Telecommunications In Korea Essay Research Paper INTRODUCTIONTelecommunications — страница 11

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Korea lowered its telephone tax from 15% to 10% in accordance with the revised Telephone Tax Law in January 1988. The current tariffs for a local call have been fixed at 30 won (about US $0.37) for both a subscriber’s telephone and a public payphone per three minutes – relatively cheaper than the rates prevailing in developed countries. Owing to the introduction of competition in international calls between KT and DACOM, furthermore, the tariff for international calls was reduced up to 3% by DACOM and 7% by KT. This information shows that privatization can be the answer to effective and affordable telecommunication services. He further goes on to state that economic factors, which are intertwined with government policy, have also influenced the introduction of a decentralized

or liberalized industry in Korea. The government is aware that growth can be achieved only if Korea remains highly competitive exporter and makes substantial progress in technological development. He believes that “decentralized decision making may become the most effective means of achieving the efficient allocation of resources especially in a rapidly changing and highly competitive telecommunications environment” (800). Competition between companies creates a business environment of “efficient resource management and better access to capital for investment so that the sector assumes its rightful key role in the socio-economic developments to nations (198).” Furthermore, competitiveness cannot be maximized under bureaucratic intervention. Thus, liberalization is an

important ingredient to progress in the telecommunications industry. According to R.M. Martin, “liberalization has made the shaping of policy more pluralist, increased the scope for lobbying by distributional coalitions, and given management incentives to evolve their own strategies for acquisition of larger market shares” (88). Because companies are more free to function away from government regulations, they are able to develop a more effective telecommunication market. Liberalization or decrease in government control allows companies to freely research and develop their own telecommunication products. Through their acquisition of profits away from government control, companies have the incentive to produce better quality, lower cost products and services. Myung-Jung Kim

also supports liberalization and privatization of the telecommunications industry as in the broadcasting industry. She advocates the private system stating that the new media industry is so vast in scope that state or public organization alone is more than a match for its investment demand. A private system should be adopted to induce private capital and vitality. From a corporation’s standpoint it is a golden opportunity for industries such as cable, satellite, and production and distribution of programs. She goes further to state that deregulation of program content will be positively adopted to satisfy program need caused by the introduction of multi-media and multi-channels. Hyeon-Dew Kang states that government needs to reduce regulations to attract investors in the

broadcasting industry. Also public investment will make it possible to inflow enormous capital, help providing sufficient programs, and provide management skills for operating broadcasting system. He further states that it is “necessary to assure diverse types of ownership under a flexible structure where it can combine one broadcast stations and others, broadcasters and telecommunicators, and newspapers and broadcasting so as to meet the current trend of globalizing the broadcasting industry” (241). In particular, it can help cope with the opening trends of broadcasting market by strengthening domestic corporates’ predominating positions. Friedland and Westlake also advocate deregulation as the means to technological progress in telecommunications. They state that

“deregulation – a trend that began in the mid-1980s – could be critical to the success of national economics … Deregulation was supposed to deliver goods by fostering efficiency through competition” (66). They further go on to say that liberalization has taken root in South Korea and some local firms are already world-class players. For governments and the commercial operators, the basic issue is how to achieve the most effective form of competition. To this effect, they quote a Washington based privatization consultant, “The general path is that you separate the regulatory apparatus from the operation of the telephone system. Next, you corporatise the telephone system operator. The next step is privatization and the development of a profit mentality at the old