[Column] The 5G 30,000-Won Price Shakes Up the Mobile Ecosystem

In the first quarter of this year, the three major mobile carriers will introduce 5G plans priced in the 30,000 KRW range. This is welcome news as it broadens the range of options available to consumers when choosing a plan.

However, there is a downside. The budget phone industry, which competes on offering affordable plans, is increasingly concerned. If 5G services are offered at around 30,000 KRW, budget phone customers are likely to switch back to the major carriers for better service.

The government, which pressured the introduction of 30,000 KRW plans, views the impact on budget phone providers as manageable. Just as affordable budget phone plans similar to those of the major carriers have been introduced before, they believe this time will be no different. A representative from the Ministry of Science and ICT stated, "The budget phone industry has previously offered plans that are 30-40% cheaper than those of the major carriers."

Budget phone providers argue that this overlooks reality. Even if they want to launch cheaper 5G plans, negotiations with the carriers who control network usage rights are not easy. Budget phone companies purchase 5G plan products wholesale from the carriers, but at a higher cost than LTE. Typically, the wholesale price for LTE is 40%, whereas for 5G it reaches 60%. Simply put, if they sell for 100 KRW, they must pay 60 KRW to the carriers. An industry insider said, "Why do you think there are so few 5G plans from budget phones? No matter how much we segment and lower the plans, if the wholesale price takes too much, we cannot sell 5G plans." While budget phones play an important role in creating plans at various price points, the reality is otherwise.

The unrest in the budget phone industry ultimately stems from government price controls. While the major carriers have invested trillions of won in developing 5G technology, they are dissatisfied with demands to lower plans to the 30,000 KRW range. Meanwhile, budget phone providers complain that the carriers are taking over the market. The 30,000 KRW plans are shaking the entire mobile communication ecosystem.

Recently, the government announced the 'Measures to Promote Competition in the Telecommunications Market' and completed the recruitment of candidates for a fourth carrier. This also signifies that the government recognizes that breaking the oligopoly of the three major carriers is the ultimate solution. If the government continues to set prices, the dissatisfaction within the mobile industry will not subside, even as 6G and beyond emerge.

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