Wholesale Prices Cut by Up to 52%... Accelerating Challenge of 'Full MVNO'

New Method for Calculating Network Wholesale Prices Introduced
Government to Foster Environment for Full MVNOs
Policy for Fourth Mobile Operator Shifts to Registration System

To reduce wholesale prices, the government is introducing a new wholesale price calculation method based on provision costs. Previously, wholesale prices were set by deducting unnecessary costs from retail plans, but now the approach has changed to first calculating wholesale costs and then adding any additional necessary expenses. With the introduction of this new method, the wholesale price for metered data is expected to be reduced by 36%, the largest drop in the past decade, from the current 1.29 KRW/MB to 0.82 KRW/MB.

Discount benefits for bulk data purchases by MVNOs will also be enhanced. An annual pre-purchase option has been introduced: SKT offers a 25% discount for pre-purchasing over 50,000 TB per year, and LG Uplus offers a 20% discount for pre-purchasing over 24,000 TB per year. Monthly bulk discounts will also increase from the previous maximum of 13% to 18%.

The MVNO industry has a positive outlook on the wholesale price reduction. An industry insider stated, "With the wholesale price reduction, operators who determine that they can recover this level of investment at some point may be able to challenge full MVNO status."

The government will also support institutional improvements and facility investments to foster an environment for the emergence of full MVNOs (MVNOs owning their own infrastructure). First, the system will be improved to mandate network interconnection with operators pursuing full MVNO status, and policy financing will be provided to support full MVNO facility investments.

To ensure that MVNOs do not face restrictions when designing their own plans even after the introduction of ex-post regulation, a provision requiring cooperation from mobile network operators will be reflected in the wholesale provision agreement. The agreement renewal is scheduled for the first half of this year.

Additionally, MVNOs will be able to offer data speed-limited products alongside their own plans, increasing the existing 400 Kbps option by adding a 1 Mbps option, and the number of international roaming products will expand from one to four, thereby broadening choices for MVNO users.

At the same time, the government is pursuing strategies to strengthen MVNO competitiveness while enhancing user trust. To prevent fraudulent MVNO activations, Information Security Management System (ISMS) certification will be made mandatory, and MVNOs will be required to appoint and report a Chief Information Security Officer (CISO). Furthermore, to ensure sufficient financial capacity for fulfilling information security obligations, the capital requirement will be raised from the current 300 million KRW to 1 billion KRW, thereby increasing market entry barriers for MVNOs. The "MVNO User Protection Guidelines" will also be revised to specify detailed cancellation procedures, which currently vary by operator.

To ensure fair competition among operators in the MVNO market, differentiated regulatory measures will be applied between mobile carrier subsidiaries and independent large and medium-sized enterprises. As of September last year, there were 9.48 million MVNO subscribers, with mobile carrier subsidiaries accounting for 47% (4.44 million) of the market.

On the same day, the government also announced a new stance on the policy for the 4th mobile network operator in addition to the MVNO wholesale price. The direction will shift to a registration system focusing on the willingness of operators to enter the market. After the selection and subsequent cancellation of StageX as the 4th operator last year, the government plans to introduce a procedure allowing operators to propose frequency bands they desire for allocation announcements.

The Ministry of Science and ICT explained, "Considering past policy experiences and the current market environment and competitive conditions, the government has so far decided frequency allocation bands and business models to implement policies, but going forward, policies will be based on market demand."

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