[Reporter’s Notebook] Budget Phones Boosted by Free Plans Must Now Focus on Qualitative Growth

"Unlimited calls and texts with 11GB per month plan free for 7 months"

The '0-won plan' competition that started in April has energized the budget phone market. Although the telecommunications market is stagnant, last month the number of budget phone number portings reached 150,000. However, it is difficult to say that the budget phone market has truly grown due to the 0-won plan effect. For now, it is merely a temporary bubble in subscribers. The three major telecom companies that lease their networks to budget phone providers have recently been paying about 200,000 KRW in subsidies per budget phone subscriber to increase their network share. Budget phone providers pay the three major telecom companies a usage fee of 1,500 KRW per subscriber.

Photo by Suyeon Oh, Industrial IT Department

Thanks to telecom company subsidies, 6-7 month free promotions are possible, but they cannot provide free service indefinitely. After the promotion ends in 6-7 months, 0-won plan subscribers must pay the original monthly fee of 20,000 to 40,000 KRW. Budget phone plans allow free cancellation. Once the free promotion ends, most subscribers are likely to cancel. Some cherry pickers switch from one company's 0-won plan to another's.

To attract genuine subscribers rather than transient ones who stay only 6 or 7 months, service quality must be improved. For example, budget phone providers are often criticized for problems with their customer centers. Some providers require customers to call the customer center to complete number porting, but as subscribers surged, the customer centers became overwhelmed, causing activation delays of several weeks. When customer complaints exploded, one small budget phone provider’s CEO personally wrote and posted an apology.

The Telecommunications Business Act requires one call center staff per 10,000 users. Providers with fewer subscribers inevitably have smaller customer centers, so even normally, lack of customer center staff often causes delays in consultations, activations, and cancellations. According to data submitted last year by the Ministry of Science and ICT to the office of Kim Young-sik of the People Power Party, some providers do not even comply with this. The surge in subscribers due to promotions exposed these festering problems.

According to the Ministry of Science and ICT’s "Wireless Communication Service Statistics Status," as of March, the number of budget phone lines reached 13.63 million. It has established itself as a significant pillar of the telecommunications market. Interest from users is higher than ever due to the 0-won plans. There is a need to move beyond simply selling cheap plans. Besides customer centers, providers should consider service differentiation by offering attractive membership programs, bundling services referencing the three major telecom companies, or selling specialized plans to catch consumers’ attention. Now is the time to focus on qualitative growth rather than quantitative growth so that transient subscribers become loyal ones.

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