Mid-tier plans would better align current data allowances with consumption, and help relieve pressure on consumer finances
Minister calls for the introduction of mid-tier plans: On 11 July 2022, South Korea’s Minister of Science and ICT Lee Jong-ho held a meeting with the CEOs of SK Telecom, KT and LG Uplus to discuss current issues in telecoms policy. In this first meeting between the operator executives and the Minister since he assumed the role, Lee outlined proposed initiatives to help deliver greater affordability for consumers. Specifically, he requested that telcos introduce “intermediate rate plans”, i.e. mid-tier tariffs, for 5G, noting that offers on the market today were limited to small or large data allowances. For example, LG Uplus offers SIM-only plans with either less than 12GB of 5G data or more than 150GB. The Minister added that active efforts were needed to create a range of 5G propositions that meet user demands given increasing pressure on consumer finances.
New 5G tariffs would more accurately reflect data usage levels: Shortly after the meeting, it was reported that SK Telecom is considering a new mid-tier 5G plan with a 24GB data allowance for around KRW59,000 ($45) per month. While not confirmed until the operator submits its draft proposition to the Government, the tariff could potentially be available to subscribers as early as this August. It would more closely reflect current average monthly data consumption (23-27GB), thereby easing the burden on household spending and addressing the polarising effect of existing 5G packages. As similar action from the other two telcos would be likely, the Minister’s message may well have got through. Beyond tariffs, Lee also revealed aims to improve coverage, underlining a need for continued investment to expand availability to rural areas and to improve service quality within indoor settings.
Operators will hope for a something in return: While some regulators have tended to be reluctant about making significant policy interventions at the retail level, in particular to encourage operators to reduce prices or even to force them down via the use of caps, authorities in some Asian markets (such as Japan and Korea) have not been so restrained. As we have discussed, a quid pro quo relationship exists between the Government and the Korean telecoms industry. As a result of this arrangement, the country’s telcos generally benefit from the support of the ruling party in government, which creates an enabling regulatory environment. The Minister should therefore expect a response from his call to action, although the sector will be equally hopeful of continued government support and cooperation, as it has demonstrated with the approval of a shared 5G network to boost coverage in rural areas.
