SKT cedes to pressure to cut rates

Melissa Chua
03 Jun 2011

South Korea’s largest mobile carrier SK Telecom will cut its monthly base fee by 1,000 won ($0.93) in response to the government’s claims of high telecom fees in the country.

According to Joong Ang Daily, the country’s number 2 and 3 players, Korea Telecom and LG Uplus are expected to follow suit.

SK Telecom’s fee cut will be effective September, in addition to other concessions such as 50 free text messages per month, user-customized mobile plans and a lower-cost prepaid plan.

The new measures by SK Telecom will reduce mobile services fees by about 28,000 won per person yearly, said KCC, the country’s regulator, adding the country’s households would save about 748 billion won in total telecom spending every year.

The KCC had been caught between the ruling party’s demands to curb inflation and operators’ protests that fee cuts and concessions would hurt bottom lines and lead to a lack of innovation in an industry already suffering from a saturated market.

A KCC official acknowledged the measures might appear inadequate to consumers, but told the public not to view the cuts as a mere 1,000 won discount but 114,000 won in annual savings for a 4 person household.

Measures to reduce telecom fees were scheduled to be released end May, but the KCC had postponed the announcement saying it needed more time to gather feedback from industry players. Joong Ang Daily reported the 1,000 won fee cut was a last-minute addition, with the original package less impressive.

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