By Kim Yoo-chul
KT, the nation’s second-biggest wireless operator, has confirmed its much-awaited plan to cut mobile rates but it fell short of providing details on the scope and timeline of the measure.
Pyo Hyun-myung, president of KT’s mobile business unit, told a press conference Thursday that the company will come up with a new billing system offering discounts, but refused to elaborate.
KT has been expected to trim its mobile charges after market leader SK Telecom opted to shave 1,000 won (around $0.9) off monthly fees for its customers starting in September.
``KT is in the process of introducing updated billing plans to our customers. We are in talks with the Korea Communications Commission (KCC) with regard to the new plans,’’ said Pyo, who is regarded as KT Chairman Lee Suk-chae’s right-hand man.
``It’s a customer-oriented market. Because SK Telecom did it, we should follow. The upcoming billing plans are geared toward lessening our clients’ burdens on telecom service charges," the executive told reporters in downtown Seoul.
Although Pyo refused to give details, a KT insider gave a glimpse on what KT executives have in mind.
``KT originally offered to provide 20- to 30-minutes of free calls to our customers. But the KCC refused to accept the suggestion for some reason,’’ said the insider, who asked not to be named.
In this climate, KT is projected to follow SK Telecom in providing rate cuts but it fears that such a policy would substantially chip away at its bottom line.
If KT slashes 1,000 won off the monthly fee, the step will cost it hundreds of billions of won every year, which KT officials say is ``massive.’’ KT’s has 16 million customers.
Despite the concerns, the KCC is likely to flex its muscles to make KT offer discount schemes as part of the government’s priority of fighting inflation, according to observers.
Korea’s mobile carriers are the latest sector that has seen the administration request price cuts at a time when the country struggles to grapple with soaring consumer price levels.
Oil refiners lowered gasoline and other oil product prices for three months this year following government pressure.
Handset charges take up for more than 3.3 percent in calculating the consumer price index and end users have consistently complained that the charges are far higher here compared to other nations.
In a separate news conference, the KT president proposed the ``open price system’’ as part of a strategy to lower subsidies offered to outlet managers.
Under the new system, KT will update retail prices of its cellular phones via its online shopping mall www.ollehshop.com to help consumers better compare handset values before purchasing them.
``We hope SK Telecom and LG Uplus will join the system because it is expected to boost the transparency of handset prices and will help carriers cut subsidies to their contractors,’’ Pyo said.
Even though the open price system looks reasonable, it’s highly unlikely that SK Telecom and LG Uplus will accept the proposal of fierce rival KT, watchers point out.
Korea’s telecom market has already reached saturation and this pushes companies to spend heavily on marketing so as to attract new customers or retain existing ones.
In a follow-up measure, KT plans to introduce a so-called ``green phone’’ system from September this year.
``Second-hand handsets obtained by KT will be used as supportive packages to help the underprivileged,’’ Pyo said.
Korea is touted as one of the world’s most-wired societies and tech-savvy local consumers usually change their mobile phones for new ones after less than two years.