This Is Why Waiting Takes 1 Hour... Half of Budget Phone Providers Have 10 or Fewer Customer Service Staff

Among 40 Altteul Phone Companies, 21 Have Customer Service Staff of 10 or Fewer
Easy to Subscribe but Difficult to Cancel
Calling Customer Service Leads Only to ARS Automated Guidance

[Asia Economy Reporter Minyoung Cha] "Canceling a budget phone plan is truly hell." A, a 30-year-old with a middle school child, chose the Iyagi Mobile budget phone SIM combination last year when buying the latest smartphone for their child. This was to save on the plan cost since they were purchasing a high-end smartphone worth over 1 million won. After using the budget phone plan for a year, when trying to cancel it, the website only directed them to contact customer service or visit a branch in person. No matter how many times they called customer service, only the ARS automated guide came up, and after holding the phone for two consecutive days, they barely managed to cancel.

Half of Budget Phone Providers Have 10 or Fewer Customer Service Staff

The budget phone (MVNO) market, which is approaching 12 million subscribers this year, is facing criticism for a shortage of personnel. Despite marking its 12th anniversary, both small and large budget phone providers are criticized for chronic customer service staff shortages.

According to data submitted by the Ministry of Science and ICT to Rep. Youngsik Kim of the People Power Party on the 19th, among 48 registered budget phone providers in Korea, excluding 8 IoT line providers, more than half (52.5%) of the remaining 40 companies have 10 or fewer customer service staff. Six companies, including CN Communication, Huel Company, Jangseong Mobile, E-Card, Npaynet, and CK Communistory, have only 1 to 2 customer service employees.

Some providers fail to meet even the minimum legal standard of "one customer service employee per 10,000 subscribers." For example, Jangseong Mobile had over 150,000 subscribers as of June 2019 but currently has only two customer service staff. Since companies are reluctant to disclose subscriber numbers citing trade secrets, transparent management is difficult. In July last year, the Ministry of Science and ICT's own investigation found some small and medium-sized providers operating below legal standards. The names of these companies were not disclosed.

According to the Ministry of Science and ICT, as of June this year, the total number of budget phone lines in Korea, including IoT lines, reached about 11.6 million. This number has generally increased from 7.52 million lines at the end of 2017 to 8 million in 2018, 7.75 million in 2019, 9.11 million in 2020, and 10.35 million in 2021. This rise is due to more people seeking self-supplied + budget phone combinations because of the high cost of smartphones priced over 1 million won.

Easy to Subscribe via 'Self-Activation' but Difficult to Cancel... 'Number Porting Automatically Cancels' Tip Shared

The shortage of customer service staff directly harms consumers. The increase in 'self-activation,' where consumers activate their plans through the website themselves, is a self-help measure to address this issue. While activation is not difficult, cancellation is problematic. Most providers require customers to contact customer service or visit a branch as a barrier to cancellation. Online smartphone community boards share the 'tip' that "since the cancellation process is too slow, porting your number automatically cancels the previous plan."

Within the budget phone industry, there is internal criticism that some providers' negligence lowers the overall market's reputation. Budget phone providers purchase voice, text, and data wholesale at low prices from mobile network operators (MNOs) and resell them to consumers, profiting from the margin. The cost of maintaining customer service centers is accounted for as labor costs in this process.

Some providers who have no intention of expanding their scale neglect service investment for this reason. The nature of the budget phone market, where number portability is free, also leads to so-called 'cherry pickers' who switch carriers just to get freebies, which discourages providers from making efforts.

An industry insider said, "Even though many companies work hard to improve the image of budget phones, some malicious companies neglect customer service, creating a problematic image. It is better to accurately point out and correct problematic companies."

The government is also aware of these issues and has formed a consultative body including the budget phone industry and multiple civic groups to communicate with budget phone providers. Recently, KT and LG Uplus opened integrated budget phone partner customer centers as part of these efforts. A Ministry of Science and ICT official said, "We are continuously working with budget phone providers through the consultative body to discuss ways to strengthen competitiveness. Following last year, we plan to check the budget phone guidelines again in the second half of this year to ensure compliance with customer service staffing standards."