SK Telecom's second mobile brand "air," billed as exclusive for unlocked phones (devices bought directly from manufacturers without going through carriers), has been out for more than a month, but the market response appears colder than expected. It targeted users of unlocked phones weary of the three carriers' expensive plans, but so far subscribers are estimated at only up to about 60,000. Contrary to industry concerns that it could be a "game changer" shaking up the mobile virtual network operator (MVNO) market centered on unlocked phone customers, it failed to generate early buzz.
◇ SK Telecom even ran ads touting a 500 won monthly fee amid weak sign-ups
According to SK Telecom on the 25th, cumulative installs of the "air" app, launched on the 13th of last month, totaled about 60,000. Because air can be subscribed to only through the app, the number of installs can be used to estimate subscriber size.
Data compiled by Mobile Index showed that air app installs numbered only 21,966 in October, but new installs more than doubled in November. The rapid rise in air app installs came as SK Telecom rolled out aggressive marketing, such as increasing point benefits. Starting in November, SK Telecom launched ads highlighting that the effective price for the 7GB plan (29,000 won per month) is 500 won per month. SK Telecom promoted that from November, for seven months on a limited basis, if users receive bonus pack points (21,000 won) and earn up to 7,500 won in points per month through the step counter and missions, it is the same as paying 500 won for the monthly fee. In fact, weekly active users (WAU) accessing the air app for mission participation also surged in November. WAU in the first week of November was 16,388, about double the last week of October (8,383).
◇ The cap on using all points for bill payments was a limitation
But the consensus is that the industry's anticipated boom did not materialize. That is because it was impossible to use all the points SK Telecom promised for bill discounts. For the 7GB plan (29,000 won per month) that SK Telecom advertised as having an effective monthly price of 500 won, the maximum points a customer could apply to a discount was only 5,000 won. Even if users received 28,500 won in points each month, they still had to pay 24,000 won in monthly fees. SK Telecom explained that remaining points not used for bill payment could instead be used for shopping at the air customer-only product mall.
A telecom industry official said, "If all points had been usable for bill payments, they could have absorbed a large number of MVNO customers," adding, "Capping point-based bill discounts at 5,000 won per month seems to have held them back."
◇ Lack of membership benefits and various bundle discounts is also a limitation
Another reason cited for lower-than-expected SK Telecom air sign-ups is that it does not offer various bundle discounts. According to the telecom industry, MVNO subscribers using the networks of SK Telecom, KT, and LG Uplus can receive bundle discounts if they use those carriers' internet services. Family bundle discounts are also available for families using MVNOs. However, air subscribers do not receive internet bundle discounts or family bundle discounts. A telecom industry official said, "SK Telecom seems to have overlooked that MVNO subscribers are also tied into various bundle discounts. Even if you offer more than 20,000 won in points per month, that cannot replace the effect of bundle discounts," adding, "Point offerings are also limited to about seven months, which likely fell short of driving inflows to air."
The lack of membership partnership benefits and device subsidies is also cited as a limitation for air. A telecom company official said, "Air has put forward low-priced plans, but without device subsidies, there are limits to absorbing existing carrier customers," adding, "SK Telecom's policy of not offering various carrier membership partnership discounts is also a hurdle to attracting subscribers."