[2020 National Audit] "Monthly Fee of 130,000 Won Is Excessive" Criticism Pours In on 5G (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Seulgina Cho] At the National Assembly Science, Technology, Information and Broadcasting and Communications Committee (STIBC) audit held on the 7th, criticism poured in mainly from the ruling party, which has pledged to reduce household communication costs, stating that the 5G plans costing up to 130,000 KRW per month are excessive. Despite one and a half years since commercialization, there were also repeated remarks that coverage remains insufficient.

However, there were also criticisms that the National Assembly is recklessly shifting the burden of 'rate reduction' and 'investment expansion' onto companies without considering the large-scale investment costs at this early stage of network construction. The industry has rebutted that some of the presented data contain errors and do not reflect reality.

◆5G Under Heavy Fire: "Excessive Profiteering"

On the day of the audit, Woo Sang-ho, a member of the Democratic Party of Korea, said, "Charging up to 130,000 KRW when 5G service is not functioning properly is excessive profiteering," and pointed out that "the communication rate plans should be simplified and reorganized around unlimited data plans."

He claimed, "The recent cost of LTE and 5G plans is in the mid-30,000 KRW range, and the average revenue per user (ARPU) is in the 50,000 KRW range," calling it "excessive profiteering." Regarding the telecom companies' rebuttal that the cited figures are incorrect, he dismissed it as "nonsense." Currently, telecom companies argue that the cost used as the basis for Woo's claim is underestimated, and that discounts such as selective contract discounts, official subsidy discounts, and family bundle discounts are not reflected, resulting in significant errors.

Woo also said, "Looking into the cost of communication fees, astronomical marketing expenses are included," and called for improvements in the distribution system. He raised his voice, saying, "The three major telecom companies have spent 78 trillion KRW on marketing over the past 10 years, of which nearly 50 trillion KRW was provided as incentives to distribution points," adding, "All of this cost is borne by consumers."

Jeon Hye-sook, also from the same party, pointed out, "In the case of American telecom operators, LTE is the base, and additional fees are charged if you want to use 5G," highlighting that consumer burdens are increasing due to the release of 5G-exclusive smartphones. She said she visited areas with poor 5G coverage and criticized, "When selling 5G devices, there is no guidance that 5G service may not function properly." Democratic Party member Han Jun-ho also mentioned the issue of expensive 5G plans, saying, "We need to structure plans that align with public sentiment and offer low-cost options."

Democratic Party member Hong Jung-min revealed that from the first half of last year, when 5G was commercialized, until now, 562,656 subscribers have switched back from 5G to LTE. This accounts for 6.1% of the 8.658 million 5G subscribers of the three major telecom companies as of the end of August. The reasons cited include expensive plans and poor coverage.

In response, Choi Ki-young, Minister of Science and ICT, gave a general answer, saying, "If telecom operators propose a rate plan revision and it is deemed appropriate, it will be approved." Regarding the criticism that 5G-exclusive smartphones are being released domestically, he replied, "We have improved it so that LTE subscriptions are possible even with 5G phones."

◆Expected Concentrated Attack: Regret Over "Just Hit First" Style Offensive

The concentrated attack on 5G was anticipated early on. Reducing household communication costs is a staple topic in audits. It is a pledge of the Moon Jae-in administration, and the ongoing quality controversies surrounding 5G even one and a half years after commercialization in April last year also contributed to this. STIBC members released data criticizing expensive 5G plans and poor coverage even before the audit began.

However, there are also criticisms that the National Assembly is shifting the burden of 5G construction onto the private sector without considering that it is still in the infrastructure investment phase. Instead of establishing a virtuous cycle of 'early infrastructure construction - 5G activation - rate reduction - investment expansion' through incentives to attract private investment, the National Assembly seems focused on a "just hit first" style offensive. The nature of companies having to charge higher rates compared to LTE due to initial investment scale was not considered. Moreover, the telecom industry has already opened the way for mid- to low-priced 5G plans.

Additionally, there were criticisms that the National Assembly's offensive equating marketing expenses with consumer burden is unreasonable, as a significant portion of telecom companies' marketing expenses are paid as device subsidies. The industry also expressed regret over some inaccurate data presented by the National Assembly.

On the 8th, Yoo Sang-young, SK Telecom MNO Business Representative, Kang Guk-hyun, KT Customer Division Head, and Hwang Hyun-sik, LG Uplus CEO, are scheduled to appear as witnesses to provide related explanations. An industry official said, "The three telecom companies invested about 9 trillion KRW in the first year of commercialization alone, but due to the characteristics of 5G frequencies that cannot utilize existing equipment, more investment than LTE is inevitable," adding, "We will strive to build 5G infrastructure and improve quality to enhance customer experience."

◆"20,000 KRW Communication Fee Support is Populism" and Calls for "Selection and Concentration" in Infrastructure Investment

While the ruling party repeatedly criticized expensive 5G plans, the opposition raised criticisms that the 20,000 KRW communication fee support is hasty populism. Heo Eun-ah, a member of the People Power Party, called it "typical showy administration," and pointed out, "If the goal is to help struggling citizens, support should have been fully provided for communication fee reductions for vulnerable groups, not 20,000 KRW for all citizens."

There was also criticism that the 25% selective contract discount system is not well known to the public, resulting in many not receiving household communication fee reduction benefits. Democratic Party member Jo Jung-sik said, "As of the end of August, there are 12.19 million devices not subscribed to the selective contract discount," adding, "Converted to discount amounts, this is about 500 billion KRW per year, a scale similar to the communication fee support funded by the 4th supplementary budget."

Democratic Party member Yoon Young-chan suggested that selection and concentration are necessary in future infrastructure investments. Yoon said, "The U.S. Defense Innovation Board also recommended shifting the 5G investment strategy from the 28GHz band to the sub-6GHz frequency. We need to carefully observe global standardization trends," adding, "We must clearly state the limitations of the 28GHz band and set a new strategy suitable for us accordingly."

The 28GHz band network he pointed out is evaluated as suitable for B2B-centered use because it suffers significant loss even in everyday situations and its service coverage is only 10-15% compared to the 3.5GHz band. Minister Choi responded, "I agree," and said, "The 28GHz band is not intended for nationwide service. It can be converted for B2B or specific services."

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