New gov’t tries to push phone bills down, increase WiFi

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New gov’t tries to push phone bills down, increase WiFi

As early as September, some mobile phone users may see 25 percent cuts in their monthly service charges, and more free WiFi will be available in public, the government said Thursday.

An advisory committee in charge of mapping out President Moon Jae-in’s policies and the ruling Democratic Party jointly unveiled a series of measures to give a helping hand - to the underprivileged, in particular - on mobile communications expenses.

Senior citizens aged 65 or older and low-income families with monthly earnings in the bottom 70 percent of income levels will enjoy 11,000 won ($9.60) discounts on their monthly mobile bills later this year. The total number of people in that category is 5.84 million but only 3.29 million are expected to apply for the benefit, the committee said.

A new monthly plan that charges only 20,000 won for 200 minutes of voice calls and 1 gigabytes of data will be launched for the underprivileged as soon as the government lays ground for a related bill.

The government will offer free WiFi on some 50,000 buses and subways trains and 15,000 schools, which is expected to cost 80 billion won.

WiFi in the subways will be upgraded to long-term evolution networks from the current WiBro. Only the smallest telecom player LG U+ has installed LTE networks in the subways. SK Telecom and KT will soon follow suit.

Korea’s mobile subscription system allows new phone buyers to choose between receiving a lump-sum subsidy of 100,000 won to 200,000 won at the point of purchase, or getting a discount on monthly bills on the condition that users maintains a subscription for one to two years. There are 19 million mobile subscribers that chose the latter option.

The Thursday measure pertains to them. The discount ceiling on monthly mobile expenses will be raised from the current 20 percent to 25 percent under the government’s plans. That means that subscribers to the most common plan of 60,000 won monthly may see 3,000 won slashed from their bills on top of the current 15,000 won maximum discount. Before April 2015, the discount limit stood at 12 percent.

All together, the measures are expected to lead to a yearly savings of 4.6 trillion won by Korean consumers on their mobile communication expenses, the committee said.

Abolishment of basic monthly fees, which Moon pledged in his campaign, was delayed at the last minute as mobile operators opposed collectively. Users have to pay between 9,900 won and 110,000 won, depending on the amount of data and hours of voice calls allowed.

“The promise to scrap the basic monthly bill hasn’t been nullified,” said Choi Min-hee, a member of the committee, in a briefing on Thursday. “We will proceed with it in the long term.”

The committee vowed to launch a body that involves various parties including lawmakers, mobile operators and civic groups.

It remains to be seen whether the consumer-friendly measures are actually carried out, given that some will lead to enormous revenue losses for mobile operators. Some are threatening to sue the government in the Seoul Administrative Court, citing violation of the mobile communications terminal distribution act.

Foreign investors in mobile operators, disgruntled about the Moon administration’s move, may file suits.

“The government’s arbitrary intervention damages the order in the telecom industry,” said a spokesman with one of the three carriers.

“It is regrettable that the government announced mobile communication cost-cutting measures, such a grave issue, without serious debate,” said the Korea Telecom Operators’ Association in a statement.

But for the telecom companies, the discount increase was a relatively better option than the scrapping of basic fees, as indicated by their share prices Thursday.

SK Telecom shot up 3.34 percent to close at 263,000 won, KT, up 1.86 percent to 32,800 won and LG U+, up 1.19 percent to 17,000 won.


BY SEO JI-EUN [seo.jieun@joongang.co.kr]

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