Why Did the 30% Cheaper SKT Plan Spark Controversy... Because of MVNOs?

SK Telecom's mid-range and low-cost 5G plans have become a 'hot potato.'

[Asia Economy Reporter Joeslgina] “What’s wrong with price-cutting competition?” “It could lead to the market exit of MVNO operators.”

SK Telecom’s 5G mid-range plan, priced about 30% cheaper than existing plans, has become a “hot potato.” The controversy surrounding the top mobile carrier’s introduction of a cheaper plan stems from the industry’s complex interests. There are concerns that it may merely result in taking away MVNOs’ market share rather than achieving a real reduction in fees.

According to the telecommunications industry on the 7th, SK Telecom’s 5G Untact Plan (tentative name), reported to the Ministry of Science and ICT at the end of last month, offers 9GB of data for 38,500 KRW per month, 200GB for 52,500 KRW per month, and unlimited data for 60,000 KRW per month. This is about 30% cheaper compared to existing 5G plans.

This plan is an online-only plan and does not allow the existing 25% selection discount or bundle discounts. However, it is expected to provide significant fee reductions for customers using a single line. Especially in the prolonged economic downturn caused by COVID-19, it is seen as meaningful that the industry leader is leading efforts to reduce 5G communication costs.

It is also not unrelated that lawmakers such as Lee Won-wook, Chair of the Science, ICT, Broadcasting and Communications Committee, Cho Seung-rae, Woo Sang-ho, and Han Jun-ho unusually expressed support shortly after the plan was reported. For SK Telecom, this move is interpreted as considering political demands for household communication fee reductions and expanding consumer choice amid the trend of non-face-to-face services.

However, the Ministry of Science and ICT, which must decide whether to accept the plan, is in a dilemma. This is because it could negatively affect the MVNO activation policies it has been promoting. The MVNO industry, fearing market encroachment, has also expressed concerns. The Korea MVNO Association stated in a press release yesterday afternoon, “If SK Telecom’s product is launched, MVNOs will inevitably be forced out of the 5G market.”

According to the association, the wholesale price that MVNO operators pay to SK Telecom is about 89-96% of the price of this plan, showing almost no difference. The association argues that a 20% gap is necessary for MVNOs to secure competitiveness and maintain operating costs. Currently, the association is strongly demanding a reduction in the wholesale price.

The controversy over the plan continues in the National Assembly’s Science, ICT, Broadcasting and Communications Committee. Upon closer examination, it is pointed out that the plan may not provide much incentive to the majority of subscribers. Kim Young-sik, a member of the People Power Party, said, “It does not apply to users of bundled products, so it can be seen as a discriminatory plan,” and added, “There is a concern that MVNOs could be excluded from the mobile market.”

On the other hand, voices criticizing the government’s hesitation to accept the plan are pouring in. Park Sung-joong, the People Power Party’s floor leader, said, “There will be a significant fee reduction effect for single-line customers,” and emphasized, “If operators want to reduce communication fees through autonomous price competition, the Ministry of Science and ICT should not intervene.” Park Dae-chul, also from the same party, criticized on his Facebook, “Are you afraid of competing with MVNOs? What’s wrong with competition that lowers prices?”

The Ministry of Science and ICT is reportedly expected to make a final decision on whether to reject the plan around the 12th, in line with the review deadline. This plan is the first case since the abolition of the rate approval system and the introduction of the deferred notification system. The industry’s attention is focused on this as it indicates the future market direction following the introduction of the deferred notification system. The current enforcement decree includes a clause that allows rejection if a plan excludes other operators by offering rates lower than the wholesale price.

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