Mobile carriers face pressure to cut rates

Following the National Assembly elections, mobile carriers are expecting bigger pressure to cut rates.

“The political circle has been pressuring mobile carriers to lower subscription fees in every election. It really is a problem for the industry,” a spokesman for a mobile carrier said. “Since everybody has a cell phone, mobile rates are an issue that involves every voter. Nobody would oppose a rate cut,” he added.

Left, center, and right combine for one voice when it comes to mobile phone costs. Both the governing Saenuri Party and opposition groups have pledged to reduce fees for mobiles in their campaigns, saying that this would lessen the financial burden on households.

The Saenuri Party said that the voice call rate should be cut by 20 percent, and it also wants unlimited data schemes for fourth-generation (4G) long-term evolution (LTE) services to be introduced. Mobile carriers have been refraining from adopting this after offering unlimited data plans for 3G services. It resulted in both an explosion of data traffic on their networks and an erosion of profitability.

The opposition parties, including the Democratic United Party, Unified Progressive Party, and Liberty Forward Party, meanwhile, promised to keep pressuring carriers to abolish their basic rate and subscription fees and provide text messages for free. If carried out, the proposals by both the governing and the opposition parties would cost carriers trillions of won in lost income.

The political circle is also likely to hamper mobile carriers from limiting smart TVs or mobile Internet phone services, which have weighed on their networks and eaten any profit gains.

“It is nonsense that the political circle can pressure us over rates or data schemes, but we can’t directly say no as telecommunications businesses are heavily affected by the regulator,” a representative for another mobile carrier said.

They already cut the monthly basic rate by 1,000 won last year but pressure is to continue amid inflation and with a presidential election scheduled for December. The parties are likely to take action to put mobile rate cuts as the main agenda. President Lee Myung-bak pledged cutting mobile rates by 20 percent upon inauguration but this did not happen. <Korea Times/Yoon Ja-young>

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