LG Telecom Pursue Single Consortium

The LG Telecom plans to go on with its own single synchronous IMT-2000 consortium, excluding the Hanaro Telecom. Since the LG`s decision goes against the plan of the Ministry of Information and Communication, it has raised some disturbances. The Ministry has urged the LG Telecom and the Hanaro Telecom to constitute a grand consortium on the premise of the cooperation of the communication business.

The LG Telecom has extended its power since the meeting with the Hanaro`s CEOs ended in failure last week. The LG Telecom announced that 570 companies are participating in the consortium. Especially, the member companies of the Promising Information & Communication Companies Association (PICCA), which have been the core members of the Hanaro consortium, are likely to take sides with the LG Telecom after having the directors meeting today.

▼Possibility of the Single Consortium

As the participants in the consortium have increased, the LG Telecom took advantage of the fact that the general situation is favorable to its single consortium. Twenty conglomerates such as Hyundai Motor, Powercomm, Taeyoung, Hanjin Shipping, etc, and Dongah Elecomm, Nanum Teconologies, Standard Telecom, Sewon Telecom participated in the consortium.

With the huge supports from the major companies, the LG Telecom is maintaining that it is more plausible to exclude the Hanaro Telecom. An official of the LG Telecom told that ``unless the company is selected by July, it is difficult to protect and develop the synchronous business``. But the Hanaro Telecom turned down the LG`s assertion, saying that ``because the synchronous business can be achieved only by adding a frequency to existing business, the LG`s assertion of the urgency of the business is groundless``.

▼Problems of the Single Consortium

In case that the single consortium, excluding the Hanaro Telecom, is selected as the synchronous business company, the restructuring of the communication market will be inevitably frustrated. The Ministry of Information and Communication has pursued the joint consortium comprised of the LG Telecom, the Hanaro Telecom and the Powercomm, in order to establish the three-pole system in the communication market. This plan was like the double edge sword strategy in order to solve together the pending problems of the Hanaro Telecom and the Powercomm necessary for the restructuring of the communication market.

And the LG`s way to constitute the consortium is also likely to generate the controversy over the preferential treatment. Rep. Kwak Chi-Young (New Millennium Democratic Party) maintained that ``a holding company includes the LG Telecom, the Hanaro Telecom, the Dacom, and the Powercomm``. Rep. Kwak told that ``The LG Telecom, the Hanaro Telecom, the Dacom, and the Powercomm should establish a holding company by investing their holding of shares, which will start the synchronous business in order to ``work out`` the communication market``. A high-ranking official of the Ministry of Information and Communication told that ``the government cannot help but wait for the compromise of the companies, even if the selection of the business company will be delayed``.

freewill@donga.com