High Communication Fees but Inadequate Discount Benefits [Heotdari Economy]

Benefits Vary Widely by (39) Grade
Many Benefits May Be Missed If You Don't Check the App Often

Editor's NoteMany people thought they were engaging in smart economic activities to get better deals, but it often turned out to be misguided. When consumers are deceived by corporate marketing or blinded by momentary gains and make wrong decisions, it is ultimately the consumers who suffer. We aim to examine economic activities where people have misjudged everyday situations and ended up making mistakes.

Consumers using the three major mobile carriers?SKT (SK Telecom), KT, and LG Uplus?can enjoy membership discount benefits, although there are differences in tiers such as VIP and GOLD. They can receive free coffee and ice cream, and even get beverage size upgrades. Discounts are also available when purchasing over a certain amount at partner stores. However, if users do not frequently use the apps or check the benefits individually, they may miss out on these offers.

We reviewed the main benefits of the three major carriers. SK Telecom has partnered with a total of 171 affiliates, while KT and LG Uplus have 127 affiliates each. SK Telecom customers can get discounts at Baskin Robbins (up to 50%, once a month for a single regular size), Paris Baguette, CU, and 7-Eleven (100 KRW discount per 1,000 KRW spent, once daily). At CGV, they can enjoy free movie tickets up to three times a year (weekend 1+1 viewing), and at Megabox and Lotte Cinema, they can get up to 4,000 KRW off when purchasing movie tickets priced at 11,000 KRW.

KT membership discounts include Baskin Robbins (50% off V/VIP pint, once a month), Paris Baguette (100 KRW discount per 1,000 KRW spent for GOLD and above), Starbucks (size upgrade once a month / free Americano once a month for VIP and above), GS25 (100 KRW discount per 1,000 KRW spent for GOLD and above, once daily), and CU (all tiers get 200 KRW discount per 1,000 KRW spent on morning convenience meals, once daily). Discounts are also available at Lotte Cinema (up to 5,000 KRW off once daily / free booking for VIP and above, up to 12 times a year), Megabox (6,000 KRW discount once daily), and CGV (up to 5,000 KRW discount, three times a month).

LG Uplus offers discounts at Baskin Robbins (6,000 KRW off when purchasing one family pack, once a month), Paris Baguette and GS25 (100 KRW discount per 1,000 KRW spent for VIP and above, once daily), Tous Les Jours (100 to 150 KRW discount per 1,000 KRW spent for VIP and above), Lotte Cinema (4,000 KRW discount, six times a month), Megabox (2,000 to 4,000 KRW discount for Excellent tier and above, once daily), and CGV (2,000 KRW discount, once a month).

Three Carriers Reduce Benefits... "Should I Switch to a Budget Phone Since Benefits Are Few?"

Ms. Lee Seyun (35) presented her carrier-affiliated card at a convenience store to get a 10% discount after purchasing items. However, discounts on 2+1 or 1+1 promotional products, which used to apply, were no longer available. The free movie benefits, which she could receive 12 times a year, had recently been halved to six times.

Membership benefits from carriers are noticeably decreasing. According to data on changes in carrier benefits disclosed by Lee Jeongheon, a member of the National Assembly’s Science, Technology, Information and Broadcasting Committee from the Democratic Party, SK Telecom reduced its free movie ticket booking benefit from six times a year in 2021 to three times this year; KT reduced it from 12 times a year in 2019 to six times; and LG Uplus cut it from 24 times a year in 2017 to three times. Convenience store discount benefits have also been reduced. Previously, purchasing 1,900 KRW worth of items would get a 10% discount, saving 190 KRW, but now only 100 KRW is discounted for the same amount.

The decline in membership benefits is a key reason for customers leaving carriers. Since it is difficult to find all the discountable items and the perceived benefits are low, more consumers are switching to budget phones with lower communication fees.

According to the Ministry of Science and ICT’s “Status of Wired and Wireless Communication Service Subscriptions as of the End of July,” over five years since 2019, 2.41 million lines have left the three major carriers, while budget phone lines increased by 2.55 million. SK Telecom suffered the largest loss with 1.24 million lines leaving, followed by KT with 910,000 lines, and LG Uplus with 250,000 lines. The biggest reason existing customers switch to budget phones is the pricing plans. According to a survey by the Korea Consumer Agency, as of June, the average monthly communication fee for subscribers of the three major carriers was 65,027 KRW, more than three times that of budget phone subscribers (20,252 KRW).

Professor Lee Youngae of Incheon National University’s Department of Consumer Studies said, “Consumers should be accurately informed about the benefits and information they can receive according to their membership tier.” She added, “If communication fees keep rising but consumers cannot properly utilize the benefits due to lack of information, they will eventually leave. If consumers leave, carrier benefits will decrease further, and only bundled services will increase, creating a vicious cycle.”