Telecom firms cut fees for socially vulnerable by $960 bn

[Photo by Yonhap]

South Korea‘s major telecom firms collectively cut telecom fees for the socially disadvantaged by 1.26 trillion won ($958.8 billion) in 2023, the Korea Telecommunications Operators Association (KTOA) said Tuesday.

SK Telecom Co., KT Corp., LG Uplus Corp. and SK Broadband Co. offered discounts to 7.76 million people, totaling 1.26 trillion won, in 2023. This is a significant increase from 2017’s 63 billion won and more than 2.7 times that amount.

The telecom operators have offered a 35 to 50 percent discount on communication fees for vulnerable groups and veterans since 2000. The scope of beneficiaries has broadened over the years to encompass basic livelihood recipients, persons with disabilities, veterans, near-poor households since 2008, and basic pension recipients since 2017. Discounts apply to landline telephone, mobile communication, high-speed internet, and internet telephone services.

The three major mobile operators reduced fees for vulnerable groups by more than 1 trillion won per year in 2023, the third consecutive year it has done so since 2021 and providing discounts two to five times higher than other major industries. As an example, the energy sector offers discounts of about 200 billion won and the electricity sector offers discounts of about 700 billion won.

In comparison, only one service out of landline, mobile or broadband internet is discounted in the United States, while only the landline is discounted in Spain and France. Korea’s share of beneficiaries per capita is more than 20,000 times higher than these countries, at 15.1 percent compared to 2.2 percent in the United States, 0.0007 percent in Spain and 0.0008 percent in France. In terms of value, Korea‘s discounts are about 89 times higher than Spain’s and 191 times higher than France‘s.

Although the United States offers discounts on mobile charges, the total amount remains lower than Korea’s, even though the U.S. population is 6.5 times larger. Korea stands out as a country that is proactively reducing communication charges for vulnerable groups, but this is leading to concerns about the sustainability of the discount system as the burden of these reductions is borne by all telecom operators.