The Ministry of Science and ICT plans to lower wholesale prices to encourage budget mobile operators to launch their own pricing plans and to induce the emergence of full Mobile Virtual Network Operators (MVNOs) with their own facilities. This is intended to improve the budget mobile industry's structure and lay the groundwork for growth as the fourth mobile carrier. The plan to launch the fourth mobile carrier, which was promoted last year, was deemed to have failed, leading to a policy shift toward nurturing budget mobile operators.
Yoo Jae-myung, Director General of the Ministry of Science and ICT's Network Policy Division, noted during a briefing on the results of discussions regarding measures to strengthen budget mobile competitiveness and policies for new providers held at the Government Seoul Building on the 15th, "We aim to implement measures to improve the budget mobile industry's structure and invigorate market competition."
◇ Budget mobile: reduction of usage-based wholesale prices… "Expecting the launch of a 5G 20GB plan for around 10,000 won"
The Ministry of Science and ICT announced it will reduce the usage-based wholesale prices that budget mobile operators have to pay to the three major carriers (SK Telecom, KT, LG Uplus) by up to 52% (from 1.29 won/MB to 0.62 won/MB). Additionally, it plans to expand the discount benefits for budget mobile operators when purchasing data in bulk, allowing them to receive an additional discount of up to 25% off the wholesale price if they pre-purchase more than 50,000 terabytes (TB) in a year.
Budget mobile pricing plans are divided into flat-rate and usage-based (RM) types. Flat-rate plans refer to those that resell products with a composition similar to the three major carriers at relatively lower prices, while usage-based plans mean pricing plans independently composed by budget mobile operators. Currently, over 90% of budget mobile pricing plans are said to be sold in flat-rate form. In flat-rate plans, operators need to pay part of the monthly fee for each subscriber to the three major carriers as a wholesale price, but usage-based plans require post-payment based on the amount of voice, text, and data used, making them relatively more burdensome.
Yido, Director General of the Ministry of Science and ICT's Communication Policy Division, said, "Flat-rate pricing plans are fundamentally limited in improving competitiveness as they involve reselling the pricing plans of the three major carriers," and added, "We have focused on reducing the wholesale prices of usage-based plans to encourage budget mobile operators to launch their own pricing plans." He continued, "We expect to see multiple pricing plans in the 10,000 won range for 5G (5th generation mobile communication) with 20GB due to the reduction in wholesale prices."
◇ Support for policy finance for corporations wishing to establish full MVNOs
The Ministry of Science and ICT stated it will take policy support measures to allow full MVNOs to emerge. Full MVNOs are defined as operators that borrow communication networks such as base stations from carriers while having their own facilities, such as exchanges and customer management systems. The ministry plans to improve the system to mandate network integration between mobile carriers and operators pursuing full MVNOs, and provide policy finance to support facility investments for full MVNOs.
To ensure that full MVNOs can stably integrate their facilities with all mobile carriers, the ministry intends to designate all three major carriers as mandatory wholesale providers for full MVNOs. Currently, only SK Telecom is designated as a mandatory wholesale provider under existing law. A mandatory wholesale provider refers to an entity obligated to provide its communication network to other operators in a wholesale manner.
Deputy Minister Yoo noted, "This does not mean we are giving advantages, such as credit evaluations, to individual corporations," adding, "It means we will provide support such as interest reductions for corporations with a certain level of credit." He explained, "We are continuously requesting the National Assembly to pursue the plan of making all three mobile carriers mandatory wholesale providers."
The Ministry of Science and ICT indicated that it will consider re-promoting the 'pre-regulation of wholesale prices' system, which is set to sunset in March, after reviewing market conditions. The pre-regulation system allows the government to negotiate network rental fees with the three major carriers on behalf of budget mobile operators, who have weak bargaining power. Deputy Minister Yoo stated, "After implementing this policy, we plan to review the market situation and, if deemed necessary, request the National Assembly to extend or institutionalize the pre-regulation of wholesale prices."
The Ministry of Science and ICT will strengthen security obligations for budget mobile operators. It will mandate the Information Security Management System (ISMS) certification for budget mobile operators and periodically check their information security capabilities through annual post-assessments. Additionally, Chief Information Security Officers (CISOs) will be required to register to enhance the information security systems and capabilities of budget mobile operators.
◇ "The policy direction is to grow budget mobile into the fourth mobile carrier, like Japan and Germany"
The Ministry of Science and ICT also announced plans to promote frequency allocation when an operator comes forward to challenge the fourth mobile carrier slot. This effectively means the government will not engage directly in the launch of the fourth carrier but will nurture the budget mobile industry and wait for suitable operators to emerge.
The Ministry of Science and ICT has decided that when corporations wishing to engage in the mobile communication business emerge, it will review capital requirements and set a condition for the one-time payment of the full frequency allocation fee. This is to prevent a recurrence of cases like 'StageX,' which lost its qualifications as a fourth mobile carrier due to financial soundness issues caused by failure to meet capital injection requirements last year.
Deputy Minister Yoo stated, "Currently, the main policy direction is to nurture budget mobile corporations to grow them into the fourth mobile carrier," adding, "In Germany and Japan, budget mobile operators have become full MVNOs and subsequently grown into mobile carriers, so I believe we can create a similar situation in our market."