Suspensions are a jackpot for MVNO

While the three major mobile carriers have been penalized for excessive subsidies on sales of smartphones, mobile virtual network operators (MVNO) are taking the opportunity to expand by using similar subsidy tactics.

MVNO are wireless communication service providers who borrow network infrastructure from larger mobile carriers while offering cheaper phones for users not interested in high-end smartphones.

According to the Korea Telecommunication Operator Association, since the KT and LG U+ sales suspension started March 13, subscriptions for MVNO services have surged.

On Monday, new subscriptions hit a one-day record of 6,572. Behind the sudden increase was CJ Hellovision, an affiliate of CJ Group. Roughly 35 percent of MVNO subscribers have switched to CJ Hellovision. The industry believes CJ Hellovision was able to attract subscribers largely because the company offered as much as 700,000 won ($647) in subsidies on older model smartphones.

Last week, CJ Hellovision sold the Galaxy S4, Galaxy Note 2 and LG G2 for about 250,000 won. The Optimus G Pro and Nexus 5 were offered for 40,000 won to 70,000 won.

CJ Hellovision wasn’t the only one busy attracting subscribers as major retailers, including E-Mart and Homeplus, which runs an MVNO, also were trying lure customers by offering freebies, such as irons and rice cookers.

“MVNO operators are following the exact techniques practiced by the large operators,” said a telecommunications official, who requested anonymity.

BY SOHN HAE-YONG [ojlee82@joongang.co.kr]