Telecom companies saddened by drop in 5G subscribers

By Kim Hyun-bin

The commercialization of the fifth-generation (5G) technology garnered explosive popularity among the public in the beginning, attracting over 500,000 new subscribers each month from last April to October. But the demand was short-lived with the lack of the introduction of 5G smartphones, a shortage in marketing budgets and the unstable coverage, which have become barriers for telecommunication companies.

According to data released by the Ministry of Science and ICT (MSIT), there were 4,355,176 5G subscribers in November, but the increase month-on-month was 9.3 percent, marking the first single digit growth since April.

After the commercialization of the 5G network, over 500,000 subscribed each month hitting a peak in August with 882,831. However, in the following months the growth rate continuously dropped, 672,248 and 516,048 for September and October respectively.

The drop in the increase rate of subscribers can be attributed to the lack of new 5G smartphones and the shortage in spending on marketing.

“Usually, the year end is off-season and company marketing budgets are depleted. Also a lot of our budget was used when the new iPhone was released in October, but we began to boost marketing at the beginning of the year,” a KT official said.

According to telecom companies, the new iPhone being LTE based also contributed to the decline in 5G subscribers.

The three major telecommunication companies SK Telecom, KT and LG Uplus engaged in fierce competition in the initial stages of the commercialization of 5G networks, providing extensive discounts for customers purchasing 5G phones.

Telecom companies provided over 500,000 won in discounts for the Samsung Electronics Galaxy S10 5G and LG Electronics V50.

The extreme discounts led to poor performances. SKT's operating profit for the second quarter of last year was 322.8 billion won, a drop of 6.95 percent compared to the same period the previous year, while KT saw a 27.8 percent and LGU+ a 29.6 percent drop.

“There were large sums of money spent for marketing to attract initial 5G customers. Instead of engaging in price competition, now we will focus on enhancing the quality of the 5G network to appeal to customers,” an official from one major telecom company said.

One of the biggest criticisms among 5G subscribers is the unstable coverage.

“I live in Seoul but sometimes the 5G network does not work so I need to switch the smartphone into LTE mode,” said Kim Jung-ho, a Seoul resident in his 30s.

At the end of 2019, there were around 94,400 5G base stations, a major shortage in comparison to the 870,000 LTE base stations constructed around the country.

“It is difficult to increase the number of base stations and enhance quality in the short run. It will take an estimated three more years to construct more base stations to provide stable coverage. We also encountered a similar problem when we first launched the LTE network,” another major telecom official said.

Because 5G has a shorter coverage range than LTE, in theory there needs to be 10 5G base stations to provide the same coverage as one LTE base station.