"Even as Mobile Virtual Network Subscribers Rise, Losses Remain"...Independent MVNOs Urgently Need "Sustainable Growth"

The mobile virtual network market has grown significantly in terms of subscriber numbers, but concerns have been raised that independent operators need to strengthen their footing in the competitive structure. The number of mobile virtual network subscribers was said to have surpassed 10 million lines.

The concern was raised at a National Assembly forum hosted by Democratic Party of Korea lawmaker Lee Joo-hee. The forum, titled "MVNO 2.0: From Quantitative Growth to Qualitative Growth," was held at the National Assembly on the 2nd.

At the event, participants called for MVNOs to be strengthened as a competitive force that can check MNOs, as well as for greater competitiveness among independent MVNO operators. In particular, MNO subsidiaries and affiliates of financial companies were presented as excluded categories.

In her presentation, Bang Hyo-chang, chair of the policy committee at the Citizens' Coalition for Economic Justice (CCEJ), noted the upward trend in MVNO subscribers while saying there are large gaps in service capability among MVNO operators and also wide differences in sustainability. At the forum, the key issue was identified as the large gap in capability and sustainability among independent MVNOs, excluding MNO subsidiaries and affiliates of financial companies.

It was also noted that while MNO subsidiaries are offering cash-like benefits, independent operators face limitations. Expert recommendations related to this situation were also presented at the forum.

The MVNO market consists of 59 registered MVNO operators, including 5 MNO subsidiaries and 54 non-MNO MVNO operators. As of June this year, the number of MVNO subscribers stood at 10.49 million, of which 4.92 million were users of MNO subsidiary MVNOs. As a result, 8.5% of operators account for 47% of subscribers, and there are also gaps in profitability.

Within this structure, KT M Mobile is the No. 1 MVNO operator, and its operating profit last year was KRW 11.5 billion. By contrast, the overall MVNO industry posted an operating loss of KRW 25.8 billion in 2024, and 27 of the 59 MVNO operators posted operating losses that year. As of June this year, 6 operators were also said to be in the process of shutting down.

Against this backdrop, criticism has emerged that MNO subsidiary MVNO operators are bypassing regulations through cash-like benefits. In response, the government has imposed regulations barring MNO subsidiaries from launching tariff plans priced below network wholesale rates to ensure fair competition in the MVNO market. Network wholesale rates are the costs paid by MVNO operators to mobile carriers in exchange for leasing network infrastructure.

Concerns were raised that MNO subsidiaries are effectively implementing zero-won plans by combining tariff plans with cash-like benefits such as gift cards and cashback. It was also pointed out that independent operators, at a disadvantage in scale, are in no position to follow such aggressive marketing.

For that reason, Policy Committee Chair Bang proposed that a legal basis be established to prohibit improper support among affiliates. Bang also said transparency in transactions between parent and subsidiary companies is needed.

There were also calls to enhance the competitiveness of independent MVNO operators. Suggestions were made for customized government support in terms of technology and business models, and the need to protect users was also mentioned.

Professor Cho Dae-geun of Sogang University said support for independent, small operators should not take the form of unconditional subsidies. He said the government should support the parts needed in the process of implementing new services and products using mobile networks.

He also said support is needed for independent efforts to target areas where MNOs face difficulty entering. Views continued to emerge on ways to support stronger competitiveness for independent MVNO operators.

It was pointed out that, from a consumer perspective, both operator competitiveness and user protection levels need to be improved together. Yoon Myeong, secretary general of the Citizens' Coalition for Consumer Sovereignty, said the Broadcast, Media and Communications Commission's user protection evaluation covers only about 10 operators. He added that many of the operators subject to evaluation are affiliates of large companies.

Secretary General Yoon said evaluations of many operators are inadequate. As a result, he explained, feedback on key areas for improvement is weakened, and competitive pressure is also weakened.

Yoon said consumers may be more likely to choose large-company-affiliated MVNO operators when considering the wider range of benefits and faster complaint handling. Accordingly, suggestions were made that independent operators need to strengthen consumer convenience competitiveness, including user protection and complaint resolution, in addition to pricing and benefits, in order to secure market viability.

Source: IT DAILY · Seong Won-young
Original: https://www.itdaily.kr/news/articleView.html?idxno=241998

References

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