Mobile service rate cut satisfies no one

SEOUL, June 3 (Yonhap) -- The government and SK Telecom, South Korea's leading mobile carrier, announced a plan Friday to cut service rates, including a 1,000 won (US$0.93) cut in monthly basic rates, and increase free short-messaging service. SK Telecom's move, which will go into effect in September, will help reduce mobile service rates by about 28,000 won per person every year, the Korea Communications Commission (KCC) said in a media briefing. KT Corp. and LG Uplus Corp. will likely follow SK Telecom's move, a KCC official added. Mobile tariff cuts were broached by the government earlier this year as one of the measures to rein in runaway inflation. High mobile service rates have been a major source of consumer complaints. However, the rate cut does not satisfy both consumers and mobile service companies. The 1,000 won cut in basic rates is too small for consumers to feel a real cut. Those who have smartphones have to pay 40,000 to 50,000 won a month. The number of smartphone users in the country hit 10 million in March, about a 10-fold growth from January 2010, and mobile service fees for smartphone users are about 30 percent higher than those for cell phones that can only handle voice calls and text messages. An additional provision of 50 free text message service a month is not significant in effect. Some consumers have insisted on a 50 percent cut in basic rates and limitless free text service. Consumers who have expected a 20 percent cut in telecommunication charges voiced dissatisfaction and argued that the government sided with mobile service operators in the reduction of rates. Mobile service companies, meanwhile, expressed dissatisfaction over the rate cut, which will reduce their revenues and hamper their investment. SK Telecom said the rate cuts will relieve the burden of SK Telecom users by an estimated total of 748 billion won a year, which means a reduction of its revenues. The other mobile service companies also expect their revenues to drop by hundreds of billion won a year. The companies cry that the reduction in revenues from service charges will impede their investments in the development of next-generation mobile networks. However, the service operators' dissatisfaction is groundless considering their huge net profits, which reach several trillion won a year. The companies should voluntarily find an optimum level of the service rates of mobile phones, which have become a daily necessity. They should not pass the expenses stemming from excessive competition among themselves and from lax management onto consumers.