By Kim Tae-gyu
Staff Reporter
Packaged telecom services due next month will reduce telecom rates, with many households wondering how much the discount will be.
Companies have been reluctant to elaborate on the discount rates but the Ministry of Information and Communication has expected that the range would be substantial.
Realistically, the discount ranges are not likely to be so substantial and some major services are expected to be ruled out according to recent announcements of KT and SK Telecom.
This sparked criticism against the government, which sold the bundling as a panacea to deal with various problems in the telecom market.
The projection of generous discount rates started in March, when the Ministry of Information and Communication unveiled the scheme.
``To offer benefits to consumers and spur the telecom business, we are set to approve bundling discounts of KT and SK Telecom,’’ Information-Communication Minister Rho Jun-hyong said at the time.
``We are ready to give the green light to discount rates of less than 10 percent. Even if the rates are higher than 10 percent, we may accept it after checking its impact,’’ Rho said.
Rho’s remarks spawned high expectations that the overall telecom charges would fall steeply, to the delight of people who have spent a large chunk of their income on telecom fees.
According to the Seoul YMCA, average Korean homes spend up to 7 percent of their income on telecom services, 3.5 times more than the average of the Organization for Economic Cooperation and Development member countries.
News reports also predicted the reduction would be large while citing various precedents set both at home and abroad. Included in the examples are Hanaro Telecom and AT&T.
Hanaro, the runner-up broadband carrier, cut 44 percent off the basic fee for inner-city calls, for those who order both the outfit’s high-speed Internet and fixed-line telephone.
U.S. landline telecom company AT&T offers a 23 percent discount for subscribers who select a mix of high-speed Internet and voice services.
Thus far, only small outfits here, excluding KT and SK Telecom, have been permitted to offer bundled services at discounted prices, a policy aimed at diluting the dominance of the two large players.
KT is the country’s top fixed-line telecom carrier, which services about 93 percent of the local landline telephony market and roughly half of all high-speed Internet demands.
SK Telecom is far-and-away the foremost mobile operator with 20.9 million customers, accounting for 50.4 percent of the overall market.
KT and SK Telecom have yet to unveil their bundling discount schemes in detail but they recently gave a glimpse of what is in store _ both disappointing from the perspective of end users.
KT said it would introduce two ``cocktail’’ products of combining its high-speed Internet service (Megapass) with the third-generation mobile telephony of its affiliate KTF (Show) and portable Internet (WiBro) respectively.
Then, the Megapass prices of around 30,000 won a month will be sliced by 5 to 15 percent while the basic rates of Show, 16,000 won per month, will be discounted by 10 percent. For WiBro, the range is set at 10-20 percent.
Accordingly, those who use Megapass and Show at the same time will be able to save roughly 4,500 won a month.
``We will ask the Ministry of Information and Communication to approve the discounted rates in the near future,’’ KT spokesman Oh Tae-sung said.
``Then, the discounted mixes of services will be available to end users some time in July,’’ he said.
SK Telecom also said Monday that it plans to roll out a service mix of combining its flagship mobile telephony with cable TV networks, which provides the high-speed Internet application.
``End customers will be able to enjoy a substantial discount of 5-20 percent through this bundle. We will continue to come up with follow-up measures,’’ SK Telecom President Kim Shin-bae told a press conference.
However, the announcements of KT and SK Telecom mostly invited criticism rather than praise.
In particular, KT refuses to include fixed-line telecom services in the bundling scheme.
Market observers point out that KT excludes its landline telephony due to government guidelines _ once a service is included in a firm’s package, it must be provided to other carrier’s bundles with the same conditions.
``You can estimate KT’s intention. The company doesn’t want to make other company’s bundling services attractive by providing its fixed-line telephone,’’ said Kim Kyung-mo, an economist at Mirae Asset.
``KT will not want things to evolve as such. Plus, KT’s mobile arm KTF will by no means hope to see SK Telecom gain market share in the wireless competition through bundling with its parent firm,’’ he said.
The anonymous analyst, however, said that the measure sacrifices the benefits of many telecom service users to cater to the interests of KT and its subsidiaries.
Green Consumers Network, a local civic group, takes issue with the minor changes in mobile charges, which has become a bone of contention of late.
Many activists have claimed that the country’s mobile telephony service charges are too high, such as basic fees, subscription fees and the cost of text messages and caller identification (CID) services.
Calling them the ``four monsters of cellular phones,’’ the Seoul YMCA last month contended the fees are prohibitively high for the average household to shoulder.
Their argument: CID and subscription fees should be free while basic fees and text message charges must be more than halved.
In response, the government said such a drastic step will dent the viability of the country’s three mobile operators, which have to shell out big bucks to install and maintain expensive networks.
Instead, the government has insisted that bundling services due in the latter part of this year will drive down mobile rates.
``By announcing their plans on packaged services, KT and SK Telecom demonstrated the government has lied to the public,’’ said Chun Eung-hwi, an activist at Green Consumers Network.
``The bundling services are basically about boosting the industry, not reducing mobile rates. The Information Ministry needs to take other measures to slash mobile rates,’’ Chun said.
Indeed, many blame high mobile phone rates as the burden of households because they account for 60 percent of total telecom expenditures.