Measures to cut mobile costs to be delayed to mid-September

Implementation of the Moon Jae-in administration’s measures to help reduce the burden of mobile costs is likely to be postponed to mid-September due to differences between the government and telecom industry.

The Ministry of Science and ICT on Wednesday issued an executive notice that the ministry will start working on making an executive order for an additional 11,000 won ($9.60) cut in the base rates of mobile plans for low-income households. But it unexpectedly put off expanding the discount percentage for ordinary consumers, which remains an issue among the government, mobile carriers and consumers.

According to the telecom industry, the government and the industry have not yet reached an agreement on the discount expansion for ordinary consumers due to conflicts of interest. 

Since the State Affairs Planning Advisory Committee announced in June a package of mobile cost cut measures, the two parties have been negotiating the plans, but they have been clashing over the past two months regarding the 25 percent discount rate for ordinary subscribers, up from the current 20 percent.

The June package included measures that demanded the telecom industry cut its 11,000 won base rate per month for senior citizens aged 65 or above and users from low-income households on state medical subsidies.

For ordinary users, the committee expanded the current optional 20 percent discount for monthly bills to 25 percent. Users have been able to choose whether to take a government subsidy worth 330,000 won for a new handset device or a 20 percent cut for their monthly mobile bills.

The ministry said the 25 percent discount should be applied to not only new subscribers -- starting from September -- but also existing plan holders. However, telecom companies have been opposing the new rate to existing subscribers due to estimated revenue falls.

A more than 300 billion won fall in combined sales of the country’s three mobile carriers is estimated, according to the industry.

If the telecom firms continue protesting the plan, the ministry is highly likely to issue an executive order that covers a discount expansion only for new subscribers.

“However, the ministry will continue talking with the mobile carriers to apply the expansion to current subscribers before the executive order takes effect,” said a ministry official.

Due to the differences, the government’s mobile cost cut plans are expected to be implemented officially in mid-September, instead of its initial target of Sept. 1.

Meanwhile, six consumer and civic groups Wednesday gathered at Gwanghwamun Square in central Seoul to demand the government and telecom companies introduce the 25 percent discount for existing subscribers.

“The whole government package was not enough to make consumers feel their mobile costs are reduced to begin with,” said the groups in a joint statement. “Limiting the optional 25 percent discount to new subscribers does not go with the president’s campaign pledge to bring down the costs for all everyone.”  

By Song Su-hyun (song@heraldcorp.com)