April 25, 2024

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[THE INVESTOR] South Korean telecommunications companies are set to announce pricing plans for fifth-generation wireless networks this week, amid intensifying new network services.

The unveiling of pricing plans is anticipated as the government said it had approved mobile carriers’ pricing plans on March 29.

According to the Ministry of Science and ICT, the government has greenlightedSK Telecom’s pricing for 5G services. SK Telecom is the only mobile carrier required to obtain the government’s approval for a new pricing plan. Once the government approves SKT’s scheme, no additional administrative procedures are needed for the other telecoms.

While the details of SKT and KT’s pricing plans will be kept under wraps until they hold a press conference this week, March 29's approval would help the government’s initiative of becoming the world’s first 5G country on April 5, when Samsung’s Galaxy S10 5G hits the market.

“SK Telecom’s 5G pricing plan has been one of the biggest issues for launching a new network service,” said an official from the ICT Ministry. “Now that the issue has been resolved, there is not much left (to do) before April 5.”

Third-biggest telecom LG Uplus earlier revealed that its pricing would start from 55,000 won ($48) per month. The other two pricing plans from LG Uplus are 75,000 won per month for 150 gigabytes and 95,000 per month for 250 gigabytes. If users subscribe to the 95,000 won plan by June, they will be provided with an additional 1,000 gigabytes each month for free, LG Uplus said.

Meanwhile, SKT has been under pressure to come up with a cheaper pricing model. Earlier this month, the government rejected the company’s original pricing plan, criticizing it for “restricting consumers’ choices.”

During a meeting with shareholders on March 26, SKT Chief Executive Park Jung-ho hinted that the company’s 5G pricing plan would start in the range of 55,000 won per month following the government’s proposal.

“There was a request for a pricing plan in the range of 55,000 won (from the government). We are about to wrap up the discussion,” said Park.

However, consumer activist groups have continued to take issue with the possibility that consumers may end up with hefty bills for use of the next-generation network. Combined with the cost of new 5G smartphones, a consumer could pay up to 20,000 won more than a current 4G Long Term Evolution plan.

According to industry watchers here, SKT’s pricing plan is expected to consist of four tiers: 55,000 won for 8 gigabytes; 75,000 won for 150 gigabytes, 95,000 won for 200 gigabytes and 125,000 won for 300 gigabytes.

Given that the price of Samsung’s first 5G smartphone, the Galaxy S10 5G, would be set at around 1.4 million won, a consumer advocacy group argued that the hyper-speed network may not be accessible to low-income households.

“Those who spend 30,000 to 40,000 won on telecom bills would not be able to use 5G network services,” said People’s Solidarity for Participatory Democracy. “It is the worst pricing plan in the era of worsening income disparity.”

Telecom firms have said that they are compelled to raise prices as a result of the extensive infrastructure they needed to install for the introduction of 5G services. They spent about 3.6 trillion won combined last year to purchase the rights to use certain frequencies for 5G services.

Industry watchers said while the average price per unit of data would decrease, thanks to the increased amount of data delivered via the ultrahigh-speed network, the overall price of 5G services could initially be higher than existing services, as companies seek to recoup the costs of establishing the new networks.

SKT chief Park told reporters if 5G subscribers were to use the same amount of data as 4G subscribers, 5G would be cheaper by up to a third. The 5G network is expected to be up to 20 times faster than 4G, allowing users to download a high-definition movie in a few seconds.

By Yeo Jun-suk/The Korea Herald (jasonyeo@heraldcorp.com)