20GB 5G Plan at '10,000 KRW Range'... Significant Wholesale Price Reduction for Budget Phones (Comprehensive)

Ministry of Science and ICT Announces Measures to Strengthen MVNO Competitiveness
New Cost-Based Wholesale Fee Calculation Introduced... Industry Calls It "Encouraging"
Institutional Improvements and Policy Financing to Support the Emergence of Full MVNOs

The government has lowered the wholesale data fees that Mobile Virtual Network Operators (MVNOs) pay to mobile carriers for network usage by up to 52%, paving the way for MVNOs to introduce 5G plans offering 20GB of data for around 10,000 KRW. With policies supporting full MVNOs (MVNOs that own their own infrastructure) also introduced, the industry is optimistic that competitive operators will emerge.

On the 15th, the Ministry of Science and ICT announced measures to strengthen the competitiveness of MVNOs at the Government Seoul Office. The aim is to enhance consumer benefits by providing reliable communication services at low prices.

Until now, the MVNO industry has consistently argued that to maintain competitive low-priced plans, the wholesale fees paid to SK Telecom, the designated wholesale provider, must be reduced. Especially for 5G plans, there have been strong voices that high wholesale fees prevent the creation of affordable plans comparable to LTE.

Additionally, from April, MVNOs will have to negotiate wholesale fees individually with mobile carriers. By announcing significant reductions in wholesale fees and other measures to strengthen MVNO competitiveness, the government is seen as setting a benchmark to enable MVNOs to create competitive plans.

Significant Wholesale Fee Reduction Expected to Enable 5G 20GB Plans Around 10,000 KRW

The government has reduced the data wholesale fee for independent MVNOs (not subsidiaries of mobile carriers) by up to 52% (from 1.29 KRW/MB to 0.62 KRW/MB) to strengthen their competitiveness. This is expected to enable MVNOs to launch their own plans in the 20-30GB range, which corresponds to the average data usage of mobile users. In particular, the launch of 5G plans offering 20GB for around 10,000 KRW is anticipated, significantly increasing consumer benefits. Currently, the 5G plans offered by the three major mobile carriers are priced around 42,000 KRW for 24GB (based on SK Telecom Direct).

To reduce wholesale fees, a new cost-based wholesale fee calculation method will be introduced. Previously, wholesale fees were calculated by subtracting unnecessary costs from retail plans, but now the wholesale costs will be calculated first, with additional necessary costs added afterward. With this new method, the wholesale fee for metered data plans will be reduced from the current 1.29 KRW/MB to 0.82 KRW/MB, marking the largest 36% reduction in the past decade. Ryu Jae-myung, Director of the Network Policy Office at the Ministry of Science and ICT, stated, "The revision of the wholesale fee calculation standard notification is currently underway and is expected to be completed by February, so it can be applied immediately thereafter."

Discount benefits for bulk data purchases by MVNOs will also be enhanced. Annual pre-purchase discounts will be introduced: SKT offers a 25% discount for pre-purchasing over 50,000 TB per year, and LG Uplus offers a 20% discount for pre-purchasing over 24,000 TB per year. Monthly bulk discounts will also increase from a maximum of 13% to 18%.

To ensure that MVNOs face no restrictions when designing their own plans after the introduction of ex-post regulation, mobile carriers will be required to cooperate, and this will be reflected in the wholesale provision agreements. The agreement renewals are expected to take place in the first half of this year. However, Kim Do-gyu, Director of Telecommunications Policy at the Ministry of Science and ICT, commented on the standardization of the agreements, saying, "There are doubts about whether negotiations will go smoothly after ex-post regulation, so we will listen to industry opinions and assess the situation before making further statements."

Additionally, MVNOs will be able to offer data speed-limited products alongside their own plans, increasing the speed limit options from the existing 400 Kbps to include 1 Mbps, and the number of overseas roaming products will increase from one to four, expanding choices for MVNO users.

The MVNO industry has responded positively to the competitiveness enhancement policies, including the wholesale fee reduction. An industry representative said, "With the wholesale fee reduction, operators who determine that they can recover their investment at some point may challenge becoming full MVNOs."

Supporting the Emergence of Full MVNOs... Raising Entry Bar to Gain User Trust

The government will also support institutional improvements and infrastructure investments to foster the emergence of full MVNOs. First, the system will be improved to mandate network interconnection with operators pursuing full MVNO status, and policy financing will be provided to support infrastructure investments for full MVNOs. Financial support will be determined by policy financial institutions after reviewing individual companies' credit and conditions.

On the morning of the 15th, Ryu Jae-myung, Director of the Network Policy Office, announced measures to strengthen the competitiveness of budget phones at the Government Seoul Office Building. Photo by e-Briefing Capture

Director Ryu stated, "The government has not set a specific target number for full MVNOs. However, we will actively support the emergence of competitive operators through prompt investments." Currently, the government has identified 2 to 3 companies interested in becoming full MVNOs.

Alongside strengthening MVNO competitiveness, the government is also pursuing strategies to enhance user trust. To prevent fraudulent MVNO subscriptions, Information Security Management System (ISMS) certification will be made mandatory, and Chief Information Security Officers (CISOs) must be reported. Furthermore, to ensure sufficient financial capacity for information security obligations, the capital requirement will be raised from the current 300 million KRW to 1 billion KRW, increasing the entry barrier to the MVNO market. The 'MVNO User Protection Guidelines' will also be revised to specify consistent cancellation procedures across operators.

To ensure fair competition among operators in the MVNO market, differentiated regulations will be applied between mobile carrier subsidiaries and independent large and medium-sized enterprises. As of September last year, there were 9.48 million MVNO subscribers, with subsidiaries of five mobile carriers accounting for 47% (4.44 million) of the market.