The smallest carrier with the biggest plans

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The smallest carrier with the biggest plans

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Customers play games on the recently released Galaxy Note9 at the Galaxy Studio set up at Parnas Mall next to COEX in Gangnam District, southern Seoul, on Monday. [YONHAP]

LG U+ may be the smallest mobile carrier in Korea, but its recent aggressive business strategy and innovative products have persuaded tens of thousands of customers to leave its rivals and join the telecommunications underdog.

On Tuesday, the company announced that it will guarantee the exchange value of Galaxy Note9s at 40 percent of the original launch price even after the phone has been used for two years. This means that a Galaxy Note9 will be able to get a discount of 40 percent of the value of the Note9 on their next phone from LG U+, even if they use it until the summer of 2020.

No mobile carrier in the country has ever offered such a good deal on phones used for as long as two years.

SK Telecom offers a program that allows users to exchange their Galaxy Note9 phones at 40 percent of the original price tag after using the phone for 18 months. KT’s program enables consumers to exchange the phablet at 50 percent the price, but the phone can’t be used for more than a year.

Considering that general consumers change phones in a two-year cycle, LG U+’s program can help users change to new phones with less of a price burden. As for those wanting to return their phones earlier than two years, LG U+ also guarantees resale prices of 50 percent the original price tag when the phone is returned within a year.

The aggressive plan is one of the first strategies from new LG U+ CEO Ha Hyun-hwoi. Since the start of this month, Ha has emphasized that the smallest player in the industry should differentiate its products by offering high price competitiveness.

The idea isn’t new - LG U+ has been trying to stand out in the industry by offering unique services ahead of its larger competitors for a while now.

In November last year, the carrier introduced a phone plan that offers twice the data to customers buying phones with a lump sum payment rather than installments. LG targeted customers who would typically be ineligible to receive monthly phone bill discounts because they opted to buy their phones in advance instead of with installments. Larger competitors SK Telecom and KT followed suit and launched similar phone plans in March this year.

The smallest carrier also was the earliest to introduce a truly unlimited data plan in February. While there were existing plans described as “unlimited,” they really worked by slowing transmission speeds after a certain amount of data was used.

The new 88,000 won ($78) plan introduced by LG U+, however, offers the same speed throughout the month regardless of the amount of data used.

Once again, KT and SK Telecom quickly followed LG’s lead. KT revamped all of its phone plans in May to offer more data at cheaper prices, while SK Telecom introduced plans that enable family members to more easily share data.

There are critics, however, that are not so sure about LG U+’s recent ventures. The carrier has been partnering with video streaming service provider Netflix since May. It gave out three months of free Netflix for people newly subscribing to its truly unlimited data phone plans. It is also looking into airing Netflix content on its own internet TV service.

A major obstacle for LG U+ is the high commission it has to pay to the U.S. streaming giant. The commission is reported to be around 90 percent and local industry insiders say the unfair rate may negatively affect negotiations with other local internet protocol television operators.

LG U+’s positive stance toward using equipment made by Huawei instead of Samsung Electronics when building infrastructure for 5G commercialization has also faced criticism.

But customers don’t seem to share the concerns. According to data from the Korea Telecommunications Operators Association, 18,275 people newly subscribed to LG U+ in the second quarter this year, while SK Telecom lost 16,998 subscribers and KT lost 1,277 subscribers.


BY KIM KYUNG-JIN, KIM JEE-HEE [kim.jeehee@joongang.co.kr]
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