South Korea plans to cut wholesale telco rates to boost MVNO growth – reportSouth Korea plans to cut wholesale telco rates to boost MVNO growth – report

South Korea's Ministry of Science and ICT (MSIT) said that it is ready to implement measures that would help 'budget mobile operators' to thrive and grow in a competitive market.

Gigi Onag, Senior Editor, APAC

January 20, 2025

3 Min Read
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South Korea is reportedly planning to cut wholesale telecom prices to encourage the emergence of full mobile virtual network operators (MVNOs) that can offer more affordable wireless plans to consumers.

The Ministry of Science and ICT (MSIT) said in a press briefing last week that it is ready to implement measures that would help "budget mobile operators" to thrive and grow in a competitive market.

These measures include the possible continuation of the "wholesale price pre-regulation" system, which is due to expire in March.

The pre-regulation system allows the government to negotiate network rental fees with the three major carriers on behalf of the low-cost mobile operators, which have weak bargaining power.

"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," said Yoo Jae-myung, director general of the network policy division at MSIT, as quoted by ChosunBiz.

The report added that MSIT will push for a rule change that would require all three major mobile carriers in South Korea – SK Telecom, KT Corporation and LG Uplus – to be mandatory wholesale providers. Under the current law, only SK Telecom has been designated as a mandatory wholesale provider.

Related:South Korea to revoke license of fourth mobile carrier over funding issue

Cutting the usage-based wholesale prices

According to local news reports, MSIT also intends to reduce the usage-based wholesale prices that low-cost mobile operators pay to the three major mobile operators by up to 52% – from 1.29 Korean won (US$0.00088) per MB to KRW0.62 ($0.00042) per MB.

Currently, it is reported that over 90% of low-cost mobile plans are sold through a flat-rate model, where low-cost mobile operators pay a portion of each subscriber's monthly fee to the three major carriers.

"Flat rate plans are fundamentally limited in improving competitiveness because they involve reselling the three major carriers' plans," Yoo said, adding that "we have focused on reducing the wholesale prices of usage-based plans to encourage low-cost mobile operators to launch their own plans."

The MIST reportedly expects to see several price plans in the KRW10,000 ($6.84) range for 20GB 5G subscriptions due to the reduction in wholesale prices.

In addition, the ministry plans to extend discounts to low-cost mobile operators for bulk data purchases, 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.

Related:Kakao wins 28GHz auction to become South Korea's fourth operator

Nurturing full MVNOs

South Korea has shifted its policy to encourage the development of full MVNOs after last year's failed attempt to launch a fourth mobile operator, according to MSIT.

In June last year, the MSIT revoked the license of new mobile operator Stage X for failing to pay the required paid-in capital of KRW205 billion ($149 million). The company – backed by a consortium led by Internet giant Kakao – won the auction for spectrum in the 28GHz frequency with a bid of KRW430.1 billion ($320 million).

The MSIT defines full MVNOs as mobile operators that rent communications network infrastructure, such as basestations, from carriers, while owning their own facilities, such as switches and customer management systems.

The ministry reportedly plans to improve the system to mandate network integration between mobile carriers and operators pursuing full MVNOs, and to provide policy funding to support equipment investment for full MVNOs.

It is hoped that one of the MVNOs will eventually grow to become the fourth mobile carrier in the country once full MVNOs are established.

Once a potential fourth mobile carrier has emerged from the full MVNO ranks, the ministry will reportedly review capital requirements and set a condition for the one-time payment of the full spectrum allocation fee.

Related:Lower mobile subscription fees could reduce investments in South Korea's telco infrastructure

This is to prevent a recurrence of cases such as Stage X, which lost its license as South Korea's fourth mobile carrier for its failure to pay the paid-in capital requirement.

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About the Author

Gigi Onag

Senior Editor, APAC, Light Reading

Gigi Onag is Senior Editor, APAC, Light Reading. She has been a technology journalist for more than 15 years, covering various aspects of enterprise IT across Asia-Pacific.

She started with regional IT publications under CMP Asia (now Informa), including Asia Computer Weekly, Intelligent Enterprise Asia and Network Computing Asia and Teledotcom Asia. This was followed by stints with Computerworld Hong Kong and sister publications FutureIoT and FutureCIO. She had contributed articles to South China Morning Post, TechTarget and PC Market among others.

She interspersed her career as a technology editor with a brief sojourn into public relations before returning to journalism, joining the editorial team of Mix Magazine, a MICE publication and its sister publication Business Traveller Asia Pacific.

Gigi is based in Hong Kong and is keen to delve deeper into the region’s wide wild world of telecoms.

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