5G mid-priced plan in $30 range may be available in Korea this year

Logos of SK telecom Co., KT Corp. and LG Uplus Corp. [Photo by Yonhap]

The South Korean government is speeding up efforts to activate the market for budget mobile phone services, indicating its willingness to further reduce household phone bills.

The Ministry of Science and ICT plans to release a measure for market activation by June following a review of the current wholesale supply system and the market share of mobile carriers. The ministry is also reviewing the device purchasing support system to increase the actual reduction in household phone bills.

On Wednesday, Park Yun-kyu, the 2nd vice minister of the ICT ministry, said that the ministry will discuss the expansion of 5G budget phone plans and the development of new service plans suitable for different consumer usage patterns with the mobile carriers.

“Expanding price options in the plans for consumers is desirable, and KT Corp. and LG Uplus Corp. are also joining to prepare various plans,” Park said.

SK telecom Co., the country’s largest mobile telco, announced earlier that it will provide wholesale services for budget mobile phones for data usage of over 30 gigabytes (GB), raising expectations for the release of a 5G mid-priced plan in the 30,000-40,000 won ($23~$31) range within this year.

Earlier, SK telecom added a 5G mid-priced plan that covers 37-99GB of data for a monthly fee of in the 60,000 won range. KT and LG Uplus are expected to release similar plans by May.

Budget mobile phone plans are typically 20-30 percent cheaper than those offered by the three major mobile carriers. If budget mobile phone providers introduce 5G mid-priced plans, the effect of reducing phone expenses is expected to be even greater.

[Photo provided by Ministry of Science and ICT]

Regarding this, Vice Minister Park emphasized the need to review the obligation to provide wholesale services and the method of calculating wholesale prices, to enable small and medium-sized budget mobile phone providers to evolve into new competitors in the communication market. Currently, SK telecom is designated as an obligated provider of budget mobile phone wholesale services.

The government’s efforts to promote budget mobile phones aim to increase the perceived effect of reducing phone bills.

“Considering the various user benefits such as free second device fees and mobile phone insurances available along with high-priced plans, the migration of subscribers who pay more than 80,000 won per month will be insignificant,” said Hana Securities Co. said, forecasting that given the contract effect and actual price difference, the proportion of subscribers adopting the new mid-priced plan will not exceed 20 percent of new subscribers.

Given the past practices, SK telecom is expected to enter negotiations for budget mobile phone wholesale prices for new data usage starting in May. As a result, 5G intermediate rate plans with more than 30GB of monthly data may be available in the fall.

If the existing 5G wholesale price ratio of about 60 percent is applied to the price of SK Telecom’s 37GB plan (62,000 won), a 5G plan with 37GB data coverage costing slightly more than 37,200 won may be available.