Budget phone operators affiliated with the three mobile carriers are keeping the listed plan prices at or above wholesale rates while piling on cash‑like perks such as points and gift certificates, effectively lowering subscribers' out‑of‑pocket costs to "0 won." Critics say they are only formally complying with the registration condition that bans launching products below wholesale rates, which was put in place to stop loss‑leading by large corporate affiliates backed by capital. The gap in perks by sign‑up channel for the same plan exceeds 400,000 won, fueling controversy over discrimination against users.
◇ Up to 520,000 won in points and gift certificates… perks exceed six months of fees
As of on the 13th, according to reporting by ChosunBiz, SK Seven Mobile, KT M Mobile, and U+ UMobile—budget phone operators affiliated with the three carriers—are running sign‑up promotions that combine points, gift certificates, and coupons.
The most generous perks come from U+ UMobile under LG Uplus. New subscribers receive 40,000 won in LG Lifecare Mall points per month for up to 10 months, plus an additional coupon worth 120,000 won. The maximum perk totals 520,000 won.
KT M Mobile also offers perks worth up to 470,000 won to some plan subscribers. If you use a plan allowing up to 130 gigabytes (GB) per month for six months, the total fees paid are 249,000 won. By contrast, if you meet various conditions—entering an event code, referring a friend, and SIM sign‑up—you can receive 450,000 won in M Market points and SIM sign‑up perks such as Naver Pay points worth 20,000 won. Factoring in all perks, the economic benefit nears double six months of service fees, pushing the out‑of‑pocket burden into the "negative."
SK Seven Mobile also gives some plan subscribers up to 180,000 won in Naver Pay points or Shinsegae gift certificates. Naver Pay points are paid at 15,000 won per month for 12 months.
The budget phone industry views these perks not as simple freebies but as de facto cash‑like support. Naver Pay and gift certificates can be used online and offline, and dedicated mall points can be used to buy products and mobile coupons.
◇ Only the listed fee is regulated… "cash‑like perks should be reflected"
The key question is whether to treat points and gift certificates as freebies or as factors that lower the effective sale price. The registration condition imposed when carrier‑affiliated budget operators entered the market states, "A registered operator must not launch products below the wholesale price paid under a revenue‑sharing method for products received from a wholesale provider." It is designed to prevent large corporate affiliates from squeezing out smaller operators through below‑cost competition.
Recent promotions provide separate points and gift certificates without cutting the monthly flat fee. On listed prices alone, they appear to comply with the registration condition, but once cash‑like perks are reflected, the effect can resemble selling below wholesale. That is why critics say the letter of the rule is observed while its intent is circumvented.
A small budget phone industry official said, "If you include points and gift certificates, the effect is no different from selling below wholesale," and added, "Small operators cannot afford the same level of marketing expense and are being driven into competition that gives up margins."
If this is deemed a violation of registration conditions, sanctions are possible. Article 20 of the Telecommunications Business Act allows the Minister of the Ministry of Science and ICT to cancel registration or order a business suspension of up to one year if a facilities‑based carrier fails to fulfill registration conditions. However, the current conditions do not set clear criteria requiring points and gift certificates to be included in the sale price. Whether the promotion actually constitutes a registration condition violation requires the ministry's judgment.
◇ Same plan but a 420,000 won perk gap… verbal caution from the Korea Media and Communications Commission (KMCC)
Perks differing by hundreds of thousands of won depending on the sign‑up channel are also contentious. According to the industry, in June U+ UMobile's maximum sign‑up perks were 520,000 won on its own mall, 300,000 won on Moyo, a budget phone comparison and activation platform, 155,000 won on Alddat, LG Uplus' budget phone platform, and around 100,000 won at offline stores. The gap between the official mall and offline stores was 420,000 won.
The Korea Media and Communications Commission is said to have verbally pointed out the perk gap between channels to LG Uplus. LG Uplus said, "This is not limited to a specific operator but appears similarly across the industry," and explained, "Related consultations are underway under the KMCC's lead."
Article 50 of the Telecommunications Business Act prohibits unfairly offering fees or other economic benefits in a discriminatory manner to specific users. Gift certificates, points, and coupons can also be included as "economic benefits." However, the mere fact that perks differ by channel does not immediately make it illegal. It is necessary to determine whether the plan and sign‑up conditions are the same, who—between the carrier and the distribution channel—bore the perk expense, and whether there are reasonable differences in selling expenses and marketing methods. It is also necessary to distinguish between cases where an external platform provided additional perks at its own expense and cases where a carrier varied the level of support by channel.
Industry sources say current regulations address below‑wholesale sales and channel‑based user discrimination separately, making it hard to screen out effectively low‑priced sales that use cash‑like perks. Some argue that the economic benefits returned to subscribers should be reflected in fees under certain standards. If only the listed monthly fee is compared, carriers can avoid regulation by keeping the fee unchanged while lowering the effective burden with points and gift certificates.
A telecom industry official said, "Judgment should be based on what subscribers actually pay, not the listed price," and added, "While distinguishing the expense burdens of operators and distribution channels, we need standards that jointly curb de facto underpricing and excessive discrimination among users."