SK Telecom on 13th launched the self-purchase-only mobile brand "AIR" and unveiled a breakthrough plan that offers 100 gigabytes (GB) of data for 15,000 won per month. The plan will run for six months on a limited basis as a launch promotion, but it is being evaluated as superior to MVNOs in terms of "value for money (price-to-performance)" due to its low price, sending the MVNO industry into high alert over fears of subscriber churn.
◇ SKT "AIR" surpasses MVNOs on value for money
According to the telecom industry on 14th, the Korea Association of MVNOs (hereafter the MVNO Association) has begun internal discussions to prepare countermeasures against the fallout from the AIR launch. This is because SK Telecom announced that it will offer, for six months, a plan providing 100GB of data and QoS at 5Mbps (additional data service at 1–5Mbps after basic data is used up) for 15,000 won. The original price of this plan is 47,000 won per month, but SK Telecom decided to provide 32,000 won in points each month and discount the bill for six months.
Koh Myung-su, head of the MVNO Association, said in a phone interview with ChosunBiz, "I was surprised to hear about 100GB of data for 15,000 won a month," and added, "We will first compare and review MVNO plans and SKT AIR's plan, then gather views within the association and state our position."
Even compared with the 5G 20GB MVNO plan in the 10,000-won range (19,800 won) that the government rolled out early this year to invigorate the MVNO market, SK Telecom AIR's monthly price is 4,800 won cheaper, and it offers five times more data. While the 10,000-won-range 5G plan does not support QoS, AIR supports QoS at 5Mbps.
On top of that, if users earn additional points provided through participation in games and other activities in the SK Telecom "AIR" app (up to a 5,000-won discount per month), they can use the 100GB data plan for just 10,000 won per month for six months. An MVNO industry official said, "Because MVNOs are, in principle, contract-free sign-ups, subscribers can cancel at any time," and added, "If there is a cheaper plan, subscribers can migrate en masse, so anxiety over SK Telecom's new AIR brand is shaking the MVNO industry."
◇ Prior regulation removed for MVNOs… "Even the lead ministry finds it hard to step in"
Although SK Telecom has introduced to the market a plan priced low enough to threaten the MVNO market, the Ministry of Science and ICT, the lead ministry, also finds it difficult to intervene readily. That is because SK Telecom did not set the rate itself lower, but temporarily lowered the bill through point discounts. A telecom industry official said, "If SK Telecom had lowered the plan price itself, MVNO firms could have used that as grounds to demand a cut in wholesale network access fees, but because it used the workaround of point discounts, even that is impossible."
Since April this year, the method for setting wholesale network access fees has changed from prior regulation (the government negotiating with carriers on behalf of MVNOs) to post regulation (each MVNO negotiating with carriers first, with the government then evaluating appropriateness), making it impossible for the government to intervene and pressure cuts in wholesale network access fees. Previously, when carriers lowered rates, prices were controlled by cutting wholesale fees through prior regulation. Under current law (the Telecommunications Business Act), SK Telecom, the No. 1 carrier, is obligated to provide wholesale network access, but there is no legal provision requiring it to provide wholesale network access fees to MVNOs at low prices.
A telecom industry official said, "It seems to be a strategy to attract subscribers by adjusting bill prices through point discounts, just as subsidies were once widely offered for devices," adding, "The first target will likely be MVNOs centered on users of contract-free, self-purchase phones." SK Telecom AIR is a self-purchase-only mobile brand based on contract-free plans.