Wholesale Price of Altteul Phone Data Reduced by 20%... Enhancing Competitiveness

Ministry of Science and ICT Develops Measures for Sustainable Growth of Altteul Phone Market

[Asia Economy Reporter Cha Min-young] The Ministry of Science and ICT announced on the 22nd that it will promote measures to protect users and revitalize the market for the sustainable growth of MVNOs (Mobile Virtual Network Operators). This is to ensure that MVNOs can contribute to activating competition in the mobile telecommunications market and reducing household communication expenses.

Since their introduction in 2010, MVNOs have secured 12.46 million subscribers as of the end of October, accounting for 16.3% of the total mobile market subscribers. This consists of 7.15 million mobile phone lines and 5.31 million IoT (Internet of Things) lines, including connected cars. However, MVNO sales amount to 1.1562 trillion KRW, with an operating loss of 11.5 billion KRW. There have also been cases of misuse, such as mass production of ghost phones.

Wholesale Price Cut by 20%

The Ministry of Science and ICT will lower the wholesale data prices of SK Telecom, the wholesale service provider, by nearly 20% to enhance the price competitiveness of MVNOs. The wholesale data price will be reduced by 19.8%, from 1.61 KRW per 1MB to 1.29 KRW. Voice prices will be cut by 14.6%, from 8.03 KRW per minute to 6.85 KRW. The government expects that the lowered wholesale prices will improve the pricing competitiveness of MVNO operators.

SKT, the wholesale service provider, will also reduce the revenue-sharing rate for LTE and 5G plans provided wholesale to MVNOs by 1 to 2 percentage points. Additionally, to supply 20-30GB tier plans considering average 5G usage, related system development will be expedited to enable the launch of MVNO plans by January next year.

Subsidiaries of the three major mobile carriers will withdraw from the prepaid phone market to promote coexistence with small and medium MVNO operators focused on prepaid phones. These subsidiaries will stop accepting new prepaid subscriptions and gradually exit the prepaid phone business.

To allow MVNO operators to independently compose and launch LTE and 5G plans including data QoS, SKT as the wholesale provider will supply 400kbps data QoS wholesale to MVNOs. Previously, KT and LG Uplus have provided 400Kbps and 1Mbps data QoS for LTE plans. QoS refers to providing unlimited speed-controlled data after the basic data is exhausted.

Furthermore, cooperation between MVNO operators and card companies will be strengthened to increase the number of partnership cards that allow MVNO subscribers to receive communication fee discounts similar to those of the three major carriers. The number of common discount partnership cards among MVNO operators increased from 3 in 2020 to 4 in 2021 and 9 in 2022.

To improve user accessibility, the 'MVNO Hub' will be equipped with an integrated module to conveniently use electronic signature services, supporting 13 services including Kakao and Naver. Telecommunications-related information will be linked to help private platforms like 'Modu-ui Yogeumje' grow. Customized plans and event plans for new semester youth will also be launched through the Post Office MVNO.

To alleviate cost burdens on small and medium MVNO operators and encourage the launch of affordable plans, the exemption period for radio usage fees, which was set to expire in 2022, will be extended to 2023. The validity period of the wholesale provision obligation system will also be extended to support stable operations of MVNO operators.

The wholesale price calculation method will be improved. Considering service characteristics and market conditions, system improvements will be reviewed to allow flexible application by operator. Discussions will be held with the Regulatory Innovation Promotion Team of the Office for Government Policy Coordination.

Strengthening MVNO User Protection

The Ministry of Science and ICT will also strengthen user protection for MVNOs. MVNO operators will independently start a fact-finding survey on the entire process from subscription, usage, to termination from the user’s perspective in cooperation with the Korea Consumer Federation. The survey results will be regularly announced starting early next year.

The Ministry will periodically inspect MVNO operators for compliance with the ‘Guidelines for MVNO User Protection.’ It will closely monitor prohibitions on false and exaggerated advertising, illegal telemarketing, explanation of contract terms, and prevention of unfair business practices. Especially regarding ghost phones, the Ministry will work with the Korea Communications Commission and the National Police Agency to enforce identity verification procedures during mobile phone activation. Severe penalties will be imposed for involvement in fraudulent activations.

The accuracy of emergency location tracking, which has been raised as an issue with MVNOs, will also be improved. To resolve inaccurate location tracking issues during emergencies with self-supplied devices, a quality council for emergency location information will be formed including the Korea Communications Commission, emergency agencies, carriers, and device manufacturers. Advanced location tracking technologies using various signal information such as Wi-Fi and Bluetooth will also be pursued.

The Ministry of Science and ICT stated, "This year was an important year in which MVNO subscribers recently increased at the fastest rate, surpassing 12 million, thanks to the efforts of the MVNO industry and government policy support," adding, "We expect that individual MVNO operators’ competitiveness will further improve through mergers and acquisitions in the future."