South Korea's telecommunications regulator will limit the amount telecom companies spend on marketing, in a move aimed at cooling intense competition and boosting profits in one of the world's most saturated telecom markets, the Wall Street Journal reports.
The Korea Communications Commission says that the country's major mobile operators—including KT Corp., SK Telecom Co., LG Telecom Co. and SK Broadband—shouldn't spend more than 22 percent of their respective revenues from fixed-line and wireless businesses on marketing.
The regulator said it expects the move, which take effect from May, to help lower total marketing costs to around 7.03 trillion won ($6.14 billion) in 2010, sharply down from the 8.02 trillion won spent last year.
The Korea Communications Commission says that the country's major mobile operators—including KT Corp., SK Telecom Co., LG Telecom Co. and SK Broadband—shouldn't spend more than 22 percent of their respective revenues from fixed-line and wireless businesses on marketing.
The regulator said it expects the move, which take effect from May, to help lower total marketing costs to around 7.03 trillion won ($6.14 billion) in 2010, sharply down from the 8.02 trillion won spent last year.
It's hard to predict in advance how such restrictions will play out, but the limit obviously favors contestants with larger gross revenue, since the marketing cap is based on a percentage of revenue. Smaller providers might have benefited more if the restrictions were set at a flat amount per company, or some other formula that limits the ability of the larger carriers to outspend carriers with lower market share.
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