Ministry mobilizes against costly phone fees

A customer scans smartphones on display at a store in Yongsan, central Seoul. The government yesterday announced measures that would reduce the burden of mobile fees. [JoongAng Ilbo]

The Ministry of Science, ICT and Future Planning has come up with its first major policy: reducing mobile fees for Korean households.

“If the policies are administered as planned, the mobile telecommunication market will switch its focus from exhaustive subsidy competition to service and fee competition,” said Lee Dong-hyung, head of the telecommunication policy bureau at the ministry, in a press briefing yesterday. “More active use of thrifty phones and diversified mobile fee plans are expected to ease mobile fee burdens, thus boosting competition in the mobile device market and eventually leading to cheaper mobile phones.”

The ICT Ministry will encourage the use of the so-called thrifty phones - low-end smartphones and feature phones not sold by mobile carriers that are as much as 30 percent cheaper than ordinary phones - by dragging down the monthly fees users pay.

To that end, the top policy maker would lower fees sellers pay to SK Telecom, KT and LG U+ for using their networks, to be effective next month.

With SK Telecom, for instance, the cost for voice calls will be lowered 22 percent to 43.2 won ($0.04) per minute, whereas the fee for data will become cheaper by as much as 48 percent. If phone sellers pay less to carriers, fees imposed on users will naturally go down. Thrifty phone users already pay 20 percent less.

That is not the end. The recent system among mobile carriers of enabling the subscribers of the same carrier to make unlimited calls will apply to thrifty phone users starting in June at the earliest. SK Telecom and KT have agreed to allow thrifty phone business operators to run the system, while LG U+ is considering it.

Also, the ministry will expand the sales network for thrifty phones by allowing sellers to take advantage of post offices around the country, effective September. The seven largest thrifty phone sellers in Korea out of the total 27 have 688 outlets, only 2.8 percent of the stores run by the three mobile carriers, according to data.

Good news for all mobile phone users is that the government aims to abolish fees that users pay to mobile carriers when they start their subscriptions - so-called mobile carrier membership fees ranging between 24,000 won and 39,000 won. In 2011, the three carriers earned 570 billion won from membership fees. But they will be slashed by 30 percent in September and gone by 2015.

To widen consumer choices, mobile carriers will allow users to customize plans depending on their voice and data usage patterns. The new system will go into effect by the end of next month.

By Seo Ji-eun [spring@joongang.co.kr]