Data-oriented mobile plans to accelerate content service race
By Yoon Sung-won
KT’s new rate plan is expected to bring a major change to the local telecom industry, from voice calls and texting to data and content services.
On Thursday, the nation’s second-largest mobile carrier rolled out new mobile payment plans which include unlimited free calls and text messages. Instead, it offered subscribers more options in data packages.
“We were able to introduce the new data-oriented payment plans earlier than other carriers because we were willing to push for a paradigm shift even at a short-term decrease in the average revenue per user (ARPU),” a KT spokeswoman said.
Voice calls used to be a major income source for mobile carriers. Their significance has continued to diminish with the penetration of smartphones and free mobile messengers run on faster long-term evolution (LTE) networks.
An industry source said mobile carriers have hesitated to expand the free voice calls because they still made certain profits from the call and test message services. Another concern is a possible data traffic overload in the mobile network, said the source.
After KT’s bold decision to overturn its traditional profit system, SK Telecom and LG Uplus are gearing up to release similar data-oriented mobile payment plans.
LG Uplus promised to launch new payment plans with cheaper prices this week.
As the largest telecom company in Korea, SK Telecom is obligated to gain approval from the Ministry of Science, ICT and Future Planning before introducing a new payment plan. The company did not disclose the exact date of the new payment plans’ release and their specific prices.
With their new focus on data, the telecom companies are expected to stress better content services available on the faster mobile network and additional subscriber benefits over voice call quality and prices.
This is because the three mobile carriers have fewer marketing options to attract subscribers under the telecom act that prohibits them from providing excessive subsidies for those who buy a new handset.
With content services such as music streaming and mobile video-on-demand (VOD) applications, companies can make more profits from subscribers who will use more data and may seek a larger data package.
“We are providing a music streaming service ‘Genie’ and a mobile television app ‘Olleh TV Mobile.’ We plan to roll out more quality content services,” the KT spokeswoman said. “We also anticipate that the data traffic for content services will further increase with diverse Internet of Things devices. The possibilities will become boundless once the fifth-generation mobile network is developed and introduced.”
SK Telecom agreed with the prospect.
“Our scheme is to expand subscriber benefits tapping into our competitiveness in content services,” an SK Telecom spokesman said. “In addition, we have expanded marketing expenses to strengthen the membership benefits.
LG Uplus, which has successfully established the LTE network, is pushing ahead with high-definition video streaming services including VOD contents and private live broadcasting service on the network.
An analyst said the data-oriented payment plans will positively influence the mobile carriers’ profits in a long-term perspective.
“The new mobile payment plans will act positive to the ARPU in the mid- and long-term considering that the monthly average data usage of local LTE subscribers has seen a twofold growth during the last three years,” a Korea Investment analyst Yang Jong-in said.