The Korea Herald


[Editorial] Flawed telecom policy

Government needs to devise stronger measures to lower prices for 5G plans

By Korea Herald

Published : July 11, 2023 - 05:30

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The Ministry of Science and ICT on Thursday unveiled a set of plans aimed at lowering mobile subscription fees and increasing competition in the telecom market. One key measure is to allow a fourth carrier to enter the mobile telecom market dominated by three players -- SK Telecom, KT and LG Uplus.

With a new player in the fray, the government hopes competition among the carriers will intensify in a way that will lead to more affordable monthly subscription plans.

The new plan of the ICT Ministry came after President Yoon Suk Yeol called for drastic measures to lower the prices of mobile subscription and lessen the financial burden on households in February.

Consumers, civic groups and telecom experts have long called on the government to devise a new mobile price policy that will introduce affordable monthly plans, since existing plans are deemed too expensive. The average telecom cost for each Korean household jumped to a record 130,285 won ($100) as of the first quarter of this year, extending a three-year rising streak since 2020 when the figure was 119,775 won.

The latest plans of the ICT Ministry left many consumers unimpressed. They had expected the government to lower prices for the fastest 5G mobile service, abolish the law that limits mobile subsidies and introduce pay-as-you-go mobile data plans. None of the new policies announced by the ICT Ministry deals with these three key demands.

The ICT Ministry said it would update its mobile price policy twice a year to encourage carriers to introduce diverse and affordable 5G subscription plans. But the ministry did not draw up any specific measures to achieve the goal.

In fact, the supposedly midlevel 5G subscription plans were introduced in April last year, but consumers still see the existing plans as too expensive. Civic groups said mobile phone users want to sign up for a monthly plan that costs around 30,000 won and offers 30 gigabytes of data via the 5G network -- the most common data usage pattern and the ideal price range.

Unfortunately, the three carriers have no plan to roll out such monthly plans. Nor does the ICT Ministry have the will to push them to do so, as far as the new competition plans unveiled Thursday are concerned.

Another sticking point is whether the government should abolish the Mobile Device Distribution Improvement Act, which went into effect in October 2014. The act was originally designed to prevent excessive subsidy-based marketing. The government had forecast the new act would encourage the three carriers to lower monthly subscription fees as they could save subsidy costs substantially.

What played out, however, was perplexing for both consumers and policymakers. Instead of cutting fees, the three carriers simply stopped offering generous subsidies and kept the monthly subscription prices at a high level, leading to higher profits.

As a result, Korean mobile users are now forced to pay far higher prices to buy mainstream smartphones from Samsung and Apple than those in other countries because of the strict limit on the maximum amount of smartphone subsidies.

For this reason, consumers want the government to abolish the limit altogether and allow carriers to freely set the subsidy level. But the ICT Ministry has no such plan yet.

The ICT Ministry’s plan to give another license to a new carrier faces obstacles and skepticism as well. Since a new carrier has to invest a huge amount of money to set up networks and compete against the three dominant carriers, it is difficult to find a new bidder. This is why the government has tried to find a fourth carrier seven times since 2010 and failed every time.

If the Yoon administration truly wants to lessen the burden of telecom bills, it has to abolish the subsidy limit and set a new price policy aimed at introducing much-needed affordable 5G subscription plans.