iPhone finally allowed in South Korea – but what’s next?

Thanks to a legal technicality, the iPhone wasn’t allowed to be sold in South Korea for a long time. However, the regulators there have made an exception to the rule for Apple, clearing the path for iPhones to be sold in South Korea. What changed their mind?

The legalities:

The issue that held the iPhone at bay was GPS and location. According to Korean regulations, only technologies that come from domestic sources are allowed to use GPS functions in the country. Since Apple is an American country, it would not be allowed to use Korean GPS. Korea has traditionally been very protective of it’s native telecoms industry, and this move was likely taken to make sure that home companies weren’t damaged by an influx of iPhones.

But this lead to an interesting problem for the Korean regulators. Apple could probably have gotten around this legality by allowing a single operator to manage and run all of it’s location services for it. In effect, Apple could have solved the problem by doing what it ALWAYS does – entering into an exclusive contract with a single operator in the country.

What’s the problem with that?

As we reported back in August, even the whiff of an iPhone exclusive was causing the two main operators in South Korea, KT Corp and SK Telecom, to behave quite poorly. The “exclusive” business that Apple does in countries has lead to anti-competitive behaviour more often than not, which is the very reason that the FCC got interested in the first place.

What we think?

The South Korean regulators, being protective of their telecoms industry, almost certainly don’t want to see the iPhone causing any trouble. So by making an exception to the GPS statute, they are effectively giving the iPhone free access to South Korea. This will allow Apple to enter the country – but how will they do so? Apple has yet to comment on this story at all. It seems that what the regulators want to avoid is an exclusive contract. Given the negative attention being paid to that at the moment, it’s something that Apple might want to avoid as well.

I can’t wait to see how this pans out. We could quite likely see Apple enter the South Korean market equitably, with every operator getting a slice of the pie. And if it doesn’t play nice… well, South Korea has proven adept at slapping people for anti-competitive behaviour before. I would say that Apple is going to play ball.

Via WSJ