On January 22, 2024, the Office of Government Policy Coordination (OGPC) announced that the “Mobile Device Distribution Improvement Act” will be abolished. The law was originally intended to reduce the customers’ confusion when purchasing mobile devices by preventing telecommunication companies from providing support funds to distributors. However, the law had the side effect of removing the need for competition among different companies, thereby placing the burden of unvaryingly high mobile device prices on the customers. Like in this case, Korea’s infamously high telecommunication rates have also been challenged and have subsided.

According to a report conducted by the Finnish business consulting company Rewheel, incorporating statistics provided by the European Union (EU) and Organization for Economic Co-operation and Development (OECD) published in December, 2017, Korea had the highest cost for one gigabyte of data among all the countries covered in the report. One main cause of the unusually high price is the oligopoly consisting of SK Telecom (SKT), Korea Telecom (KT), and LG U+. These three telecom behemoths have been owning the scene for quite some time now, but more recent statistics show that they have not been pressuring the customers as much as they used to, due to the backlash of the customers and the government. According to a source from the a national assembly debate on September 11, 2023, Korea’s daily telecommunication rate per income was not far off from the OECD average, with 20.3 percent versus 19.4 percent for the average user. Another material used for a separate debate on September 20, 2023, indicated that the communication service fees for an average household are lower than 2011.

In addition to this, there are various reasons that could explain expensive telecommunication fees. Firstly, Korea undoubtedly has one of the best internet accessibility and internet speed, thus making it justifiable to sell good products at a higher price. Korea’s fiberoptic cable and high-speed internet distribution rates always rank near the top among OECD assigned nations. This logic has been used to defend expensive prices for 5G, a feat which was advertised as a technological breakthrough by various sources including the telecommunication companies. Secondly, as many other countries do, Korea distributes frequencies through an auction, and those prices are substantially higher than other countries within the market. Thus, the companies are buying expensive, high-quality internet in order to provide expensive, high-quality internet to their customers. However, the final and the most important reason without question is the oligopoly formed by SKT, KT, and LG U+.

Essential Services

In Korea, there are more telephone lines than people, with over 70 million lines currently in circulation according to Statistics Korea. This alone indicates that telephones and data are not a choice but a must in order to fully function as a member of the urban, high-tech society. And because of this nature, the telecommunication market is a regulation industry always under pressure from the government. For instance, According to Professor Jung Hoon (Department of Accounting, Cheong Ju University), the al-ddeulphone policy was also introduced by the government in order to weaken the oligopoly and make a perfect competitive market.

Al-ddeul-phones is a marketing terminology for “Mobile Virtual Network Operator (MVNO)”, meaning that the distributor rents mobile communication networks from the three telecommunication companies to provide their service. Because they share the same infrastructure, al-ddeulphones provide the same quality of internet at a more reasonable price. This system was deployed by the Korean Communication Commission (KCC) in order to reduce the burden of communication fees for the citizens. Although al-ddeul-phones did not receive the spotlight at the time it was launched, the number of members has been steadily rising, especially during 2023 when al-ddeul-phone members had increased by about two million from January to August. A Shift in Dynamics This new trend of finding cheaper telecommunication fees among customers along with the “telecommunication rate burden reducing measure announcement” issued by the Ministry of Science and ICT (MSIT) has pressured the companies to further lower their prices. MSIT’s announcement included clauses such as the reorganization of 5G telecommunication services and the improvement of the current oligopoly. The announcement has been made to grant customers more freedom in choosing their preferred services, especially since 5G technology has not received a lot of attention from customers, but has remained high in prices for some time. In response to this new legislation, the telecommunication companies have recently started to introduce 5G connectivity services for less than 40,000 South Korean Won (KRW) a month, conforming to the steady decline of telecommunication rates.

In an interview with The Granite Tower (GT), Professor Jung agreed that the telecommunication fees are getting cheaper, and that the increase of al-ddeul-phone members is also a result of government policies. However, he also mentioned that “the three telecommunication companies are definitely nongovernmental corporations with stockholders.” They would also aim for “optimal decision making in the long term between the government and the consumers with minimal risk but reliable profits.” To elaborate, Professor Jung added that the current telecommunication services are basically the same in quality, and that the devices they support are the only core distinctions, an odd phenomenon for telecommunication companies. “I wish for a competition where the service aspect is differentiated, with new technology actively introduced into the system,” said Professer Jung, “It will all lead to the growth of the telecommunication market, and the citizens will be able to u se b ette r se r v i ces a t a m o re reasonable price.”

Korea has exceptional internet services when it comes to quality, speed and accessibility, and it used to come at a rather unflattering price. The oligopoly with low competition has led to a stalemate between SKT, LG U+ and KT, but the government has intervened throughout the past, managing to s o m ew h a t l i m i t t h e we i g h t of telecommunication fees. Some innovation in technology could be beneficial for the market and the customers. But even in the short term, now that the government is taking even more substantial measures against this issue, along with the customers who are now actively looking for cheaper services, telecommunication rates will likely become more and more affordable for the citizens.