With the three mobile carriers set to expand 5th generation (5G) plans priced in the 20,000-won range and to make the data safety option (QoS) standard starting in June, the budget phone market is shaking. After the government released the plan in April, concerns have grown that leadership in the low-cost telecom market could shift from budget carriers to the three major carriers. In fact, in April, number portability to budget phones posted its first net decline this year, heightening tension in the budget phone industry.
◇ Three carriers to bolster low-cost plans; budget phones see first net decline in number portability this year
According to the Korea Telecommunications Operators Association (KTOA) on the 11th, number portability to budget phones recorded a net decline of 7,353 cases in April. That means 7,353 more subscribers left budget phones than moved to them. This is the first time this year that number portability to budget phones has turned to a decline. Over the same period, SK Telecom gained a net 347, KT 4,703, and LG Uplus 2,303.
Budget phones had been adding subscribers this year despite an unfavorable market environment. In January, a waiver of KT's penalty fees sparked fierce subsidy competition among the three carriers, and in March, the three carriers sharply expanded subsidies right after the launch of the Galaxy S26. Even so, budget phone number portability had remained in net growth, but it swung to a net decline in April.
Industry officials say the Ministry of Science and ICT's released plan in early April to standardize QoS for the three carriers and expand low-cost plans in the 20,000-won range has had a preemptive impact on the budget phone market. The lowest 5G plans from the three carriers had been in the 30,000-won range. With QoS applied by default, even the carriers' low-cost plans effectively take on a "data unlimited" character. QoS allows users to continue using data at a reduced speed after exhausting their basic data allowance. According to the industry, the carriers' effective date is known to be after June 1. An industry official said, "The three carriers allow plan changes, so subscribers who sign up for current carrier plans in the 30,000-won range can lower them to the 20,000-won range after June," adding, "As the carriers decided to offer the data safety option without extra charges even on low-cost plans, the perception spread first that budget phones' price competitiveness could weaken."
Last year, under government leadership, the budget phone industry saw a series of 5G budget plans launched that offer 20 gigabytes (GB) of data in the 10,000-won range per month. However, unlike the three carriers' low-cost plans, the government-led 10,000-won-range 20GB budget plans do not include QoS by default, so after all data is used, an additional 22.53 won per MB is charged. Budget phones have grown by offering lower prices and relatively larger data allowances than the three carriers, but some say their differentiation will inevitably diminish if the carriers strengthen their low-cost plans.
◇ "10 won per month" ultra-low-cost plan battle; growing calls for wholesale rate cuts and QoS support
The budget phone industry has reentered an ultra-low-cost race. According to the plan comparison, recommendation, and activation platform "Modu's Plan," Finda Direct introduced a plan that offers 10GB of data, 200 minutes of calls, and 100 texts for 10 won per month for seven months. Tplus offers 6GB of data, 350 minutes of calls, and 100 texts for 10 won per month for six months. At Iyagi Mobile, users can get 1GB of data, 100 minutes of calls, and 100 texts for 80 won per month for four months.
Industry officials view this trend as more than simple marketing, saying it has a strong "survival competition" character. As the three carriers' low-cost plan offensive ramps up, budget phones' price advantage could weaken, forcing operators to defend their subscriber bases even at the cost of losses.
Still, there are concerns that excessive cutthroat competition could weaken the market's stamina over the long term. Plans priced in the 10-won range are highly effective in attracting subscribers but have little to do with improving profitability. If the promotion battle drags on, there are also warnings that restructuring pressure could mount, especially among small and midsize budget phone operators.
The budget phone industry argues that institutional improvements are needed to maintain market competitiveness. Because budget operators provide services by leasing the three carriers' networks, wholesale rate burdens are cited as a major cause of revenue deterioration. The industry is calling for additional wholesale rate cuts and conditions to provide QoS by default at levels comparable to the three carriers. A budget phone industry official said, "Although the carriers' 20,000-won-range plans and standardization of the data safety option have not yet taken effect, they are already weighing on the budget phone market," adding, "For budget phones to secure sustainable competitiveness beyond simply the low-price market, institutional support such as wholesale rate cuts and the foundation for offering QoS must proceed in parallel."