The MVNO Industry Faces Growing Concerns Over Nationwide 20,000-Won 5G Plans

MVNO Industry Losing Price Competitiveness

"Measures to Promote MVNOs Also Needed"

The three major mobile carriers have announced plans to launch 5G plans in the 20,000 won range as part of efforts to lower telecommunications fees, deepening concerns for the MVNO (Mobile Virtual Network Operator) industry, which relies on price competitiveness as its core strategy.

According to the telecommunications industry on April 10, the MVNO sector has been struggling to come up with countermeasures since the Ministry of Science and ICT announced the direction for plan restructuring at the ‘Task Force for Special Management of People’s Livelihood Prices’ the previous day. An MVNO industry representative said, “If the three major mobile carriers release low-cost products with membership benefits, the MVNO sector, which relies on price competitiveness, will have nowhere to stand. To fulfill the original purpose of reducing telecom fees and increase consumer choice, measures to revitalize the MVNO market should have been included, but it is disappointing that this was omitted from the latest government policy.”

The three major carriers are already encroaching on MVNO demand through online-only, no-contract plan brands. Specifically, online-exclusive brands such as Air (SK Telecom), Yogo (KT), and Nugget (LG Uplus) offer 5G plans in the 20,000 won range including the data safety option (QoS).

The policy of applying the basic QoS only to users of the three major carriers is also a burden for the MVNO sector. The QoS value-added service, which allows unlimited internet usage at 400kbps even after data is exhausted, costs 5,500 won per month, but customers of the three major carriers are exempt from this charge.

With the plan restructuring centered on the three major carriers, MVNO companies now face a triple challenge: a decrease in users, increased cost burdens, and additional pressure to lower prices. The government had exempted small and medium-sized MVNO companies from radio usage fees until 2024, but last year it began imposing a 20% fee. The burden will increase to 50% this year and 100% next year, further straining the MVNO industry. When the radio usage fee is imposed at 100%, MVNO companies will have to pay an additional 2,000 won per subscriber line.

MVNO Government Support Omitted from Telecom Fee Reduction Measures

Some companies have already withdrawn from the MVNO business due to worsening profitability and intensifying competition. Sejong Telecom, which previously served as the chairman company of the MVNO Association, exited the MVNO business early last year and transferred its MVNO brand Snowman to Eyesvision. Other companies such as YeoYoo Mobile, CN Communication, Opasnet, and Seogyeong Mobile have also left the MVNO market.

An MVNO industry representative stated, “Consumers buy MVNO plans to save money, but due to the structure where we must lease networks from the major carriers at wholesale prices, there are limits to our ability to compete on price. Some small and medium-sized companies are launching loss-leader ‘100-won plans’ and engaging in cutthroat competition, but without government support, survival is difficult.”

A representative from an MVNO company owned by a major carrier said, “Although we are subsidiaries of the main telecom companies, in reality, we are in competition with each other. Even if we want to launch cheaper plans in response to the big three, the structure makes it impossible to offer products below the wholesale price.”

The MVNO sector has unanimously said that government support is needed to continue offering affordable services after the plan restructuring. A representative from a small and medium-sized MVNO company urged, “Since the plan restructuring and QoS application are both government initiatives, support is needed so that MVNO companies can implement the same level of reforms.”

The government plans to promote the basic application of QoS to MVNO plans as well. Hong Sachan, Director of Telecommunications Policy Planning at the Ministry of Science and ICT, said, “We will consult with operators to apply QoS to MVNO plans as well.”

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