SK Telecom launched the SIM-only brand "Air" on the 13th. Released as a no-contract plan, it does not offer device subsidies or the 25% plan discount, and there are no T Membership discount benefits, but the company said it designed cheaper plans than before targeting people in their 20s and 30s. However, inside and outside the telecom industry, there is talk that SK Telecom designed the product to funnel subscribers into the 47,000 won plan to strengthen profitability.
◇ SKT packs benefits into the 47,000 won plan
According to the telecom industry on the 14th, Air, which SK Telecom released as a second telecom brand, concentrated benefits on the 47,000 won plan. Specifically, the 44,000 won plan offers 30 gigabytes (GB) of data and QoS at 1 Mbps (data service at 1–5 Mbps when the basic data is used up), while the 45,000 won plan, which is 1,000 won more expensive, provides 71 GB of data and QoS at 3 Mbps. The price difference between the plans is only 1,000 won, but the basic data is more than double and the QoS speed is three times faster. The 47,000 won plan supports 100 GB of data and 5 Mbps QoS. It is only 3,000 won more than the 44,000 won plan, but offers more than three times the data and five times the speed.
A telecom industry official said, "The 38,000 won plan, which is one tier cheaper than the 44,000 won plan, offers 15 GB of data and 1 Mbps QoS, but given the heavy content data consumption characteristic of people in their 20s and 30s, they will have no choice but to use a plan in the 40,000 won range," adding, "When consumers choose a plan, the product was likely designed so they would pick the 47,000 won plan instead of the 44,000 won one."
◇ Steering subscribers to the 47,000 won plan with point discounts
To mark the launch of Air, SK Telecom decided to temporarily offer for six months, depending on the subscribed plan, ▲ the 29,000 won plan (7 GB per month/19,000 points) ▲ the 38,000 won plan (15 GB per month/20,000 points) ▲ the 44,000 won plan (30 GB per month/23,000 points) ▲ the 45,000 won plan (71 GB per month/30,000 points) ▲ the 47,000 won plan (100 GB per month/32,000 points) ▲ the 58,000 won plan (unlimited monthly data/32,000 points).
Because points can be used to pay for plans, the actual monthly cost after applying them drops to 10,000 won (29,000 won plan), 18,000 won (38,000 won), 21,000 won (44,000 won), 15,000 won (45,000 won), 15,000 won (47,000 won), and 26,000 won (58,000 won). Notably, while the 44,000 won plan that offers 30 GB of data and 1 Mbps QoS costs 21,000 won, the 47,000 won plan that supports 100 GB of data and 5 Mbps QoS costs 15,000 won, making it cheaper. The design makes it most advantageous for consumers to choose the 47,000 won plan.
◇ "Air" that minimizes marketing expenditure… Aimed at maximizing revenue?
Why did SK Telecom concentrate benefits on the 47,000 won plan? The figure "47,000 won" is known as the average service fee that a domestic mobile network operator (MNO) charges customers. According to the "Korea mobile fee map report" published last year by the Digital Future Research Institute, the average fee of the three telecom companies was 47,097 won. In other words, the average service fee for subscribers recruited through expenditure on marketing such as device subsidies and membership discounts is roughly 47,000 won.
But SK Telecom Air does not offer benefits such as device subsidies or a 25% plan discount. That is because it was designed as a no-contract plan. There are no add-on services such as T Membership discounts, which can drastically reduce marketing expense. In addition, Air can only be subscribed to through a 100% online-only app, so it does not bear labor costs or sales commissions that occur when operating offline stores, yielding significant cost savings. A telecom industry official said, "As a result, the more customers subscribe to Air plans priced at 47,000 won or higher, the more the company can increase revenue."
SK Telecom suffered a hacking incident in Apr., spending several hundred billion won just on SIM replacement expense. It then pledged to invest 700 billion won in security over the next five years and announced compensation measures totaling 1 trillion won, including a 50% reduction in telecom fees (for Aug. only) and enhanced 50% T Membership discounts. In this situation, although the Mobile Device Distribution Improvement Act was abolished at the end of Jul., the inter-carrier device subsidy war that consumers expected did not happen. That is because SK Telecom did not choose to sharply increase subsidy expenditure to win back subscribers.
Instead, SK Telecom appears to have sought a breakthrough by launching a new type of telecom brand that reduces the burden of marketing costs while increasing business revenue. Externally, it promoted the launch of cheaper telecom plans than before, but critics say the ultimate goal is to maximize telecom business revenue.
Shin Hyeon-du, head of the Korea Consumer Association, said, "It seems like a trick by telecom companies to reduce marketing costs after the repeal of the Mobile Device Distribution Improvement Act," adding, "They promoted it as if it were for consumers, but over time consumers will realize it is actually to increase business profitability."