[The Editors' Verdict] The Era of Forcing Telecom Fee Reductions Has Ended

[Asia Economy Reporter Myung Jin-kyu] Past governments have lowered communication fees when prices surged sharply. This is likely because communication costs account for a large portion of household living expenses, and lowering communication fees alone can reduce consumer prices by nearly 0.1 percentage points.

The Kim Dae-jung administration lowered basic fees, subscription fees, and call charges in 2000 to curb soaring prices amid the IMF financial crisis, and further reduced basic fees and call charges in 2002. The Roh Moo-hyun administration cut wireless internet fees by 30% in 2007. At that time, wireless internet fees, which charged several thousand won just to send a single photo via mobile phone, had significant structural problems.

The Lee Myung-bak administration offered discounts on fees for low-income groups and basic livelihood security recipients in 2008 and introduced per-second billing in 2010. The Park Geun-hye administration abolished subscription fees in 2014 and provided a selection discount to those who did not receive device subsidies in 2015. The Moon Jae-in administration lowered fees in January last year with the ‘Untact Plan’ (selection discount, membership, and bundle discounts not included), a 30% cheaper 5G·LTE plan.

The current administration’s recently promoted ‘5G Mid-tier Plan’ was nominally introduced because there was no intermediate tier plan, but in reality, it has a greater fee reduction effect. However, the method is problematic. Although they said they would leave it to market autonomy, the National Assembly and civic groups are raising their voices, saying ‘the basic data provided is insufficient’ and ‘how can this have a fee reduction effect?’ Various government-wide measures are being introduced to curb rapidly rising prices, but there are even claims that telecom companies are just trying to make money. The Ministry of Science and ICT, which accepted the fees, is somewhat embarrassed.

Every time the government forces the three major telecom companies to lower fees, consumer confusion only grows. Because it directly affects sales and operating profits, instead of lowering fees themselves, new plans are introduced. This also increases costs. The cost of explaining the ‘fee reduction effect’ rather than an actual fee reduction is also high. These measures have been taken to somewhat alleviate criticism from political circles and civic groups. Each plan has complicated conditions, and it is difficult to know whether one is eligible.

This situation is largely the government’s fault. Without clear justification, the pressure to lower fees has forced the three telecom companies to design new plans, creating a distorted structure where similar plans are produced every year. Therefore, instead of insisting on a government-controlled universal fee plan and producing superficial plans to avoid responsibility, it is more important to encourage market competition through MVNOs (Mobile Virtual Network Operators) so that fees can be lowered independently. Another method is to promote actual household communication cost reductions through bundled product plans and benefits that combine wired internet, IPTV, and landline phone services to receive discounts.

US telecom companies Verizon and AT&T are pushing for communication fee increases in line with inflation. Europe is the same. Although the reason is inflation, we have lowered fees while overseas have raised them. In the UK, all telecom companies including Vodafone and O2 raised fees. T-Mobile also announced plans to raise fees in the Netherlands and other countries. The common explanation is that electricity and labor costs have risen, reflecting increased costs. In Korea, electricity fees were raised by 4.3% starting in July. Naturally, the cost burden for the three major telecom companies has increased, but they are only being stigmatized as the main culprits of household communication cost increases.

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