on social contribution," the minister said.

He confirmed the ministry's Internet policy bureau is analyzing and monitoring the situation, but declined to elaborate further.

Choi said the ministry will create a new bureau to handle only software policies.

"We recently sealed a memorandum of understanding (MOU) with the education ministry to improve the understanding of software for elementary and middle school students," he said.

Cut in telecom bills

He also made it clear the ministry will ask all three local carriers - SK Telecom, KT and LG Uplus - to cut monthly telecom bills to customers but with fair competition.

He remained cautious about the upcoming auction of radio frequencies to be used for long-term evolution (LTE) networks and reiterated his "basic stance" towards the auction plan by insisting the ministry will guarantee fair competition and consider public interests, efficiency and price.

"I think it's reasonable for each household to pay between 120,000 won and 130,000 won as a monthly payment. It's quite difficult to keep price plans unchanged when the functions of digital devices are enhanced," he told the media.

According to his figures, a typical household spends 152,000 won a month on average, which he said isn't high, considering mobile phones have become highly sophisticated and that data usage fees are low in Korea. He said a handset is now a "computer" rather than a mobile phone.

"I don't think a household's communication expenses will easily go below 152,000 won," the minister said. "As we use more advanced devices, the telecom cost will go up."

Choi pointed out problems in the existing business model of mobile carriers.

They generate revenue from voice calls and have kept data usage fees low to attract customers. But amid intense competition, mobile carriers are now introducing plans with free voice calls while unable to change data usage fees.

"The era of free voice calls will be here soon. Mobile carriers should put their heads together to find a solution and come up with reasonable data plans," Choi said.

The minister said what the government can do now is try to remove bubbles in the current system, such as membership fees users have to pay when they buy a phone for the first time or switch to a different carrier.

Another solution, the minister said, would be boosting the market for cheaper phones as not every mobile phone user needs an advanced smartphone.

"I have a smartphone, but use less than a third of its functions," he said.

In the past, only the three major mobile carriers could distribute handsets and the government recently helped form a "frugal phone" market where devices can be sold by non-mobile carriers, such as supermarkets.

The lack of handset models distributed this way, however, has hindered the market from growing further. The future planning ministry Tuesday announced measures to vitalize the market.

The government the same day announced a blueprint for a funding system for venture companies and start-ups in the industry.