Input 2021.03.10 12:08
5G·LTE fee is provided in the range of 20,000 to 50,000 won… Similar to a cheap phone
Industry “Competitiveness can be secured only when net wholesale prices are lowered”
The reason for the introduction of the plan is to reduce the cost burden on customers and expand options. However, there seems to be an intention to avoid the government’s pressure on low and mid-price rates for the purpose of easing household communication costs.
As the three telecommunications companies have announced that they will introduce mid- to low-priced rates, the affordable phone industry is on the verge of testing again. The atmosphere was good with the recent crowds of self-sufficient phone subscribers, but a sense of crisis is rising that the three telecommunications companies will be robbed of users again. There are claims that the’network cost’ should be lowered for fair competition, but cohesion is falling due to subsidiaries of the three telecommunications companies.
According to the industry on the 10th, three telecom companies, including SK Telecom, KT, and LG Uplus, are recently offering 5G mid-to-low price plans one after another. Last January SK Telecom (017670)and LG U+ (032640)Launched a 5G and Long Term Evolution (LTE) online-only plan for 20,000 to 50,000 won per month. KT(030200)Also launched an online-only plan with a similar price.
The online-only plan excludes the combined discount, but at the same time, it does not have a mandatory subscription period (contract) and is 30% cheaper than the existing plan. The LTE plan is at a similar level to the affordable phone plan, and the 5G plan is cheaper.
The reason that the three telecommunications companies launched an online-only plan is because the number of self-sufficient phone subscribers has been steadily increasing in recent years. Recently, consumers have complained that the 5G plan of the three telecom companies is expensive compared to the service level, and as a solution, they purchase a self-contained phone and sign up for a carrier with an LTE rate that is cheaper than the 5G service fee. Self-sufficient phones refer to mobile phones that are sold directly by manufacturers, rather than purchasing mobile phones through telecommunications companies.
According to the Ministry of Science and ICT, the number of self-sufficient phone users accounted for 6% in 2018. Currently, this proportion is estimated to have exceeded 10%. In particular, the Galaxy S21, launched in January, accounts for 30% of the purchase of self-contained phones.
According to the Korea Telecom Operators Association (KTOA), the number of mobile communication number transfers last month totaled 40,2601, down 25,320 from the previous month. On the other hand, the number of affordable phones increased slightly from 56,246 to 56,63, and has been on the rise for the 9th consecutive month. In the total mobile number portability market, the number of affordable phones surpassed 30% for the first time in December last year, and is now estimated to be 36.6%.
In addition, the three telecom companies are also under pressure to launch the government’s 5G mid-to-low price plan. From the beginning of 5G commercialization, the government has been continuously requesting the launch of a mid-to-low price plan from the telecom companies in order to lower the burden of household communication costs. The industry believes that the three telecom companies launching a 5G online-only plan that is cheaper than the existing rates will partially respond to such government requests.
The low-cost phone industry has escaped from a long slump due to the popularity of self-sufficient phones, but is again depressed by the 5G low and mid-price rates of the three telecom companies. Considering the operating costs such as network wholesale costs, it is difficult to provide a cheaper rate plan than the 5G rate plan currently offered by telecommunications companies.
In order to secure competitiveness, the affordable phone industry argues that it is necessary to further increase the reduction rate of network wholesalers from telecommunications companies. Currently, the three telecommunications companies”network rental rates’ average wholesale rates for low-cost phones are around 60%.
The fact that KT M Mobile, LG Hello Vision, and SK Telink are all subsidiaries of the three telecommunications companies, which is inevitable for the volume of their voices to fade. The market share of number portability subscribers in the affordable phone market, which combined them with the financial giant KB Financial LiveM, was 105,000 as of January, accounting for 68.1% of the market.
An official in the low-cost phone industry said, “It is expected that a crisis will come in the low-priced phone industry, where it is no longer possible to cut prices and secure profitability due to the competition for the three telecom companies.” “He said.