The Ministry of Science and ICT will shift the budget phone market from a simple resale focus to a structure that enables proprietary infrastructure and differentiated services. The plan is to broaden the room for rate cuts while strengthening oversight of underperforming operators and user protection to build a "budget phone 2.0" ecosystem.
On the 31st, the ministry unveiled measures to boost budget phones at a meeting of ministers on the economy and a task force for special management of consumer prices. The number of budget phone subscribers in Korea has surpassed 10 million, but most operators merely resell products from the three mobile carriers, leading to criticism that their competitiveness beyond price is weak. Limits in trust, such as call center quality and responses to voice phishing, have also been cited.
The government will first lower budget phone operators' expense burden to broaden the foundation for rate cuts. Beginning in August, it will sequentially offer to budget phones the new plans from the three carriers that apply the data safety option, and add the safety option at no extra expense to about 90 existing wholesale plans. It will reduce wholesale fees for some 5G products by 1 to 3 percentage points. The government also projected that expanding the radio frequency usage fee reduction rate for small and medium budget phone firms from 50% to 90% would enable industrywide annual expense savings of about 25 billion won.
Devices and sign-up procedures will also be overhauled. The government will activate certified used phone transactions and propose a tax credit for used devices to fiscal authorities. With 47 operators having transacted about 1.1 million certified used phones as of the end of May, one year after the system's introduction, the plan is to expand this as a means to cut device purchase costs. A public-private consultative body will also be formed to expand mid- to low-priced and unlocked devices. The use of eSIM, which allows immediate online activation, will be broadened, and the scope of mydata-based plan comparison and recommendation services will be expanded to major budget phone firms.
An "investment ladder" will also be prepared for the entry of innovative operators. The legal definitions and functional requirements for service-type and independent-type budget phones with their own infrastructure will be newly established, and operators obligated to interconnect networks will be expanded to the three mobile carriers. Wholesale fees will be differentiated according to the level of infrastructure ownership, and MVNE businesses that provide budget phone infrastructure to other operators will be allowed. Support for facility investment utilizing policy finance will also be pursued. The state of market competition after the shift to autonomous wholesale fee negotiations will be comprehensively assessed within the year and reflected in a review of the regulatory framework.
User protection measures will also be strengthened. Standards for counseling staff will be raised, and regular evaluations of call centers and simultaneous fact-finding inspections will be conducted. Registration and operational requirements will be refined so that operators lacking basic capabilities can be managed or exited. Compliance guidelines will be prepared to prevent subscriber harm during mergers and acquisitions, and customer response training for small and midsize firms will be expanded.
Starting in August, the government will begin revising enforcement decrees and related notices with the goal of increasing to at least three the number of budget phone operators that own their own infrastructure.