High-Speed Internet, “Into Competitions Again”

The high-speed Internet market, which had been quiet, is stirring again.

As the coalition negotiations of Hanaro Telecom and Thrunet are broken off, the market expects that it will be overheated again. The reason lays in the fact that the 2nd and 3rd sharers of the high-speed Internet market surrendered coalition and if they begin promoting individual survival, fierce competitions over attracting subscribers are inevitable.

Aspects of intense confrontation between the two corporations are appearing. Therefore, the government’s restructuring plan to combine Hanaro Telecom and Thrunet into a new competitive communication enterprise is stumbling.

∆ Offense And Defense Around The Failure Of Coalition = The surface reason for the negotiations’ suspension is Thrunet’s separate sale of cable business line.

Hanaro Telecom’s executive director Kwon Taek-Min attacked, “Thrunet has been secretly promoting double-negotiations for its cable business line, apart from negotiations with Hanaro.” He explains that the coalition without the cable business is meaningless.

On the other hand, Thrunet blamed on Hanaro Telecom for the suspension by saying, “Cable business’ sale had been published since the beginning of the year.”

Thrunet’s vice-president Lee Hong-Sun refuted on the 1st, “Hanaro used the coalition negotiations for supporting the stocks only.” He also showed a strong reaction that “if Hanaro Telecom does not apologize in public, it will be sued for libel,¡° after explaining that it is not true that he met president Shin Yoon-Sik on the 27th, last month, to suggest transfer of property.

∆ Is It Going Back Into The Infinite-Competition System? = If the two corporations’ coalition misfires, the high-speed Internet market cannot avoid infinite competitions. Already so deepened in confrontation, the two will fight more harshly for the 2nd place in the market.

For now, he two corporations are confident in improving the status of financial affairs, which feared of weakening. There are increasing concerns that their over-competitions will worsen their weak financial systems.

Especially, the high-speed Internet market is slowly becoming saturated, as over 8 million members have already subscribed until now.

If the two corporations jump into the market separately, their fight against the top-ranker KT (former Korea Telecom) will be unmanageable. Hanaro Telecom and Thrunet each possess 2.09 million and 1.3 million subscribers, which are far from KT’s 4.5 million subscribers.

Therefore, some market experts predict that even if the confrontation of Hanaro Telecom and Thrunet becomes resolved somehow, the two will eventually start negotiating again in order to survive.

Tae-Han Kim freewill@donga.com