20,000 Won 1GB·100 Minutes Call... Will the Universal Rate Plan Be Effective?

[Asia Economy Reporter Koo Chae-eun] The government has once again brought up the card of introducing a universal tariff plan priced at 20,000 to 30,000 KRW per month, but there are criticisms that it lacks effectiveness and is a hasty administration. When it was proposed in the 20th National Assembly in 2018, there was strong opposition calling it a "communist idea" due to government intervention in market prices, and the "social consensus body" also failed to reach a conclusion, so the controversy has reignited with the re-promotion.

According to the telecommunications industry on the 4th, the Ministry of Science and ICT announced on the 30th of last month that the amendment to the Telecommunications Business Act, which includes the introduction of the universal tariff plan, was approved at the Cabinet meeting and will be submitted to the National Assembly. A Ministry of Science and ICT official said, "The government-submitted bill, which was discarded due to the expiration of the 20th National Assembly session, has been reintroduced to the 21st National Assembly. We will sincerely participate in the National Assembly's discussion process."

However, if there is little difference from the draft that was scrapped in the 20th National Assembly, its effectiveness is expected to be significantly reduced. The draft, which was scrapped in 2018 due to opposition from the telecommunications industry, focused on providing 200 minutes of voice calls and 1GB of data for around 20,000 KRW per month. If the universal tariff plan is introduced through the amendment, the Minister of Science and ICT can set a new tariff level appropriate to the current situation every two years through a "notice," but operators consider this clause a "poison clause" that goes against market competition principles.

The problem is that even the tariff plan example of around 20,000 KRW is significantly less competitive compared to the lowest tariff plans of existing telecom companies. For example, SK Telecom's T Plan Save (33,000 KRW) can be used for 24,750 KRW per month when applying the "25% optional contract discount." The data provision is also 1.5GB, which is more than the universal tariff plan draft.

A telecommunications company official pointed out, "The universal tariff plan may raise issues as it restricts the principle of private autonomy, which is the foundation of the free market economy order, especially the freedom of price determination." Another telecommunications company official criticized, "Telecommunications companies are private companies, not public enterprises, so pre-regulation of prices is excessive regulation."

Some predict that if the three major telecom companies launch a universal tariff plan, MVNO (Mobile Virtual Network Operator) companies will be hit hard. The only advantage of MVNO companies is their low prices, and there are concerns that the government is undermining the competitiveness of MVNO companies by stepping in. The MVNO industry pointed out, "The introduction of the universal tariff plan is an act that undermines the competitiveness of MVNOs." There is also criticism that this does not align with the abolition of the tariff approval system, which removes 'pre-regulation' in the tariff sector.

Meanwhile, the universal tariff plan was proposed by the National Policy Planning Advisory Committee in June 2017 as an alternative to the presidential pledge to abolish the basic fee. Since then, it went through discussions at the household communication cost policy council, approval by the Regulatory Reform Committee, and Cabinet approval, and was submitted to the National Assembly in June 2018, but it was not realized and faded away during the 20th National Assembly.

This content was produced with the assistance of AI translation services.