[2020 National Audit] "Excessive Profiteering by Telecoms" vs "Data Error"... 5G Under Scrutiny

[Image source=Yonhap News]

[Asia Economy Reporter Seulgina Jo] The main issues in the telecommunications sector at the National Assembly audit, which intensifies on the 7th, are 5G, which has been commercialized for over a year and a half, and the Device Distribution Act, which marks its 6th anniversary this month.

At this year's National Assembly Science, ICT, Broadcasting and Communications Committee (Science Committee) audit, Yoo Sang-young, SK Telecom MNO Business Head, Kang Guk-hyun, KT Customer Division Head, and Hwang Hyun-sik, LG Uplus President, are scheduled to appear from the three major mobile carriers. Despite one and a half years since commercialization in April last year, quality controversies surrounding 5G continue unabated, and the market is also seeing ongoing issues with illegal subsidies, so related inquiries are expected to pour in.

Even before the audit began, Science Committee members have released materials pointing out expensive 5G plans and poor coverage. According to the 'Quarterly 5G Base Station Status' data submitted by the Ministry of Science and ICT to Democratic Party lawmaker Byun Jae-il, the number of base stations built by the three mobile carriers in the first half of this year was 21,562, which is only 43.7% compared to the same period last year. The recently announced 5G quality evaluation results by the Ministry of Science and ICT also showed that the actual speed of 5G mobile communication service is about four times faster than LTE. On the other hand, 926 complaints about 5G quality have been reported to the National Petition Board from last year until the 25th of last month.

The controversy over fees is even fiercer. Reducing household communication costs is a regular topic at the audit. Ahead of the audit, KT introduced a mid-range 5G plan, and related inquiries are expected to follow. In particular, just before the audit, domestic mobile carriers strongly rebutted the National Assembly's claim that the average revenue per user (ARPU) from one subscriber is about 140% higher than the cost price, intensifying the dispute.

Democratic Party lawmaker Woo Sang-ho previously stated, "The average revenue per user from mobile carriers is about 140% higher than the supply cost," and claimed, "They are profiteering from 5G and LTE users." According to Woo, as of January last year, the average monthly revenue per subscriber (ARPU) for 4G LTE monthly fees over the past three years was 50,784 KRW, and the estimated ARPU including 5G fees was 51,137 KRW. Based on this, he argued, "Domestic mobile carriers provide LTE and 5G services in the mid-30,000 KRW range while earning 14,000 to 16,000 KRW in fee revenue per consumer," calling it "excessive profiteering."

On the other hand, mobile carriers rebut that the communication cost used as the basis for the claim was measured too low, and the revenue cited is an estimated figure, not actual revenue, so it differs from the facts. They point out errors in the cited figures themselves. A mobile carrier official explained, "The supply cost cited by Woo Sang-ho's office is a total cost concept based on all mobile subscribers," and "The approximately 51,000 KRW revenue figure is an estimated amount from licensing and reporting documents, not actual revenue." Discounts such as selective contract discounts, official subsidy discounts, and family bundle discounts were not reflected, causing an optical illusion.

The Device Distribution Act, which has been tagged as the 'Non-communication Act' since its implementation, is also a major issue. Enacted in October 2014, the act has been criticized for blocking competition among operators, infringing on market autonomy, and reducing consumer choice, contrary to its purpose. Following the 20th National Assembly, where as many as 26 amendment bills were proposed, legislative competition is intensifying in the 21st National Assembly as well. People Power Party lawmaker Kim Young-sik proposed complete abolition, and lawmaker Cho Seung-rae introduced an amendment last month aiming to induce device price reductions through a separate disclosure system. Democratic Party lawmaker Jeon Hye-sook's amendment focuses on reforming the separate disclosure system and penalty system.

Other key issues include the calculation of frequency reassignment fees by the three mobile carriers, Seoul's public Wi-Fi, and the so-called Netflix Act, which requires global content providers like Netflix to ensure network quality. However, Reginald Sean Thompson, CEO of Netflix Services Korea, who was summoned as a witness at the Broadcasting and Communications Commission audit on the 8th, submitted a letter of non-attendance like Google Korea, making his attendance uncertain. Currently, People Power Party members of the Science Committee are also demanding the attendance of the heads of Korea's two major portals, Naver and Kakao, so their attendance is also a matter of interest.

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