South Korea's FTC Orders 'Melon' To Open Up

South Korea's Fair Trade Commission on Dec. 20 fined SK Telecom, the nation's leading mobile phone carrier, for using its market dominance to overly restrict its music-downloading and streaming service.

The governmental antitrust regulatory agency fined SK Telecom 330 million won ($354,839) and ordered it to make its "Melon" music player compatible with other music formats within 60 days.

An FTC official said that although the decision applies only to SKT, the commission expects all other telecoms to follow the same ruling on compatibility.

"The compatibility problem can be solved with a converter, which we have been developing," said SK Telecom in a statement. "We hope to be compatible with other companies' players by early next year," the statement adds. "However, considering the current illegal music market situation, it is disappointing that our company's role in leading the for-pay music market has been undervalued."

A consortium of SKT's competitors filed a grievance with the FTC in August 2005, claiming SKT's proprietary and incompatible music format was unfair, given the telecom's market clout. SK Telecom accounted for 60.2% of the music-enabled mobile phone market in Korea in 2005, according to the FTC, based upon data provided by each telecom.

SKT's Melon service launched in November 2004, allowing subscribers to download and stream music to their phones and computers for a monthly subscription fee of 5,000 won ($5.45)

Although physical music sales in South Korea fell to just 113.8 billion won ($124 million) in 2005, digital and online music sales topped 248 billion won ($270.2 million), according to the Korea IT Industry Promotion Agency. Of that amount, 202.6 billion won ($220.7 million) came from mobile music sales.