Is Your Household Communication Bill Doing Well?

Monthly Communication Media Cost of 250,000 KRW for a Family of Four
Calls for 'Lower Communication Fees' with Each Regime Change Show Minimal Effectiveness

[Asia Economy Reporter Lim Hye-seon] Amid rising prices increasing the financial burden on ordinary citizens, communication expenses are identified as an area where savings can be made. How much does a four-person family spend monthly on communication and media costs? According to a compilation of data from Statistics Korea and other sources, the average cost for a family of four using smartphones and consuming media exceeds 250,000 KRW. This accounts for about 5.9% of the average monthly household consumption expenditure (4,216,000 KRW).

According to the third quarter household trend survey by Statistics Korea last year, the average communication expense for a family of four was 207,000 KRW. This amount includes communication devices (smartphones) and communication services (mobile communication, landline phones, internet). Although most people reduce costs by applying subscription discounts (25% off monthly mobile communication fees) and bundled service discounts, the amount remains burdensome. Communication expenses increased by 4.1% compared to the previous year.

The usage rate of online video services (OTT) among the public rose from 66.3% in 2020 to 72%. Among subscribers, 60.7% use two or more OTT services. Internet TV (IPTV) fees at home are about 20,000 KRW, Netflix OTT subscription fees are 13,500 KRW (for two simultaneous users), and YouTube Premium fees are 10,450 KRW. Adding all these together amounts to a total of 250,950 KRW. Maintaining this system results in an annual expenditure of 3,011,400 KRW.

Every time a new administration took office, they promised to lower communication fees, but the effects were minimal because no substantial policies to reduce fees were implemented. For example, during the Lee Myung-bak administration, discounts were offered by bundling families together, and reductions in prepaid plans were pursued. The Park Geun-hye administration implemented the "Handset Distribution Improvement Act" (the Act on the Improvement of Distribution Structure of Mobile Communication Devices). Prepaid plans with fewer users quietly disappeared. The Act, which started in October 2014, prohibited differential subsidies. While the mobile phone sales market stabilized, companies reduced marketing expenses, resulting in no real fee reductions. Before the Act's implementation in 2014, the average communication expense for a family of four was about 160,000 KRW. Instead, only the price of devices (smartphones) increased, making consumers' wallets lighter.

At least the policy to expand budget phone services under the Moon Jae-in administration moved the mobile communication market, which had been an oligopoly for decades. Budget phone providers pay wholesale fees to telecom companies and lease networks to provide communication services. The number of budget phone subscribers has surpassed 12 million, closely trailing LG Uplus. However, their 5G service provision is insufficient.

The Yoon Suk-yeol administration plans to reduce communication fees through the introduction of 5G mid-tier plans, senior citizen plans, and the establishment of a fourth mobile carrier. However, many in the market doubt the effectiveness of these measures. Last year, 5G mid-tier plans offering 24 to 31GB of monthly data for 50,000 to 60,000 KRW already appeared. Yet, users report little change in their perceived communication expenses. This is because the monthly data offered does not align well with actual consumer preferences. According to a satisfaction survey on mid-tier plans by the National Assembly's Science, Technology, Information and Broadcasting Committee, 7 out of 10 respondents said the data provided was insufficient. The three major carriers plan to launch mid-tier plans with over 40GB and senior plans in the first half of this year.

On the 7th, when Apple's new iPhone 14 series was officially released in Korea, citizens lined up at the Apple Store in Myeongdong, Jung-gu, Seoul to purchase the products. Photo by Moon Honam munonam@

Although the government said it would induce market competition by establishing a fourth mobile carrier, it is difficult even to find candidates for this fourth carrier. This is because they would have to compete with the three major telecom companies that have maintained an oligopoly for a long time. The government stated it would provide a foothold for the fourth carrier to overcome the entry barriers posed by the three major carriers and settle in the market. Regarding this, the Presidential Office responded to criticisms that this might be excessive intervention in private companies and the market by saying, "Although they are private companies, they clearly enter the market with government permits, which create entry barriers," and "government efforts to promote competition are possible."

The problem is that it remains unclear what further efforts the government will make to promote competition. Simply drastically reducing the public resource radio usage fees and allowing the use of existing telecom networks with appropriate compensation is insufficient. Many industry insiders rumored to be candidates for the fourth carrier unanimously say, "At present, we have no intention of participating in the business." Without offering more exceptional conditions, there will be no fourth mobile carrier.

President Yoon Suk-yeol recently instructed, "Expand options for communication fees and strengthen competition in the communication market," and said, "The communication fee brackets should be subdivided to reduce the burden on the public."

Consumers say that policies capable of actually lowering fees must be created. Instead of launching new plans based on data amounts, existing plans should increase data or reduce fees. In this regard, the Presidential Office said it aims to induce competition in the telecom industry, which is effectively an oligopoly dominated by SK Telecom, KT, and LG Uplus, to expand consumer benefits.

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