"Do it or not? Absolutely do it"… Government pressures on 5G mid-tier pricing plan

Minister Emphasizes Work Reports Following Economic Policy Directions
Expansion Needed from 24~31GB to 40~100GB

[Asia Economy Reporter Oh Su-yeon] The government has emphasized the need to diversify 5G mid-tier plans three times this month. The pressure from the government on the three major telecom companies to launch new 5G plans in the new year is expected to intensify.

According to the telecommunications industry on the 29th, the Ministry of Science and ICT announced in its 2023 work report that it will promote diversification of 5G plans, including 5G senior citizen plans and data tiers ranging from 40 to 100GB. This is already the third time this month that the government has stressed the necessity of 5G mid-tier plans. In the announcement of the 2023 Economic Policy Direction on the 21st, the government also emphasized actively encouraging the launch of various 5G plans beyond the existing 5G plan range (24?31GB). Minister Lee Jong-ho of the Ministry of Science and ICT also stated at a year-end meeting on the 19th, "We will discuss ways to create more diverse plans," and added, "The government will strive to reduce the communication cost burden on the public."

The three major telecom companies launched 5G mid-tier plans in August, offering 24?31GB of data per month for 50,000 to 60,000 KRW. User response has been lukewarm. According to the industry, as of the end of October, about two months after the mid-tier plans were launched, subscribers accounted for just over 1% of the total 5G subscriber base. According to the Ministry of Science and ICT's "Wireless Data Traffic Statistics," the average data traffic per 5G subscriber as of the end of October was about 28.1GB, indicating that consumer demand is not being met.

Looking at the performance of the three telecom companies, the impact of the 5G mid-tier plans has been limited. SK Telecom and LG Uplus saw their third-quarter average revenue per user (ARPU) drop by 0.1% and 5.7% year-on-year, respectively, but excluding Internet of Things (IoT) and Machine-to-Machine (M2M) lines, it is estimated that ARPU actually rose slightly. KT, which calculates ARPU based only on wireless subscribers, saw a 3.5% increase year-on-year.

If the mid-tier plans are expanded to the 40?100GB range, the situation could change. The industry anticipates that subscribers of plans above 110GB may start migrating, potentially causing ARPU to decline. Telecom companies are responding to government pressure by expanding online-only plans instead of mid-tier plans. SK Telecom revamped its online-only plans on the 14th, increasing the data allowance of the 9GB plan to 11GB and adding 110GB and 250GB plans. They also added wired and wireless bundle discount benefits that were not previously offered for online plans. KT and LG Uplus are expected to follow suit with similar plan revisions.

So far, the telecom companies have not expressed any particular stance. However, they are tense as the government continues to express its intention to promote mid-tier plans daily. A telecom industry official said, "We have nothing to say at the moment," and remained tight-lipped.