The government has decided to significantly increase the radio usage fee reduction rate for small and medium-sized budget mobile operators from 50% to 90%. This decision aims to alleviate the burden of communication costs for citizens while enhancing the competitiveness of the budget mobile industry. As a representative of the budget mobile sector, I sincerely welcome this decision and express my deep gratitude to the Ministry of Science and ICT and the finance authorities for their careful consideration of the challenges faced by the industry.
Since its introduction in 2010, the budget mobile sector has played a crucial role in promoting competition in South Korea's telecommunications market and reducing household communication costs. Currently, the number of budget mobile subscribers has surpassed 10 million, establishing it as a core component of the mobile telecommunications market rather than a niche segment. It is now common to find people using budget mobile services, especially as citizens seek reasonable communication costs amid ongoing high inflation and economic downturns. The user base continues to expand across all age groups.
However, the growth process has not been without challenges. Budget mobile operators, which lease networks from major telecommunications companies rather than operating their own, have consistently worked to provide better services and lower rates despite structural limitations. Recently, rising labor costs, increased marketing expenses, and wholesale pricing pressures have made the business environment increasingly difficult. This is not just an issue for one operator but a reality faced by the entire industry.
In this context, the radio usage fee reduction system has served as a vital policy tool supporting the growth of the budget mobile industry. However, in recent years, the gradual reduction of these fees has led to concerns about declining profitability and reduced investment capacity, threatening the sustainability of the industry ecosystem. The association has consistently explained the realities of the industry to the government and advocated for the need to expand the fee reductions, making this decision particularly significant as it reflects those voices.
The expansion of the radio usage fee reduction carries the expectation of translating into lower rates and consumer benefits, as desired by the government and the public. When the financial relief gained from the reductions leads to the launch of more affordable plans and enhanced consumer benefits, the intent of this decision will be fully realized. The association will actively support member companies in utilizing the fee reductions to lower rates and expand consumer benefits, as well as reinvest in service quality improvements and the development of new services. We will strive to ensure that the expansion of the reductions yields results in alleviating communication costs and invigorating market competition.
Achieving balanced growth across the entire ecosystem, including large corporate-affiliated budget mobile operators, is also a crucial task. Large corporate-affiliated operators have contributed to broadening the budget mobile market through differentiated services and investments alongside small and medium-sized budget mobile companies. As the current budget mobile landscape has been shaped by the participation of diverse operators, we hope that large corporate-affiliated budget mobile operators will continue to seek ways to grow sustainably.
Furthermore, for the budget mobile industry to take a significant leap forward, there is a need to prepare for a transition to a new form of budget mobile service, known as Full MVNO, which involves independently building and operating core facilities. This represents not just an extension of existing budget mobile services but a new industry model requiring independent system operation capabilities, making the participation of well-capitalized and technically capable operators critical to its success. We hope that, alongside support for small operators, a policy and institutional framework will be established promptly to enable capable operators to take on these new challenges.
We sincerely hope that the recent expansion of the radio usage fee reduction will serve as a new starting point that goes beyond mere cost support, contributing significantly to the advancement of the budget mobile industry and the reduction of citizens' communication costs. The budget mobile association will also work closely with the government to alleviate the burden of communication costs for citizens and foster a healthy telecommunications market ecosystem.
* This article has been translated by AI.
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