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LG Uplus employees talk to a visiting customer at a company retail outlet in Jong-ro,downtown Seoul, on Jan. 8. Lee Sang-chul, CEO of the mobile carrier, recently proposed a new data plan that allows consumers to choose a specific amount of data and download speed they wish to use. |
By Cho Mu-hyun
Since LG Uplus, Korea's smallest mobile carrier, announced a new pay-per-use data plan, speculation is rife over whether larger rivals SK Telecom and KT will follow suit.
Company CEO Lee Sang-chul recently told reporters that the carrier planned to release a new pricing model for its data-intensive long-term evolution (LTE) services sometime in the first half of 2013.
The plan will allow subscribers a more specific data amount than currently available, while also allowing different caps for maximum download speed.
Mobile operators have until now charged data in packages with voice calls as well as allowing a set amount per plan.
Buyers had no specific control over how much data they wished to use at selected download speeds, having only a single option for a maximum speed of 100 megabytes per second. Once the set amount of data expires, additional charges apply for any additional amount.
The new plan offered by LG will allow subscribers to cap their maximum download speed lower than 100 megabytes per second and pay less accordingly.
SK Telecom unveiled an offering that allows unlimited voice calls among subscribers but the allotted data and download speed remained unchanged.
Spokesmen for SK Telecom and KT declined to say whether they agreed with LG's proposition, adding that they have no immediate plan to offer similar pricing.
"We've got to remember that the mobile data market is relatively young," said KT spokesman Im Soo-wang. "KT is always looking for the best way to charge our consumers in a fair and reasonable way."
SK Telecom spokesman Romeo Won said: "It is too early to judge precisely what pricing model offers consumers more choice."
Most industry observers believe the current pricing models overcharge subscribers, as most plans offer too much data and not enough time for actual calls.
"I've recently changed my data plan because I realized I wasn't using as much data as I was led to believe by mobile carriers," said 30-year-old office worker Cho, who is an SK Telecom customer and uses a Samsung Galaxy S3 phone. "Since I rarely use voice calls after I've started purchasing smartphones, I've just changed to a plan with less of both (voice and data). As a consumer, I definitely want more choice."
HMC Investment Securities analyst Hwang Sung-jin said LG's proposition will increase consumer choice and is the right direction for carriers.
"I think what's more important than the proposed data plan is Lee's message of the need to offer consumers more specific choices than currently available," said Hwang. "And a pricing model that allows consumers to choose their download speed, I think will be eventually realized, though not in the short-term."
The controversy over pricing was further fueled when operators launched an unlimited LTE data plan last month. The plan offers data for free but caps the download speed after set amounts. Many questioned whether it was appropriate to call the plan LTE, which implies fast downloads.
Most local analysts agree the unlimited plan isn't needed by the majority of smartphone owners here, as they use only an average of 2 gigabytes per month. LG Uplus subscribers use the most data with 2.3 gigabytes while SK Telecom and KT users consume 1.9 and 1.8 gigabytes respectively.
"Mobile operators have limited resources in bandwidth to control the exploding amount of data traffic and were probably aware that a wholesale migration to the new plan wouldn't have happened. They don't have the capacity to handle it anyhow," said Hwang.
"It's a shame that too much focus is being put on pricing when there should be more discussion on mobile operators' current difficulties in getting more bandwidth from the government," said a senior official at KT. "Discussion on data should come after mobile operators are given fair opportunity to actually have the sufficient amount of resources to better serve our subscribers."
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