"The goal is to increase the proportion of low-cost mobile phone services, which currently makes up about 10% of all mobile phone lines, to 30%. To achieve this, we plan to encourage mobile communication (MNO) customers, whose two-year contracts have ended and have fully paid off their device installment fees, to switch to low-cost mobile services."
Kim Myung-soo, the newly elected president of the Korea Low-Cost Mobile Communication Association (hereafter referred to as the Low-Cost Mobile Association), met with reporters on the 4th in Jongno-gu, Seoul, and made this statement.
Kim noted, "As smartphone specifications have improved and their lifespan has increased, customers who have fully paid the device installment fees over the two years can now use their devices for another 2 to 3 years." He added, "We will strive to attract this customer base to low-cost mobile services, which are characterized by their affordable rates." Furthermore, he said, "While the number of low-cost mobile subscribers is approaching 10 million, the proportion of pure low-cost mobile service lines, excluding the Internet of Things (IoT), is estimated to be around 10 to 15%. We aim to raise this to over 30% during my term."
Kim emphasized that he will prioritize cooperation with the government to enhance the competitiveness of the low-cost mobile industry. He mentioned, "As my first action after taking office, I will initiate meetings with officials from the Ministry of Science and ICT," adding, "I believe it is crucial to create a policy environment favorable to the low-cost mobile industry."
Kim also addressed the issue of free riding in the low-cost mobile sector. He stated, "Among the more than 60 low-cost mobile companies, only 20 are members of the Low-Cost Mobile Association. Since those not joining the association still benefit from the profits generated, the free riding problem has intensified." He further noted, "To resolve this issue, we will consult with the government to create laws that guarantee certain rights and benefits for those who join the association." Over 40% of the annual fees paid by member companies of the Low-Cost Mobile Association are covered by low-cost mobile subsidiaries of telecommunications companies (SK Telink, MediaLog, LG HelloVision, KT mMobile). Kim asserted, "Expanding our membership is essential for representing the interests of small low-cost mobile companies."
Kim expressed concerns over the spectrum usage fees imposed on small low-cost mobile companies starting this year and the 'post-regulation' changes to wholesale pricing. He mentioned, "From this year, low-cost mobile companies will be charged a spectrum usage fee, and starting in April, the negotiations for wholesale pricing will shift to a post-regulation approach," indicating that "there are industry worries about weakening price competitiveness."
Until now, the government had exempted small low-cost mobile companies, excluding those under the three major telecommunications companies, from paying spectrum usage fees. Starting this year, low-cost mobile companies will need to pay 20% of the spectrum usage fee, 50% in 2026, and the full amount from 2027. According to the industry, this will result in an additional expense of about 2,000 won per low-cost mobile line starting in 2027. From April, the negotiations for wholesale pricing will also be conducted directly between low-cost mobile companies and telecommunications services, with the government regulating after the fact. Until now, the government has been negotiating wholesale pricing on behalf of low-cost mobile companies. Kim stated, "Even if the approach changes to post-regulation, the government will ensure that these price negotiations fall within appropriate limits. If excessive increases in wholesale pricing occur, we will have grounds to push for legislation to revert to prior regulation."
Kim, the head of low-cost mobile company Smatel, was elected as the new president of the Low-Cost Mobile Association at the regular general meeting held on the 4th. His term lasts until February 4, 2027.