The government introduced the 'Alittle Phone 2.0' policy to strengthen competitiveness in the alittle phone (MVNO) market. The policy includes incentives aimed at enhancing price competitiveness and service diversity. However, about a month after implementation, industry reactions remain cold.
The Ministry of Science and ICT announced an activation policy on July 31 to improve the price competitiveness, service diversity, and user trust of alittle phones. Key measures include reducing 5G wholesale rates, providing data QoS (Peace of Mind Option) wholesale services, expanding fee reductions for spectrum usage by small and medium operators, and fostering partial and full MVNOs.
However, the alittle phone industry has raised doubts about the effectiveness of these measures. The plan omits any reduction in LTE (Long-Term Evolution) wholesale rates, which account for over 90% of the market, making it unclear whether operators' profitability will improve immediately. Additionally, the policy includes the previously pursued initiative to foster full MVNOs.
This set of measures excludes a plan to reduce LTE RS (pay-as-you-go) wholesale rates and instead focuses on lowering 5G wholesale rates as the main strategy. As of June this year, among 10.492524 million alittle phone mobile lines, LTE accounted for 92.2% (9.677551 million), while 5G accounted for 6.5% (680,210). This explains why the perceived impact of the policy among alittle phone operators is low.
An industry executive stated, "Most subscribers are on LTE, and many operators settle wholesale rates based on the LTE RS model. With the most critical issue—LTE wholesale rates—excluded from the measures, it will be difficult to significantly improve profitability simply by lowering 5G wholesale rates."
There is also skepticism about fostering partial and full MVNOs. While the government aims to nurture competitive operators with their own infrastructure, full MVNOs have been promoted multiple times in the past without achieving clear results. Given the substantial initial investment required and the need for a subscriber base, analysts argue that it will be difficult for truly competitive operators to emerge.
The newly included provision for QoS wholesale services also requires time to assess its effectiveness. Industry insiders suggest that the minimum speed provided to alittle phones may reach 400Kbps, similar to low-priced plans from the three major carriers. At this level, users can access simple services like messaging apps but face significant limitations when using photos or videos. An industry executive noted, "While 400Kbps is better than nothing, it's only sufficient for basic use like KakaoTalk."
Shin Min-soo of Hanyang University Gyeong Yeong-hak-bu (Prof.) said, "Price competitiveness alone through wholesale rate reductions will not drive qualitative growth in the alittle phone sector. Given that economies of scale are crucial in the telecommunications industry, operators must grow in size—even through mergers and acquisitions—and new differentiated service providers, such as full MVNOs with their own infrastructure or B2B (business-to-business) operators, must emerge."
in TECH
