Ruling and Opposition Parties Criticize 5G Mid-Tier Plans... Increasing Pressure to Lower Communication Fees

Chief Report by Ahn Jeong-sang of the Democratic Party Emphasizes Need for Tiered Pricing Plans, Not Single Products
Ruling Party Also Discusses Appropriateness of '24GB per Month' Plan
Yoon Doo-hyun to Host Forum on 14th
Telecom Industry Observes... Ministry of Science and ICT's Stance Likely Crucial

Three Major Mobile Carriers

[Asia Economy Reporter Cha Min-young] SK Telecom's '24GB monthly data' 5G mid-tier plan submitted to the Ministry of Science and ICT has been met with criticism from both ruling and opposition parties, who deem it 'insufficient.' Amid political criticism, not only KT and LG Uplus, which have announced plans to launch mid-tier plans by August, but also the Ministry of Science and ICT, the overseeing body, are facing deep concerns.

According to political circles on the 14th, Ahn Jeong-sang, Senior Specialist of the Democratic Party of Korea, stated in a report the previous day, "The core of introducing a mid-tier plan is not a single mid-tier plan but the adoption of a tiered pricing system proportional to users' data consumption." He emphasized the need to introduce tiered pricing plans. To enhance effectiveness, he argued that multiple tiered plans with 20GB increments between 10GB and 100GB should be newly established. Additionally, he added that comprehensive measures are needed, including inducing lower device prices, allowing 5G users to choose 4G (LTE) plans, and expanding non-face-to-face subscription plans.

On the 11th, SK Telecom reported a plan centered on '24GB monthly data for 59,000 KRW' on the same day as a meeting between Minister Lee Jong-ho of the Ministry of Science and ICT and representatives of the three telecom companies. Under the provisional reporting system, the Ministry of Science and ICT will review the plan within 15 days and decide whether to approve it. The ministry did not disclose whether SK Telecom reported only a single plan. The market expects additional related discussions beyond the publicly disclosed plan.

From the ruling People Power Party, Kwon Seong-dong, Acting Representative and Floor Leader, stated, "Minister Lee Jong-ho and the three company representatives agreed to reform telecom fees and announced a plan to create a 24GB data plan. We will carefully review whether the agreement is appropriate." Representative Yoon Doo-hyun of the People Power Party also pointed out, "The average data usage is 27GB per month, so if a 24GB mid-tier plan is launched, people will have no choice but to select high-priced plans," adding, "Most consumers subscribe to plans over 100GB but do not fully use them." On the same day (14th), Representative Yoon also held a '5G Telecom Plan Reform Consumer Rights Enhancement Forum.'

As SK Telecom’s 5G mid-tier plan, the first step taken, faces backlash from political circles, the three telecom companies have become uneasy. Along with SK Telecom, which introduced the plan in line with the first meeting between the Ministry of Science and ICT minister and the three company representatives, KT and LG Uplus, which have announced plans to launch mid-tier plans in August, are also deeply concerned. Plans directly affect Average Revenue Per User (ARPU), requiring meticulous design. LG Uplus’s operating profit in Q1 this year dropped by more than 5% year-on-year to about 260 billion KRW.

There are also responses that the appropriateness of the plan may vary depending on perspectives on average data usage. Jeong Chang-rim, Director of Telecommunications Policy at the Ministry of Science and ICT, explained at the telecom companies’ meeting, "Consumers’ average monthly data usage is 23 to 27GB," adding, "Excluding the top 5% heavy traffic users, the average usage is about 14 to 21GB." This is interpreted as an approach considering actual demand rather than a simple average.

A telecom industry insider said, "A comprehensive telecom policy direction considering overseas cases, global competition, and the ICT industry's global competitiveness seems necessary," adding, "I hope a more flexible policy will be applied." Another industry insider also said, "Given the mandatory investment burdens such as base stations, telecom companies are naturally reluctant to adjust plans directly linked to profitability," and added, "The policy stance of the Ministry of Science and ICT will be important."