By Yoon Ja-young
E-Mart will start selling handsets of Free Telecom, a mobile virtual network operator (MVNO), from Friday.
MVNO borrows networks from mobile carriers at cheap prices, and in turn lures consumers with lower priced mobile services than the mobile carriers. Free Telecom, which piggybacks on KT, the country’s largest communications company, offers between 30 to 50 percent lower mobile rates than the major carriers.
The package sold at E-Mart, for instance, charges 4,500 won as the basic rate a month. It suits those who usually use the phone only to receive calls instead of making calls.
Despite the discount prices, MVNOs have few subscribers due to limited sales channels. While users prefer the latest smartphones, they are not available from MVNOs. Now, however, MVNO products available at the 130 shops of the country’s biggest retail outlet tell a different story.
E-Mart will only be selling products of Free Telecom. “We will first sell 1,000 sets of MVNO phones. Then, we will determine whether we will continue or not,” a representative for E-Mart said.
Rising speculations suggest retail outlets including E-mart may start MVNO businesses themselves, instead of simply selling the products of other MVNOs.
Tesco, the parent company of Home Plus here, for instance, has a successful MVNO business in the United Kingdom where it is headquartered. The MVNO, “Tesco Mobile,” boasts around 2.8 million users, and is expanding to other countries. The U.S. retail giant Wal-Mart also has an MVNO business. Large retail outlets are competitive in MVNO marketing thanks to their nationwide network and high brand awareness. Another benefit for them is being able to link up their mobile services with other marketing campaigns.
A cell phone blacklist system, which will be implemented early next year, is also motivating retail outlets to enter the MVNO market. Currently, the country has adopted the white-list system for mobile phones, in which all cell phones have international mobile electronics identifications (IMEIs), which are like resident registration numbers, registered with the mobile carriers to get service. Subscribers are obliged to use cell phones supplied by mobile carriers under this system.
Under the black-list system, meanwhile, only problematic phones such as the ones involved in theft or loss are registered on a list. All other cell phones are allowed access to mobile services, and users simply have to insert a universal subscriber identity module (USIM) chip to activate any cell phone with any carrier. The government expects the measure to pull down handset prices as subscribers can buy cell phones from diverse sales channels. In this case, retail outlets would become the most competitive channel.
The government is also encouraging MVNOs as a new competitor likely to depress mobile rates in the telecommunication market that had been dominated by only three players ― SK Telecom, KT and LG Uplus. MVNOs have taken over 10 percent of the mobile service market in some developed countries.
On top of retail outlets, other businesses find MVNOs attractive. CJ Hello Vision, a digital cable TV company, recently announced entering the MVNO market, and there is a rumor Nonghyup, or the farmers’ bank, and other financial businesses are equally enticed.