Korean telcos object to universal fare plan

South Korean operators are protesting the government’s proposed introduction of a “universal fare plan” that would require the market’s top operator to provide a low-cost plan to help households reduce mobile costs.

The government is planning to revise the Telecommunications Business Act to require the top ranked operator to offer a plan including 200 minutes of voice calls and 1GB of data for around 20,000 won ($19).

While the regulation would technically only impact incumbent SK Telecom, rivals KT and LG U+ have complained they would have no choice but to release similar plans to remain competitive.

The three operators are protesting the government’s plans on the basis that it could be devastating to their profitability – SK Telecom estimates that operating profits for the three companies could be reduced by up to 60% as a result of the move – and that it imposes too much state intervention into their businesses.

This would be coming at a time when operators will need to make huge investments in 5G infrastructure to support their goals of launching 5G services in early 2019.

Government and SK Telecom officials failed to reach a consensus during a meeting to discuss the proposed change by the Regulatory Reform Committee late last month, the report states. The committee plans to hold a new meeting next week to continue the discussion.

Under the proposal, the universal fare plan would be revised every two years. But SK Telecom has argued that the plan would effectively force operators not to conduct marketing activities and eliminate the incentive to compete with each other.