By Kim Yoo-chul
KT, the nation’s second-biggest teleco has announced a much-awaited new mobile rate plan in a response to government pressure to cut prices to try and help ease inflation.
Under the new plan, KT said it will shave 1,000 ($0.9) off the monthly fee for its customers from October, the firm said in a statement, Thursday.
The average basic monthly charge is currently some 11,000 won. KT will also provide 50 free text messages a month and introduce a broader range of smartphone billing plans.
KT could help its customers save some 484 billion won on a yearly basis with each one saving some 28,500 won per, said company spokeswoman Kim Yoon-jeong.
``The cut is massive. The free text message plan will start from November, while our new smartphone plans have been set from December, this year,’’ said Kim.
KT customers who have fixed-mobile convergence (FMC) smartphones will use unlimited data calls between those users for just 19,000 won per month, according to the statement.
FMC is a move towards seamless connectivity between fixed and wireless telecommunications networks. It also describes any physical network, allowing handsets to function smoothly with the fixed network infrastructure, KT officials said.
The details of KT’s new billing plan aren’t too different from those of SK Telecom, KT’s biggest local rival. SK was the first of the nation's big three mobile operators to cut charges.
Along with customers that use 3G wireless services, KT’s 2G-based phone users will benefit from a cut in basic charge and receive free 50 text messages monthly, Kim said.
``If 2G-based phone users still want to use the old service after September, then we will also apply updated plans,’’ said the KT spokeswoman. KT has 350,000 2G phone users and it recently announced it would drop 2G services from next month.
Telecom firms are the latest industry to suffer from government scrutiny as Korea faces higher consumer prices. In April, leading Korean oil refiners cut their gasoline and oil prices after consistent government pressure.
But investors and analysts have warned that the pushes by the Korea Communications Commission (KCC), the nation’s top telecom regulator, will hurt the financial soundness of the telecos and may lead them to cut their investments.
``That’s a very tough decision because KT was being asked to increase investments in next-generation wireless technology such as 4G long-term evolution (LTE) to meet the explosive demand for wireless data amid the smartphone boom,’’ said Kim.
There are no options for the nation’s smallest carrier LG Uplus but to follow the moves by SK Telecom and KT.
Although the situation is desperate for the LG Group’s telecom affiliate it is way behind SK and KT in terms of the number of subscribers and annual revenue, Uplus is close to introducing new mobile rate plans, officials said.
``If we lowers our monthly charge by 1,000 won and offer 50 free text messages to our customers, than that will cost us hugely. An estimated 220 billion won will be gone, annually,’’ said a Uplus spokesman.
Last year, Uplus earned 666.3 billion won in total revenue. It is the only local firm that does not sell Apple’s popular iPhone and iPad.
``Previously, KT and Uplus formed an alliance, however, now we don’t have an option,’’ said a Uplus spokesman.
The LG teleco has been in ``deep talks’’ with the KCC to finalize the intensity of its new billing plans and its announcement will come this month.
``Cutting 1,000 won off the basic monthly charge is not the only option because offering more voice calls and texts are another lucrative way that will minimize the impact of the new plan,’’ said the official.
The KCC insisted that household spending on telecommunications has boomed since the latter half of 2009 with the introduction of the iPhone.
Because smartphones are becoming the handset industry’s mainstream with top global makers such as Samsung, Apple and LG Electronics migrating to ``all-in-one’’ devices, the number of smartphone users are expected to increase to 20 million by the end of 2011 from 1.03 million in January of 2010 here, according to the KCC.
Last year, SK Telecom took up a 54.5 percent market share, followed by KT with 30.3 percent, according to the KCC.